The majority of the impact falls to businesses involved in moving goods to and from the EU. The deal announced means that such transactions should not be subject to tariffs (AKA duties) or quotas. However, the devil is in the detail and the real issue is whether the goods are capable of being treated as ‘originating’ in Great Britain or the EU. This can mean that for some businesses there is no requirement to have a duty deferment account as there will be no duties incurred, although we would strongly advise checking this before relinquishing your account.

The postponement system for import VAT can apply to imports from anywhere, and not just the EU, but you will need to ensure that your shipper/carrier has been instructed to complete the necessary documents to show that you wish to use this system.

For sales of goods to the EU after 11pm on 31 December 2020, there is no requirement for EC Sales lists to be completed or for Intrastat forms. However, for imports from the EU, Intrastat will need to be completed for 2021 to enable import data to be collected.

If the movement of goods includes Northern Ireland as a destination or starting point, then the complexities of the Northern Ireland protocol will apply. The aim is to treat Northern Ireland as part of the EU for trade in goods, but as part of the UK for trade in services.

For the majority of UK businesses there will no longer be acquisition VAT (Box 2) but there will be for Northern Ireland hence the VAT return boxes remain unchanged -although entries in Boxes 2, 8 and 9 should only apply to businesses in Northern Ireland.

Therefore, for posting transactions to bookkeeping systems, VAT codes with the definitions such as “standard rated goods acquired from another EU Member State” or “goods dispatched to another EU Member State” are now obsolete (again unless you’re in Northern Ireland). They should be posted as imports or exports.

Whilst most services are unaffected – for example the reverse charge will still apply for services bought in from outside the UK - the fact that Great Britain is no longer part of the EU will affect the VAT treatment of certain supplies. For example, businesses making supplies subject to the “foreign and specified” rules can now count customers in the EU as generating VAT recoveries rather than just those outside the UK and EU. 

There will also be issues raised as and when certain practical applications are subjected to the new rules as there are already stories circulating of EU businesses no longer selling B2C into the UK. When these arise we will of course keep you updated and our team are here to help if you wish to discuss this or any of the recent announcements in more detail.

If you have any questions about the impact Brexit could have on your business, please contact Ian Marrow, Director at Rickard Luckin at ian.marrow@rickardluckin.co.uk