27 Jan 2020 12:36 PM

A ‘no deal’ Brexit seems to have been avoided, for now anyway. At the end of January, in line with the Withdrawal Agreement, the UK will enter an 11-month transitional period ending 31 December 2020. The Bill has been amended to remove the option for an extension to this transitional period, meaning that if a free trade agreement has not been negotiated by the end of the period, a ‘no deal’ exit could still happen.

During the transitional period the UK will remain part of the EU customs union and EU VAT area, so that during this period intra-EU VAT rules will continue to apply.

Planning is advised in preparation for a new trading arrangement with the EU. It is proposed to be under a style of free trade arrangement similar to the one we have with Canada, but involving complex VAT procedures and applications.

Businesses may need to consider some the of the following as part of their preparations:-

  • Customs processes
  • Import VAT
  • Authorised Economic Operator (AEO)
  • Inward Processing Relief (IPR)
  • Customs Warehousing
  • Transitional Simplified Procedures (TSP)
  • Economic Operators Registration and Identification (EORI)

New EU VAT rules effective from 1 January 2020

Changes came in from 1 January 2020 which UK businesses need to be aware of and ensure they comply with, despite the UK being in a transitional period until 31 December 2020.

As always under EU VAT, goods despatched from one member state to another within the EU are zero-rated where these are passed between two taxable persons, if conditions are met.

Changes to the EU VAT rules  

Under the new rules, suppliers must hold evidence such as airfreight invoices, a signed CMR consignment document or note, and receipts from a relevant warehouse among other documents in order to qualify for zero-rating.

Also, it is necessary to regularly check that the customer has a valid VAT number and to hold proof that this has been checked.

If you have any questions on to prepare for the proposed EU trade arrangement or the new EU VAT rules please contact us.