If you run a VAT-registered business or an incorporated company or group in the UK you may be wondering what you’re going to do after Brexit. The truth is that no-one can say for sure what is going to happen and what (If anything) is going to change.
However, this article aims to help you prepare for a no-deal Brexit. Read on for information about goods-in-transit, postal imports and more.
Paying for your Goods
If you run a VAT-registered business, you can account for import VAT. What this means is you won’t need to pay for your goods when they arrive at the UK’s border. The benefit of this is you will still be able to move your goods from EU member states and into the UK.
What you will need is an ‘Economic Operator Registration and Identification’ number (or EORI). This number has to start with the letters ‘GB’ if you plan on importing goods.
If you are not registered for VAT you won’t have the ability to account for any import VAT. You will need to pay for VAT on the goods when you import them.
Accounting for Import VAT
When it comes to accounting for import VAT you will have to add it to your VAT return if the goods you’re importing are for business use. You’ll also need to account for it if your VAT registration number is displayed on your customs declaration. If you are using the CHIEF system (Customs handling of import and export freight) you’ll have to account for import VAT if the EORI number shows your VAT registration number.
Goods that are in Transit
If you already have goods that are in transit you will need to treat them as acquisitions if they come from the EU. You will need to account for their VAT. You will need to do this for the period of time when the acquisition occurs.
If you are using customs freight simplified procedures when you bring goods into this country you won’t be able to account for the import VAT on your return. This is on the goods that you’ve completed the simplified frontier declaration for and before Brexit occurred.
You won’t be able to account for the import VAT even if you have completed the supplementary declaration.
Accounting for Import VAT After Brexit
If you’re using the CHIEF system (Customs handling of import and export freight) you’ll have to:
- Add your EORI number which includes the VAT number. You’ll have to add this to the (SAD box 44h) registered consignee or the (SAD box 8) consignee.
- Add ‘G’ as your payment method.
If you use the Customs Declaration Service you will need to add your VAT registration number at the header level. You will have to add it to Data Element 3/40.
Please note, VAT will be recorded against the EORI and it will only be at declaration level.
The good news is you can account for your import VAT on your VAT return. This is the case even if you are unable to confirm the value of the imported goods. What you should do, however, is declared the highest value for the VAT. You will also need to reclaim eligible input under the current normal rules.
Completing your VAT Return
You should have a monthly statement to download. This statement will show you how much VAT has been delayed for the previous month. It will also show you when it will need to be included in the VAT Return.
Please note, there will be some changes to the way the boxes are completed:
Box #2 – Include: the VAT that’s due in this period on any imports that are accounted for through any delayed accounting.
Box #4 – Include: the VAT that’s reclaimed in the relevant period on any purchases and inputs. This also includes imports.
Box #8 – Include: the total value of all of the exports of your goods. This should exclude VAT.
Box #9 – Include: the total value of all of the imports of your goods. This should exclude VAT.
When your VAT Return Period Consists of 31st October 2019
If your VAT Return period consists of 31st October 2019, you will need to account for your Vat in 2 different ways.
- You will need to use the process you currently use up until 10:59 pm UK time on this date.
- You will need to account for any import Vat on your Return from 11 pm and onwards.
If you use CDS or CHIEF you will be issued with import VAT statements. You will receive a C79 import VAT certificate. This is for any imports that were made up to 10:59 pm UK time on the 31st.
You will also receive a monthly import VAT statement. This is for imports that have occurred from 11 pm on the 31st.
For Businesses with Agents
If you have an agent you can authorise them to account for any import VAT on your Return. If they need to make a declaration at customs they should use the EORI or VAT registration number. They will also need to have the agreement so they can account for any import VAT on the Return.
Lastly, the agent will not be able to use their VAT number.
Failing to Account for Import VAT
If you fail to account for import VAT you will need to wait 2 months after you have paid the import VAT. Once the 2 months has passed you can reclaim the VAT.
In addition to this, you will need to declare any import VAT. You will have to do this when the goods either enter free circulation or when they arrive in the UK. This is the case if you use CHIEF to make your declarations. You can select to secure the import VAT by making a note of the payment method on the tax line.
You can also select to pay the VAT.
If you use CDS you won’t need to enter the number at header level which is found in data element 3/40.
Incorporated Companies and Groups in the UK
If you are an incorporated company or group in the UK you will need to prepare your annual accounts using the IAS (International accounting standards). Please make sure that you use the UK adopted IAS as opposed to the EU adopted IAS. This is for the financial years that begin after 31st October 2019.
UK Companies with a Cross-Border Presence
If you run a UK company that has a cross-border presence in the European Economic Area (EEA) your reporting requirements may have changed. They may no longer be considered as good as EEA countries’ reporting requirements.
If you have a subsidiary that’s based somewhere in the EEA you will need to make sure you know the reporting requirements in that particular state.
If you have a branch in the EEA you will need to make sure that you know what the reporting requirements are in that particular state.
If you are a UK Company with a UK Listing
The chances in the TD (Transparency Directive) and the PD (Prospectus Directive) framework will have an impact on the way capital is raised. It will also affect the way you continue to trade securities or obtain trade securities in a regulated market.
If you have securities admitted to trading on a UK market that’s regulated you will need to use accounts prepared using the EU adopted IAS for the accounting periods that start on the 31st October 2019. You will need to do this for the Prospectus Directive and the Transparency Directive. You will not need to restate the relevant accounts or any filings once Brexit has occurred.
You will also need to prepare accounts using the UK adopted IAS for all of the accounting periods the begin the day after Brexit.
If you are a UK Company with an EEA Listing
If you issue debt from a subsidiary that’s incorporated in the EU that can trade on an EU regulated market or you can trade with the EU you will need to comply with all of the EU regulatory provisions. This could include the need to publish your accounts using the EU adopted IAS. You could also use the IAS that is issued by the IAS Board.
You will also need to produce your accounts in accordance with the UK Companies Act, 2006 for domestic filing purposes.