Chas Roy-Chowdhury, global head of tax at ACCA (the Association of Chartered Certified Accountants) says:
‘While the government’s aim is to keep VAT procedures as close as possible to what they are now, there’s a strong possibility that things will change and that more guidance is to come – for instance with the land border between Ireland and Northern Ireland. This is still hazy, and we look forward to the government’s “more information in due course.”
‘The VAT guidance explains that if a no deal happens, the remaining EU member states will become third countries. This means businesses’ IT systems will need to be changed in order to re-categorise them. The government will provide additional guidance in due course around the exact accounting rules.
‘The key VAT changes that businesses will need to prepare for are when importing goods from the EU, exporting goods to the EU, supplying services to the EU, and interacting with EU VAT IT systems such as the VAT Mini One Stop Shop (MOSS).
‘If the UK leaves the EU without an agreement, the government will introduce postponed accounting for import VAT on goods brought into the UK. This will help ensure businesses are not hit by negative cash-flow and this is a concession that will be viewed favourably by UK businesses.
‘It’s important for businesses to note that they are currently able to obtain VAT refunds from other member states through a straightforward single market mechanism. This will stop and some member states may stop refunding VAT at all to the UK as they currently do to the US.
‘The main message from today’s guidance is talk to your ACCA accountant and your IT providers today. Don’t delay, be prepared as much as you can and try to be ready.”