To help businesses consider the changes that might happen following Brexit, the British Chambers of Commerce (BCC) have developed a Business Brexit Checklist. This checklist aims to provide support to companies at both operational and board levels.
Although the European Union and the UK have not yet reached a final agreement, there are a few steps that companies can already start undertaking to plan ahead.
Over the coming weeks we will be focusing on things to look out for to get your business ready for Brexit.
When the UK leaves the EU, it is assumed that we will also leave the EU VAT area. This means that UK companies may have to pay VAT when goods are imported. Therefore, it is important that companies consider how this may impact their cash flow and mitigate the risks of not having enough working capital to pay the VAT.
An alternative solution could be for companies to apply for a deferment account, this facility allows for VAT to be deferred for up to 1 month). For companies with 3 years VAT records this may be an option, however HMRC do require a guarantee from your bank that you will be able to meet the cost of the VAT.
For more information on the current Duty Deferment Scheme, please click here.
VAT Registration in the EU for Service Companies
If you’re currently selling your services in other EU countries, you will need to assume, post-Brexit, that you may need to register for VAT and appoint a fiscal agent in every member state where you supply customers.
Considering the above, it is important for UK companies selling services to other EU member states to review how many countries they are currently trading with and how many you would need to register for VAT in. Finally, the cost of this process should be reviewed.
In a recent survey, Alvaro reported that over 27,000 small e-commerce retailers will have to spend £720million per annum in new VAT compliance charges to keep selling to the EU.
If you’re concerned about any of the above or if you have any questions, please get in touch email@example.com.