Following the European Commission’s Brexit VAT notice, the UK tax administration has in turn published a guide on 22 October 2018, titled “Partnership pack: preparing for a ‘no deal’ EU Exit”. The guide is addressed to several stakeholders, such as traders, customs agents, freight forwarders and businesses supplying services to the EU, and aims to support their preparation, in case the United Kingdom leaves the EU on 20 March 2019 without an agreement.
The notice contains information regarding changes of UK customs processes and procedures and measures to be taken by the different stakeholders.
Free circulation and movement of goods between the UK and the EU would end and import and export declarations would have to be filed when goods enter or leave the UK. HMRC will introduce a new UK Customs Declaration Service and set its own tariffs for UK imports. The existing EU Free Trade Agreements and the current commodity list should be upheld. In order not to impede cash flow, the UK will introduce an import VAT deferment regime applicable to UK imports from EU and non-EU countries.
Furthermore, the UK will abolish low value consignment relief for parcels imported into the UK, instead it will introduce a digital service through which foreign companies can pay VAT on low value parcels up to and including 135 GBP.
Additionally, the EU VAT IT systems would no longer apply to UK businesses. In order to continue to use the systems, UK businesses would have to register for the non-EU mini one stop shop (MOSS) system for B2C digital services in one of the EU-27 Member States and to submit EU VAT refund claims according to the 13th VAT directive procedure for non-EU companies. UK VAT numbers would no longer be able to be validated on the VIES system, instead HMRC would introduce its own system through which UK VAT numbers could be validated.