Does this affect your business? We can help. Prepare for the new border controls and ensure correct VAT treatment for your transactions with our Supply Chain Review.
In a speech to a Border Delivery Group, Michael Gove, the Chancellor of the Duchy of Lancaster, has confirmed that the government are planning to introduce import controls for EU goods coming into the UK as of 1 January 2021. From this date, all UK exports and imports will be treated equally.
For UK businesses importing goods from the EU into the UK, there will be a requirement to complete full customs declarations and undergo checks on the goods at the border. This will ultimately lead to additional costs and delays for UK businesses trading cross-border with the EU.
Transitional Simplified Procedure (TSP)
The Government have also confirmed that they will be removing policies put in place in the event of a no-deal Brexit. Therefore, the Transitional Simplified Procedure (TSP) will no longer apply. The introduction of TSP aimed to ease congestion at the border. However, it is no longer required – businesses now have time to prepare for these changes according to the Government.
Postponed VAT Accounting Scheme
Furthermore, the Postponed VAT Accounting Scheme will also no longer apply. The Government introduced the scheme in the event of a no-deal Brexit; its removal will affect cash flow for UK businesses significantly. These businesses will no longer be able account for EU acquisitions on their UK VAT return; instead import VAT and duty is liable upon entry into the UK. Businesses bringing goods into the UK will need to consider how to deal with this change, possibly making use of the schemes available such as the Duty Deferment Account, Simplified Import VAT Accounting (SIVA) or customs warehousing.
Next Steps for Your Business
These announcements represent a significant rolling back of some of the proposals made previously which sought to ease the transitional period and make trading with the EU as frictionless as possible. It may be that the UK Government are trying to show a strong hand when it comes to negotiating the future trade agreement with the EU.
However, it will now be as important as ever to:
- Conduct a Cross-Border Supply Chain Review;
- Put in processes to ensure your business is in a position to continue trading with the EU;
- Whilst minimising trade disruption and cash flow impacts
If you are involved in cross-border trade and will be affected, then get in touch with our VAT experts. Prepare for the new border controls and ensure correct VAT treatment for your transactions. We can help you navigate the ever-changing state of VAT.