HMRC has recently issued guidance to businesses outlining the VAT treatment that will be applicable to the goods they move from Ireland to Northern Ireland in the event of a no deal Brexit scenario.
The guidance explains that if this event comes to pass the UK will have immediate third country status. This means that import VAT will be due on goods entering the UK from the EU Member States, which of course includes Ireland.
Consequently, import VAT payments would be due at the Irish border along with possible security checks. This requirement would lead to a financial burden to businesses as well as a perception of a “hard border”, both of which HMRC is keen to avoid. Goods affected include not only those that end their journey in Northern Ireland but goods that move through Northern Ireland en route to the UK.
Import VAT on goods will be accounted for differently depending on whether the business is registered for UK VAT:
Businesses without a UK VAT registration
HMRC will introduce an online service for which non-registered businesses will be required to register so that they can report their import VAT on a quarterly basis. It will not be necessary for them to account for VAT on income.
This new scheme will launch from 12th April 2019 (that being expected to be Brexit day) and the first import VAT return will be due on 1st July 2019.
Registered businesses will have to account for any import VAT due on the goods they move from Ireland to Northern Ireland in their usual VAT return as is their current customary practice.
If you are impacted by the above development or would like further advice on your Brexit strategy, please do contact us for a chat.