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Brexit: VAT Review

The Withdrawal Agreement has finally got the backing of the MPs and has passed to the House of Lords.  We are due to leave the EU on 31 January 2020 and as part of the Withdrawal Agreement we will enter into a transitional period which ends on 31 December 2020.  During this period, businesses should continue to follow EU VAT and duty rules as normal.

During the transitional period the UK and the EU will try and negotiate a trade deal, with any agreed trade deal intending to commence on 1 January 2021.  If we fail to agree a trade deal in time, we will trade with the EU without a trade deal which likely means higher duty costs for goods entering the UK from the EU and vice versa.

Separate to the trade agreement is the solution for the border between Northern Ireland and Ireland which was the main point of contention in the Withdrawal Agreement.   Although the UK will leave the EU's customs union, there will be a customs/regulatory border between Northern Ireland and Great Britain.  Therefore, certain goods (which are yet to be defined), will be subject to import duty and import VAT when they move between Great Britain and Northern Ireland.  If the goods remain in Northern Ireland and do not move to Ireland, these charges will be refunded.  The process for this has yet to be determined.

If you have any questions in relation to the above, please contact our VAT partner:

Written January 2020.

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    To discuss this feature further please contact Alison Birch: