UK Contemplates Hard Brexit

September 4, 2018 Charles Maniace

While the official position of the UK Government is that "Hard Brexit" remains an unlikely possibility given the mutual interests in reaching a negotiated withdrawal, Her Majesty Revenue and Customs (HMRC) nonetheless remains busy drafting rules and guidance which would come into play should the UK exit as of March 29, 2019. Their latest publication is a summary of the main VAT changes that would affect UK businesses post Brexit.

Of particular note, in the event of "Hard Brexit" the UK would introduce a postponed VAT accounting mechanism, meaning that UK VAT registered businesses importing goods into the UK would be able to account for Import VAT on their VAT Return rather than pay VAT at the border. Deferred or postponed VAT accounting is a common technique use to mitigate cash flow challenge associated with cross-border commerce.

The publication, which can be found here:https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal/vat-for-businesses-if-theres-no-brexit-deal, also contains information explaining how exports to businesses and consumer's located in the EU will be treated as well as the new place of supply rules applicable to the provision of cross-border services.

About the Author

Charles Maniace

Charles Maniace is the Director of Regulatory Analysis at Sovos. An attorney by trade, Chuck leads a team of attorneys and tax professionals responsible for all the tax and regulatory content that keeps Sovos clients continually complaint. Over his 15 year career in tax and regulatory automation, he has given talks and presentations on a variety of topics including The Taxation of High Tech Transactions, The Taxation of Remote Commerce, The Regulatory Implications of Brexit, The Rise of E-Audits, Form 1042-S Best Practices and Penalty Abatement Practices for Information Returns. Chuck is a member of the Massachusetts Bar and holds a BS in Business Economics from Bentley College, a JD from Boston University School of Law, and an LL.M in Taxation from Boston University School of Law.

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