The government continues to lay Brexit-related statutory instruments (SIs) in preparation for a possible ‘no deal’ exit from the EU, including a number in the tax area. Since the start of 2019 six VAT-related SIs have been laid, plus three relating to Excise Duty and one relating to Customs.
VAT – postponed accounting
If the UK leaves the EU single market and customs union it will become a third country and supplies of goods crossing international borders will become imports and exports; attracting import VAT and customs/excise duties.
The payment of VAT at the border will have potential cash flow consequences which the UK Government proposes to mitigate, in a ‘no-deal’ scenario, through the introduction of postponed accounting for import VAT. This would shift the VAT accounting and payment away from the border to the VAT return. Postponed accounting would also apply to rest of the world imports, not just those from EU countries. (NB. HMRC have not yet confirmed if postponed accounting will be available in scenarios other than a ‘no deal’.)
SI 2019/60 - The Value Added Tax (Accounting Procedures for Import VAT for VAT Registered Persons and Amendment) (EU Exit) Regulations 2019 (8 pages) contains the regulations for postponed accounting. The regulations will work in a similar way to acquisition VAT, i.e. output VAT declared and input VAT claimed (subject to normal rules) is reported in the same VAT period.
Like most Brexit SIs this is introduced under the ‘negative procedure’, which means it will pass automatically, and without a debate, unless successfully ‘prayed’ against.
Negative SIs become law on the date stated in the SI unless either House annuls (stops) them within a fixed 40-day period. If both Houses are not sitting for a period longer than four days, the time limit will pause. For tax and customs SIs only the Commons can object to them. The process for annulling an SI is that a ‘prayer’ motion is tabled by an MP and the government may choose to either refer the SI to a committee for consideration or schedule time for debate on the SI in the Commons Chamber. In some circumstances the opposition may be able to allocate time to an SI for a debate. Beyond this they may simply use ‘the usual channels’ (meetings of party whips) to put pressure on the government to do so. (Further information here.)
The objection period for this SI ends on 3/3/19. It comes into force on day yet to be named by HM Treasury.
Other VAT SIs
SI 2019/43 - The Value Added Tax (Finance) (EU Exit) Order 2019 (2 pages, negative procedure, laid 17/1/19, objection period ends 25/2/19) extends the VAT exemption on the management of recognised pension funds and removes the restriction on asset type investment for close-ended collective investments so that its management can qualify for exemption. This is to reflect the scope of the exemption as provided for in European law.
SI 2019/59 - The Value Added Tax (Miscellaneous Amendments) (EU Exit) Regulations 2019 (16 pages, negative procedure, laid 22/1/19, objection period ends 3/3/19) mainly removes references to member states/intra-community/acquisition from the legislation.
SI 2019/73 - The Value Added Tax (Tour Operators) (Amendment) (EU Exit) Regulations 2019 (4 pages, affirmative procedure, laid 22/1/19) makes changes to the VAT Tour Operators Margin Scheme that relate to Brexit. This removes references to the European Union. Unlike the other SIs this one will be debated (probably very briefly in committee) and may be voted on, without needing to be ‘prayed against’.
SI 2019/91 - The Value Added Tax and Excise Personal Reliefs (Special Visitors and Goods Permanently Imported) (Amendment) (EU Exit) Regulations 2019 (4 pages, negative procedure, laid 24/1/19, objection period ends 4/3/19) amend two existing Orders to reflect the abolition of acquisition tax and the extension of import VAT to the importation of goods from EU member States; amend the definition of “entitled person” for the purposes of the reliefs; make amendments so that the provisions for the reliefs no longer make a distinction between EU member states and other countries.
SI 2019/105 - The Taxation (Cross-border Trade) Act 2018 (Value Added Tax Transitional Provisions) (EU Exit) Regulations 2019 (4 pages, negative procedure, made 24/1/19, objection period ends not before 4/3/19) make a number of transitional provisions to deal with some of the issues that will arise when amending VAT law in relation to Brexit. These include rules to determine which supplies are made before exit day; provision that the VAT sections of the TCBT Act do not apply to the removal of goods to the UK from a member State of the EU (and vice versa) or an acquisition in pursuance of such a supply where no import duty is chargeable on the goods. While this SI has been ‘made’ it is not clear whether it has yet been laid, hence the uncertainty over the end of the objection period.
2018 VAT SIs
Two VAT SIs were published in 2018 -
SI 2018/1376 - The Value Added Tax (Postal Packets and Amendment) (EU Exit) Regulations 2018 (16 pages, negative procedure, laid 18/12/18, objection period ends 12/2/19) makes provision in relation to the liability to import VAT on the importation of goods from places outside the United Kingdom in postal packets whose contents are valued at £135 or less.
SI 2018/1228 - The Value Added Tax (Disclosure of Information Relating to VAT Registration) (EU Exit) Regulations 2018 (4 pages, negative procedure, laid 27/11/18, objection period ended 22/01/19) allow HMRC to disclose information relating to VAT registration numbers to those enquiring.
SI 2019/13 - The Excise Goods (Holding, Movement and Duty Point) (Amendment etc) (EU Exit) Regulations 2019 (20 pages, negative procedure, laid 15/1/19, objection period ends 23/2/19) revokes provisions specific to movements of excise goods to and from the EU. Other references to EU legislation that are no longer apt are amended and references to EU customs legislation are amended. The Tobacco Products Regulations 2001 are amended to remove provisions relating to deferred payment for UK registered consignees. Part 4 deals with excise goods being imported on exit day.
SI 2019/14 - The Excise Duties (Miscellaneous Amendments) (EU Exit) Regulations 2019 (4 pages, negative procedure, laid 15/1/19, objection period ends 23/2/19) amends secondary legislation relating to excise duty to address failures of retained EU law to operate effectively and other deficiencies arising on Brexit. Includes changes to two Orders so that the same rules on reliefs from fuel duty apply to all travellers entering the UK.
SI 2019/15 - The Excise Duties (Miscellaneous Amendments) (EU Exit) (No. 2) Regulations 2019 (8 pages, negative procedure, laid 15/1/19, objection period ends 23/2/19) amends the following regulations: Excise Warehousing (Etc.) Regulations 1988, Spirits Regulations 1991, Hydrocarbon Oil Duties (Marine Voyages Reliefs) Regulations 1996, Warehousekeepers and Owners of Warehoused Goods Regulations 1999, Excise Warehousing (Energy Products) Regulations 2004, Denatured Alcohol Regulations 2005, Duty Stamps Regulations 2006.
Customs – trade statistics
SI 2019/47 - The Statistics of Trade (Amendment etc) (EU Exit) Regulations 2019 (12 pages, negative procedure, laid 17/1/19, objection period ends 25/2/19) is the only new Customs SI published this year. It replaces an SI laid and then withdrawn in December. It amends existing EU legislation to retain existing obligations to submit Intrastat returns during a transitional period, if agreed.
2018 Customs SIs
Additionally a number of negative procedure SIs were published in November 2018, all of which are now past the end of their objection period. In summary they provide for:
- customs import processes and procedures, including the submission of customs import declarations and applying to be an authorised economic operator
- lodging declarations before goods arrive at specified ports
- applying to use a range of facilitations (special procedures)
- paying, or deferring payment of, import duty
- transit of goods to, through and from the UK
- a penalty regime for non-compliance
The notes on the above SIs are generally taken from the government’s descriptions of them. The government’s Collection page (which also includes links to various bits of guidance – statutory and otherwise – published alongside the SIs) is the best place to go for further information on the SIs. If anyone has technical comments on any of these SIs please technical [at] tax.org.uk (subject: Brexit%20SIs) (get in touch with us).