1 May 2019
VAT registration for EU businesses with ‘intending traders’ status preparing for a ‘no-deal’ Brexit outcome
The CIOT contacted HMRC to raise the difficulties encountered by EU businesses preparing for a ‘no-deal’ outcome, by applying for VAT registration in the UK as an ‘intending trader’, effective from Brexit date. This arises where the EU VAT simplification that relieves the current obligation to be registered in the UK is no longer available and the EU supplier will become responsible for accounting for VAT in the UK. HMRC responded as follows:
‘Businesses in the position you have described can register for VAT using the Advanced Notification facility, by registering online requesting a voluntary registration from an advanced date of 1 November 2019. In the ‘business activity’ section they should enter trade class/SIC code 99000 European Community. In the free text box they should describe accurately what the business does and ensure there is a positive amount entered in the ‘taxable turnover in the next 12 months’ box. If this is not done the application will be rejected. This information will enable the VAT Registration Team (VRT) to identify and actively manage any registration that is conditional on the UK leaving the EU without a deal.
If there is a change to the date of withdrawal from the EU, the VRT will amend the Advanced Notification date to match this new date. If the UK enters a transitional period or agrees a deal with the EU that allows current arrangements to continue then the registration will be cancelled. The approval of an Advanced Notification registration in these circumstances is only made as a contingency for the UK leaving the EU without a deal and the VAT number may not be used unless that happens. The business will receive an automated notification of an Advanced Notification VAT Registration and the VRT may follow this up with a manual letter to further explain the conditions and both.
With the UK having agreed an extension to the date of withdrawal from the EU, we would not expect businesses to use this facility until closer to the 1st November.’
12 March 2019
Legal Opinion on Joint Instrument and Unilateral Declaration concerning the Withdrawal Agreement
The Attorney General wrote to the Prime Minister setting out his legal opinion on the Joint Instrument and Unilateral Declaration concerning the Withdrawal Agreement.
6 March 2019
GOV.UK released an update on import VAT if there is no deal. It sets out how to account for import VAT and recover input tax under postponed accounting, and also contains a summary of the changes to four boxes on the VAT return:
Accounting for import VAT
If you’re a VAT-registered business find out how to account for import VAT on all goods brought into the UK if the UK leaves the EU with no deal.
HMRC further reminders and information on no deal Brexit
HMRC have asked us to share the following information which has been provided to help businesses prepare for the possibility of the UK leaving the EU without a deal. Originally this was for the 29 March 2019 deadline, which has subsequently been extended to 31 October 2019. The UK may leave before this date if the withdrawal agreement is ratified by the UK and the EU, in which case a transitional period will apply and the current VAT, duty and excise rules would remain in place until an agreed future date, which should be no later than 31 December 2020.
Actions to take
First, any trader who trades with the EU will need to register for an UK Economic Operator Registration and Identification (EORI) number. UK traders will need one to continue trading with the EU. You can register for one here.
Those appointing a customs agent should do this as soon as possible. If you’re not, and you intend to import or export regularly, you should:
- Ensure someone in your business is trained to make customs declarations.
- Buy specialist software that links to HMRC’s customs systems
- If you’re exporting, register for the National Export System
Making importing easier
The government also announced steps to make importing from the EU easier in the immediate aftermath of the UK’s departure. For at least 15 months after we exit, the Transitional Simplified Procedures (TSP) will allow businesses to import from the EU without having to make a full customs declaration at the border, and will be able to postpone paying any import duties.
You can register for TSP here. You need an EORI number to be able to do so.
Another measure to give businesses more time to prepare for a possible no deal EU Exit are the government’s plans to phase in Entry Summary Declarations. Currently Entry Summary Declarations, containing Safety and Security information, are not required when importing goods from the EU, but this will change if the UK leaves without a deal.
HMRC have decided that for the first 6 months, declarations won’t be required. They will continue to apply for trade from the rest of the world. After 6 months, carriers will be legally responsible for ensuring Entry Summary Declarations are submitted pre-arrival to HMRC at the time specified by mode of transport.
Common Transit Convention (CTC)
CTC allows goods to move between the UK, EU countries and other CTC countries under “duty suspension”, meaning that duty does not need to be paid until goods arrive at their final destination.
The benefits to businesses include cash flow benefits and keeping movement of goods flowing quickly. Under CTC, movements must:
- Start from an ‘office of departure’, (a government office), or at your own or an agent’s premises if you or they are an authorised consignor.
- Pass through an ‘office of transit’ to record the entry into the new country when the goods cross into a new customs territory (ie. the first entry in to the UK from a CTC country).
- End at an ‘office of destination’, (a government office), or at your own or an agent’s premises, if you or they are an authorised consignee. You must then enter the goods into another customs procedure, or into free circulation.
Offices of Destination and Departure are likely to be extremely busy in the event of a No Deal exit from the EU. You should consider finding an authorised consignor/consignee or applying to become one.
More information on CTC can be found here.
You may know the government announced an £8 million investment in training and increased automation to support the customs intermediaries sector.
Part of this investment, a £5 million grant scheme, opened in December 2018 to provide funding for customs intermediaries and traders who complete customs declarations.
So far more than £2 million has been requested. If you are yet to apply, we would encourage you to submit your applications soon. In particular we would like to encourage applications from traders and intermediaries looking for grants towards funding the cost of training their staff. Further information on the grant scheme can be found on GOV.UK.
The remaining £3 million is being invested to increase training provision in this area. This includes the development of a new modular training course, which is now available. The course, developed by e-learning specialists Brightwave in collaboration with key industry partners, has been specifically designed to develop the skills needed to complete customs declarations accurately and efficiently.
More information on this new course is available on the website. This includes details of what the course covers, as well as directing prospective learners to the five organisations who are delivering the training over coming months so they can choose the option that is right for them.
Finally, a reminder that the latest edition of the Partnership Pack has a number of communications resources for you to share with your clients to help them prepare for EU Exit.