2. Indirect tax and brexit
Andy Ilsley, RSM UK
11 March 2019

3. Introduction
What is Europe?

4. EUROPEAN UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia

5. EUROPEAN UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia
EURO ZONE

6. EUROPEAN UNION
San Marino
Andorra
Turkey
Monaco
EU CUSTOMS UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia
EURO ZONE

7. EUROPEAN ECONOMIC AREA
Liechtenstein
Iceland
Norway
EUROPEAN ECONOMIC AREA
EUROPEAN UNION
San Marino
Andorra
Turkey
Monaco
EU CUSTOMS UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia
EURO ZONE

8. EUROPEAN FREE TRADE ASSOCIATION EUROPEAN ECONOMIC AREA
Liechtenstein
Iceland
Norway
EUROPEAN ECONOMIC AREA
Switzerland
EUROPEAN UNION
EURO ZONE
San Marino
Andorra
Turkey
Monaco
EU CUSTOMS UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia

9. EUROPEAN FREE TRADE ASSOCIATION EUROPEAN ECONOMIC AREA
Liechtenstein
Iceland
Norway
EUROPEAN ECONOMIC AREA
SCHENGEN AREA
Switzerland
EUROPEAN UNION
San Marino
Andorra
Turkey
Monaco
EU CUSTOMS UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia
EURO ZONE

10. EUROPEAN FREE TRADE ASSOCIATION EUROPEAN ECONOMIC AREA
COUNCIL OF EUROPE
Albania
Bosnia Herzegovina
Moldova
Montenegro
Macedonia
Serbia
Republic of Kosovo
Azerbaijan
Georgia
Ukraine
Armenia
Russia
Liechtenstein
Iceland
Norway
EUROPEAN ECONOMIC AREA
SCHENGEN AREA
Switzerland
EUROPEAN UNION
San Marino
Andorra
Turkey
Monaco
EU CUSTOMS UNION
Estonia
Cyprus
Finland
Luxembourg
Austria
Greece
Malta
Slovenia
Slovakia
Lithuania
Ireland
Belgium
Italy
France
Netherlands
Portugal
Spain
Germany
Latvia
United Kingdom
Czech Republic
Denmark
Hungary
Poland
Sweden
Romania
Bulgaria
Croatia
EURO ZONE

11. What could Brexit mean for indirect tax?
For UK importers and exporters
For freight companies
For HM Revenue & Customs

12. Brexit impact Customs declarations for EU shipments
Potential customs duty and VAT costs
Businesses exposed to customs procedures for first time
Pressure on distribution supply chains
Trade agreement?

13. The perfect storm? Brexit 29 March 2019
Additional 180,000 businesses to make customs declarations
Full introduction of CDS March 2019
CDS designed for 55 million declarations
CDS tested to 180 million declarations
CDS may need to deliver 255(*) million declarations (* per NAO)

14. Case study
Shoe importer exploring Brexit impact and mitigation

15. UK Importer – current position
GSP
Reduced duty
Asian manufacturer
UK Co
Import and
distribution EU
EU Manufacturer
GSP
Free rate
of duty
Asian
manufacturer EU
Customers
Non-EU
Customers

16. Portuguese Manufacturer
UK Importer – post Brexit
UK Co
Import and
Distribution
Asian
Manufacturer
No GSP
Full duty
Portuguese Manufacturer
Full duty
Asian
Manufacturer
No GSP
Full duty EU
Customers
Full duty
Non-EU
customers EU

17. import and distribution function
UK Importer – suggested solution
UK Co EU
import and distribution function
(Netherlands)
Asian
Manufacturer
No GSP
Full duty
EU manufacturer
Full duty
Asian
Manufacturer
No GSP
Full duty EU
Customers
Full duty
Non-EU
customers EU

18. What are the VAT implications of Brexit?

19. Current Situation
VAT is charged on the consumption of goods and services in the EU.
VAT is payable by businesses involved in the chain of supply
Goods exported from the UK to third countries and to businesses in the EU are generally zero rated supplies
Goods sold B2C to EU countries are generally taxed in the UK or in the local country depending upon whether the distance selling threshold has been breached.
VAT is declared on services in the country where the place of supply takes place.
UK businesses benefit from certain central solutions for EU VAT such as distance selling, MOSS, TOMS, EU VAT refunds portal, VIES.

20. Post-Brexit Impact Preparations for ‘no deal’
HMRC have issued guidance to 145,000 businesses trading only with the EU
EU VAT refunds – identify and claim before 29 March
EORI numbers and Transitional Simplified Procedures
UK MOSS registration to be cancelled and re-application made within 10 days elsewhere in EU
‘Postponed accounting’ for Import VAT
Stockpiling of goods in UK or EU
Fiscal Representation required for EU VAT registrations

21. The UK will continue to have a VAT system after it leaves the EU
The UK will continue to have a VAT system after it leaves the EU. The revenue it provides is vital for funding public services.
HMRC
September 2018

22. What to consider?
Will you be able to adopt postponed accounting easily?
Do you supply B2C and rely on distance selling regulations?
Will a distribution warehouse in the EU simplify your supplies and maintain your access to EU simplifications such as triangulation?
Can you utilise an EU stock holding to leverage a benefit under the distance selling regulations?
Do your sales terms leave you a requirement to register for VAT in other member states? Should you consider changing?
Are your contracts properly ‘Brexit proof’?
PLEASE DON’T FORGET MAKING TAX DIGITAL WILL APPLY IN THE UK FROM 1 APRIL 2019.