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EU VAT Refunds after Brexit

VAT-registered businesses can use the VAT refund scheme to reclaim the VAT on business expenses incurred elsewhere in the EU. This obviously works both ways, so if you sell products and services into the EU zone, you do not need to charge VAT, if the recipient is a VAT registered business. We use the VIES API to confirm VAT registration that works really well and will continue to after Brexit. But, what happens in March 2019 when the UK leave the EU customers zone?

It is a question that I looked into a couple of week ago, as we have a number of bespoke ERP systems and e-commerce websites that may need changes prior to next year and wanted to get ahead of the game, to ensure our clients are not effected by the changes.

We've recently completed a plug-in for the Australian Goods and Services Tax (GST) and that prompted my initial curiosity.

So, I started with some searched using my favours search engine and found an article on HMRC published in August this year.

VAT for businesses if there's no Brexit deal

Obviously HMRC are aiming for continuity, but will they be able to achieve it? We simply do not know at this stage and it is interesting they have added a link to the following guidance notice:

Trading with the EU if there's no Brexit deal

There's a lovely paragraph towards the end of the first guidance note:

"This note summarises the main VAT issues for UK businesses in the unlikely event the UK leaves the EU without a deal. Some detail is not yet available but further information will be provided in due course."

Obviously, after yesterday's announcements of the prime ministers draft deal, we'll have to wait and see what actually happens with VAT after Brexit, but I am surprised that accountants are jumping up and down about this, as well as numerous other issues like Making Tax Digital (MTD) that I wrote about yesterday.

Other reading

You might also find the following article of interest: A Brexit Risk Assessment for UK-only businesses.

Date: 21/11/2018

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