Brexit – What do you need to do for VAT?
Brexit Checklist – UK Companies
As it stands at present, the United Kingdom is set to leave the EU on the 31st October 2019, albeit this is subject to change. The UK Government has, however, provided guidance on what should be done in preparation for this departure, in case there is no deal negotiated:
‘For most UK businesses there will be no change to VAT rules. UK businesses that are affected may wish to consult other relevant technical notices, including the
Trading with the EU if there’s no Brexit deal notice, which covers customs, excise and import processes at the border.’
A summary of the steps a UK business need to make for trading with the EU after Brexit are below:
|Importing into UK from EU||Exporting From UK to EU|
|Step 1||Make sure your business has an EORI number that starts with GB||Step 1||Make sure your business has an EORI number that starts with GB|
|Step 2||Decide who will make the import declarations||and||Check your importer has an EU EORI number|
|Step 3||Apply to make importing easier||Step 2||Decide who will make the export declarations|
|and||Set up a duty deferment account if you import regularly||and||Decide if you want to export your goods using transit|
|Step 4||Check the rate of tax and duty you’ll need to pay||Step 3||Check the rate of tax and duty for your goods|
|Step 5||Check what you need to do for the type of goods you import||Step 4||Check what you need to do for the type of goods you export|
|Step 5||Find out how changes to VAT will affect you|
|Step 6||Decide who will transport your goods outside the UK|
The UK Government also provides a tool to prepare your business for Brexit, which covers additional areas, such as data protection and employment, and industry-specific guidance at the following webpage: Prepare your business or organisation for Brexit.
The British Chambers of Commerce has also created a free downloadable checklist here, which also gives advice and links to relevant technical notices.
Brexit Checklist – EU Companies
**For EU businesses that trade with the UK**
If the UK Leaves the EU without a withdrawal agreement, the UK will be treated as a Non-EU country just like any other country outside the EU. This is due to the withdrawal agreement tabling a transition period for EU trade with the UK. Without this transition period, trade relations with the UK will be governed by WTO rules.
A No-Deal Brexit will affect an EU Company if:
- it sells goods or supplies services to the UK, or
- it buys goods or receives services from the UK, or
- it moves goods through the UK
- It has a MOSS (Mini One Stop Shop) registration that is submitted under the UK tax authority.
The EU Commission has a Brexit checklist for traders which details the steps an EU Company should take, a summary of which is below:
|ASSESS whether your business trades with the UK or moves goods through the UK.|
|If it does:|
|REGISTER your business with the national customs authority, if you have not done so for trading with non-EU countries.|
|ASSESS whether your business is ready to continue trading with or via the UK by having the necessary:|
|·||human capacity (staff trained in customs matters);|
|·||technical capacity (IT systems and others); and|
|·||customs authorisations, such as for special procedures (storage, processing or for goods under the “specific use” rule).|
|ENQUIRE with your national customs authority about the existing customs simplifications and facilitations that are available for your business, such as:|
|·||simplifications for transit procedures.|
|·||comprehensive guarantees, with reduced amounts or waivers;|
|·||simplifications for placing goods under a customs procedure;|
|CONSIDER applying for an Authorised Economic Operator (AEO) status from your national customs authority.|
|If you are registered for the VAT Mini-One-Stop-Shop in the UK, REGISTER in an EU27 Member State.|
|If you have paid VAT in the UK in 2018, SUBMIT your VAT refund claims sufficiently in advance of the withdrawal date for them to be processed before that date.|
|TALK to your business partners (suppliers, intermediaries, carriers,…) as Brexit might also impact your supply chain.|
The Brexit checklist for traders also provides additional guidance notes and guidelines includes a fact sheet on the ‘
Seven things businesses in the EU27 need to know to prepare for Brexit’ which includes non-customs related preparations.
How Does Brexit Affect the Innovate Tax Solution?
For all clients using the Innovate tax solution, the changes can be split into 2 areas.
- For those clients that trade with the UK but do not have a VAT registration in the UK
A change will need to be made the tax zone for the European Union to add the Brexit date to the United Kingdom record as an end date. This from a tax calculation perspective will set the United Kingdom as being out of the EU. If you have our maintenance contract, then we will provide this change as part of your maintenance.
- For those clients that have a UK VAT registration (GB VAT)
The changes here are not quite as straight forward and depends on the outcome of any decision made.Once the date of the UK’s departure from the EU has been confirmed, Innovate Tax will provide details on how this change will be made to your solution. It is not a simple case of ‘end-dating’ any rules as there will be a transition period where invoices received after Brexit may have the old EU treatment or the new non-EU treatment. Innovate Tax has a solution ready to deploy depending on the confirmed data and the confirmed exit approach (with or without a deal).
Regardless of the actual date, we can start looking at your current tax solution and identify what changes are needed and even apply the expected changes in a test instance should you wish to test them in advance.
Please Note: whilst Innovate Tax can suggest the changes that are needed to the configuration, the Client (you) is responsible for these changes, so our advice is to confirm these with your Tax Advisor.
If you wish to find out more, including how to make changes to a test instance now so you can test your tax solution prior to any confirmed announcement, please raise a support ticket via our support portal.
What Areas Will Need the Change?
Innovate Tax Reporting
Our standard and enhanced reports should not need any changes as they are based on the tax rates determined.
Clients with no GB VAT tax regime but trade with the UK
We will need to make a simple change to the tax zone to change the tax treatment.
Clients with a GB VAT tax regime
There will be several changes to the tax logic to ensure that the tax is properly treated and will handle any transition period where the older EU tax treatment will still be valid including for credit notes issued or received.
Steps to Make the Changes
- Raise a ticket with Innovate Tax through our support portal providing the following information:
- Details of your current setup, including which tax regimes you currently have installed
- The version of Oracle you are using
- The instance in which you wish to make the changes
- The instances and path to production you will want to use, TESTàPROD
- Whether you have our core solution or have an enhanced or custom solution – if you are unsure, we can check for you
- Make us aware whether anyone – other than the Innovate Tax team – has made changes or done any set up
- Preferred dates to carry out the work
- We will need to set a quick meeting with you to check what is needed. Please note that:
- any changes to standard core logic will be covered by Maintenance Agreement (where provided)
- any changes to non-core logic will be carried out through your Enhanced Support Hours (where in place and account invoicing is within terms)
- You will then provide the appropriate access to your instances
- The Innovate Tax team will make the changes to the test instance
- You test that these changes work
- Innovate Tax team will make the changes to production.