Following the news that Boris Johnson managed to secure a new Withdrawal Agreement with the EU last week, the battle to get his new deal through a divided parliament has yet to be won. With all this uncertainty, a no-deal Brexit on 31 October can still become a reality and therefore it is something EU businesses should be prepared for.
Currently, European businesses benefit from simplified rules that save them from having to register in different EU member states. From a UK perspective, these rules will disappear once the UK has left the EU. Her Majesty’s Revenue and Customs (HMRC) has announced arrangements by which EU businesses can apply for UK VAT registration in anticipation of a no-deal UK exit on 31 October 2019 which would then be cancelled if a deal is reached.
The current arrangement means overseas businesses do not have to register for VAT in certain scenarios, for example where stock is held in the UK and owned by the overseas entity until the point that the UK customer allocates this stock into its own inventory, sometimes called ‘call off’ stock.
To help EU businesses plan for a no-deal exit, the HMRC’s temporary arrangements would enable them to VAT register in the UK in advance of 31 October. These registrations would take effect from 1 November and would be cancelled if, and when, exit terms are agreed. The format of applying for these registrations is slightly different to a normal VAT registration application.
With 31 October 2019 fast approaching, clients and targets should already be thinking and planning for the potential impact of a no-deal departure on their supply chains and EU VAT registration requirements.
Similarly, UK businesses with activities and goods movements outside of the UK should review their supply chains and terms of trade. This will help them assess the impact on their overseas EU VAT compliance responsibilities and allow them to take action if a no-deal exit happens on 31 October.
For more information regarding registration requirements, please contact Andy Ilsley at firstname.lastname@example.org.