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UK businesses are still “in the dark” over how VAT and duties on imports and exports will work in the event of a No-Deal Brexit, UHY Hacker Young has warned.
The firm added that many UK businesses have only six working days remaining until Brexit, and may return to a “completely different” VAT and duties system in the new year having had no time to prepare for the changes.
It warned that the most difficult challenges faced by businesses will be in the event negotiations ending without a deal secured with the EU. They include:
- Businesses in the EU will have to pay import VAT and duty when buying from UK suppliers, which will make buying from domestic businesses in other EU states far cheaper in many cases
- UK businesses which pay VAT on purchases in an EU country will no longer be able to reclaim VAT quickly via an online portal. They will need to complete a paper form in the country’s local language and send this to the relevant overseas tax office in the post
- Increase in paperwork and inspection requirements to clear goods is expected to “cause chaos” in UK ports and airports
- VAT refunds for overseas travellers leaving the UK are to be scrapped, which could mean that fewer wealthy tourists from overseas are likely to make high-value purchases when they visit the UK
Michelle Dale, senior VAT Manager at UHY Hacker Young, said: “Changes surrounding VAT and duties on imports and exports are completely up in the air. For businesses, there’s only a matter of days for them to take action and it’s still unclear what they will need to do.
“The lack of clarity means businesses can do nothing but wait anxiously and hope for a deal. If there is no deal, UK businesses which trade with the EU will be dealt a huge blow.”
