How will Brexit actually affect your business?

28 June 2016

Although it may take two years to leave the European Union, businesses need to start thinking about how they will be affected by the changes.

Reporting obligations

Let’s start with the good news. If you dislike the reporting obligations that come with the existing free EU trade agreement, then you will be pleased to hear that the EC sales list and monthly intrastat reporting may well be a thing of the past.

Business-to-business transactions

The EU is Britain’s largest trade partner. As a non-EU member, Britain will need to negotiate new trading arrangements with the EU that will replace the existing free trade arrangement.

  • Imports – VAT and duty may be levied on the arrival of goods into the UK from the EU. This raises an important issue about import duty, since it is not reclaimable. This could force UK businesses to increase their prices, making them less competitive as a result.
  • Exports – All goods directly exported from the UK will be zero rated, but the customer will be charged import VAT and duty on arrival into their country. UK exporters may find that their customers choose to buy from competitors in the EU to avoid having to pay these import duties.

Business-to-customer transactions

It is almost certain that Britain will no longer be part of the distance selling arrangements within the EU. If a UK business sells to customers in other EU Member States, there may be a requirement for immediate VAT registration in that country. This will depend on the rules in each of the Member States concerned, and will affect all businesses that sell directly to the customer, such as mail order companies, internet trading platforms, etc.

Further questions?

As part of our international network, UHY, we have offices in all major European countries and are well placed to seamlessly assist with EU VAT applications. If you require further information, or have any questions relating to these changes, please contact Michelle Dale or a member of the team.