Buying print after a “no deal” Brexit
Recently they government released information about the repercussions of a “no deal” Brexit. This information covered the changes affecting goods bought from other EU countries. If there isn’t a deal with the EU, buying print (and other goods) from an EU country gets more difficult.
At present this is straightforward because of the EU single market. For example a customer in the UK places an order for printed matter with a firm in Spain. This involves the following:
- arranging the transport to the UK
- receiving a Spanish invoice without VAT
- applying the ‘reverse charge’ procedure to the invoice. This has a neutral effect on cashflow.
This changes if there isn’t a deal with the EU. The simplicity outlined above is replaced with a more complicated system because after 29th March 2019 import procedures will apply to goods bought from EU countries.
How procedures will change
By way of example, in April 2019 the customer makes another order for printed matter from its Spanish supplier. The steps for VAT purposes will then be as follows;
- arranging transport to the UK
- the Spanish will still invoice without VAT but now because they are exporting goods to outside the EU
- A customs entry must be filed when the goods are imported into the UK. In practice UK firms normally engage an import/export agent to do this
- Any import duty must be paid or arrangements to pay must be made before the goods can leave the port
- VAT will be accounted for under postponed accounting very much like the current ‘reverse charge’ procedure.
There is extra bureaucracy and cost for the UK customer because of having to comply with customs procedures. There is also concern that by March 2019 the Border Agency cannot be ready with the extra resource and technology needed to deal with a very large increase in imports.
The repercussions for services bought from or sold to EU businesses are not as significant. Claiming back VAT incurred in another EU country will change as it necessary to apply as a non-EU business.
Another niggle concerns checking UK VAT numbers. Currently this can be done using the EU VAT Registration Number Validation but if there isn’t a deal UK numbers will be deleted from this resource. As a replacement HMRC is developing its own on-line portal for verifying UK VAT numbers.
If you have any questions feel free to contact us.