The UK effectively left the European Union from 1 January 2021, after which there have been significant changes to the VAT and Duty rules that apply to trade between the UK and the EU.
The full implementation of many changes were deferred for at least 12 months, and the UK government are still in the process of agreeing some of the rules under which the UK will ultimately trade with the EU..
Although a number of reliefs and deferment processes were introduced, goods moved between the UK and the EU are now potentially subject to Customs Clearance procedures (both in the UK and in EU countries) and import duties and import VAT are potentially payable on many types of goods moved between the UK and the EU (and vice versa).
Compliance burdens are also expected to increase significantly.
There are also other significant changes to how VAT applies to cross border trading (both goods and services) as VAT simplifications that business have relied on over the years have disappeared.
Sectors that are being significantly affected are:
- Online retailers and other online suppliers
- Online service providers (particularly providers of ‘electronic services’)
- Travel and tourism
This list is not exhaustive and Brexit is having an impact on most businesses.