Customs and Tax
As it has become known, the Brexit deal has been approved in principle. However, the UK and the EU have to sign the withdrawal agreement for it to become legible. Here are the latest Brexit updates on tax and VAT issues
HMRC have already set-up a web-based support service to prepare business for possible scenarios after exit and advise of further Brexit news.
We wanted to outline some key element of the deal in the attempt to prepare our clients for the future changes awaiting them when the UK leaves.
What will happen when the UK leaves the EU?
Ultimately, the whole of the UK is destined to leave the EU customs union. Leaving it free to enter into trade deals with other countries in the future.
As the whole of the UK is leaving the EU customs union, it will be free to enter into trade deals with other countries. There will be a legal customs border between Northern Ireland and the Republic of Ireland. However, according to the deal the customs border un practice will be between Great Britain and the Ireland of Ireland. The goods will be checked at the point of entry in Northern Ireland.
Regulations on goods
Taken into consideration the above, Northern Ireland. It will be required to comply with the EU regulations of the single market, while the rest of the UK may have different rules.
Therefore, there will not be the need for checks at the Irish border. However, such checks will be introduced between the rest of the UK, as the mainland will not be obliged to sick to the EU single market rules.
Enforcement
Enforcement will be carried out by UK officials at “points of entry into” Northern Ireland. With EU officials having a right to be present and possibly able to overrule UK officials.
At the point of entry into the Northern Ireland, UK officials will carry out enforcement procedures, while EU officials will have the right to be present and even overrule UK representatives if needed.
VAT
Another interesting feature of the revised agreement is the EU law on Value Added Tax. It will continue to apply in Northern Ireland as far as goods are concerned, but not services.
VAT will continue to be the same as in the EU in Northern Ireland. This can lead to the situation when Northern Ireland will have different VAT rates to the ones operating in the rest of the UK.
Transition
According to the current agreement, all the current rules will remain the same during the transition period. This situation will last until December 2020. If the UK leaves the EU, it will lose its membership in all EU institutions, but will continue to pay into the EU budget.
The transition period can be extended for a period of up to two years.
Citizenship Rights
Through the period of transition, the current freedom-of-movement will remain unchanged. All UK citizens in the EU and the EU citizens in the UK will keep their residency and social security rights after Brexit. Further Brexit updates will provide more information.
Money
The UK will continue to pay its membership contributions until 2020. Some of these contributions have already been paid towards 2019 EU budget. Some minor payments will continue until 2060s.
Future Relationships with EU
A political declaration has been issued to address the future of the UK/EU relationship. At the moment it is not legally binding and states that both sides will work towards a Free Trade Agreement. It has been agreed that a high-level meeting will take place in June 2020 to trace progress towards this goal.
The declaration also mentions so called level playing field, which covers the degree to which the UK will agree to stick close to EU regulations.
UK-accountant will be publishing further Brexit updates for their clients. If you require further support, please contact our experts for help.
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