If you’re a small business you’ve probably come across the term ‘omnichannel’ whilst building your business strategy. Even if you haven’t, you’re likely already implementing it.
On Thursday 15th February Currencies Direct and Avalara presented a webinar aimed at helping the UK’s online sellers make the most of international business opportunities before and after Brexit
Take a look at the recording for:
• When and how will the UK leave the EU?
• Deal, Norweigan deal or No deal? (What will a UK-EU trade deal really look like?)
• What will you need to do to stay tax compliant after Brexit?
• How can you prevent a weak pound having a negative impact on sales?
Below, Avalara share the latest on Brexit’s impact on business tax and compliance…
A Brexit trade deal – are we running out of options?
The future trading model for post-UK Brexit looks as unresolved as on the 23 June 2016 referendum. Indeed, with the membership of the Single Market and Customs Union ruled out, the options are shrinking. This won’t begin to become clear until the second half of the year progresses, and the Free Trade Agreement talks get going. A 2-year+ transition agreement, or a temporary revocation of the Article 50 exit, is likely, which would keep the UK within the EU VAT Directive and ECJ’s reach.
But companies are now starting to plan for Armageddon – a hard Brexit onto WTO rules, including the full imposition of import and export VAT on EU trade. This could have severe cash flow effects on companies selling or buying from Europe. We expect the UK government to be creative in this area, perhaps introducing an import VAT deferment scheme.
In anticipation of Brexit 1 in 12 businesses are now planning to reduce their business in the UK compared to just 1 in 50 in 2016
93% of respondents believe EU VAT changes following Brexit will affect their business. Despite the near-unanimous agreement on the risk, 53% of businesses admit they have not started planning for this impact of Brexit “at all”, with 1 in 10 saying Brexit won’t happen – approximately the same proportion as in 2016.
“Without any progress on a Free Trade Agreement, companies are being forced to assume the worst news on potential VAT and customs requirements post Brexit,” commented Richard Asquith, VP Global Indirect Tax, Avalara.
UK Brexit Customs and VAT Bill
Earlier this month the UK Parliament has its second reading of the Taxation (Cross Border Trade) Bill, which lays the ground for the post-Brexit Customs, VAT and Excise regimes
The Bill is being presented prior to the conclusion of future relations with the EU after Brexit. It is therefore being constructed to enable modification once the outcome of these negotiations are known. One component of the bill is for the imposition of 20% import VAT.
VAT is an EU competency, and the UK VAT Act mirrors the EU VAT Directive. This has been highly productive in promoting the cross-border sales of goods and services within the EU.
The principle change post-Brexit, is the abolition of zero-rating of EU VAT on imports (acquisitions) and exports (dispatches). This means that importers will have to pay VAT at the time of clearing the goods into the UK from other EU states. The 20% import VAT will then be refundable in the company’s next VAT return – so this will create a cash flow delay problem.