Brexit tax planning - Customs, VAT & AEO

30 January 2019

30 January 2019 by Alison Horner

Brexit planning essentials for businesses

Businesses that sell and buy from the EU need to have contingency plans in place before 29 March 2019 and they will need to be sufficiently flexible to cope with a variety of possible unknowns.

When the UK leaves the customs union, goods moving into or out of the UK will be subject to customs checks, customs declarations and duty rates negotiated with EU or non-EU countries. In the absence of specific trade agreements with the UK’s trading partners, the default position would be for the World Trade Organisation (WTO) to apply its own tariffs. UK businesses who have not prepared for the possible absence of trade agreements with the EU, in particular, could be faced with unanticipated costs, and supply chain dilemmas which may create vulnerabilities for their business within the post Brexit landscape.


The biggest VAT impact will be the change to Intra-EU trade. At the moment, business to business transactions are zero-rated for VAT purposes. Post-Brexit, such sales will be imports into the EU and subject to EU VAT, which has a number of potential consequences.

On the plus side, there will be no more Intrastat or EC sales lists for UK businesses to complete.

Businesses will however need to consider the following points:

  • Will it be necessary to consider registering for VAT in the EU country to which the goods are being imported?
  • There will be increased freight agent costs of arranging imports and exports.
  • Whilst UK businesses should still be able to recover VAT on overseas expenses, the system is paper based and is a more onerous and lengthy procedure.


Business Brexit Action Point

We pro-actively advise businesses on Brexit planning, including contract review and the most effective place to establish an EU supply chain to take advantage of best practice in the EU. We can assist with local VAT registrations and advise on the most efficient way to deal with recovering VAT on overseas expenses.


Authorised Economic Operator Status

The EU Authorised Economic Operator (AEO) scheme is a voluntary system which was introduced to create a system of ‘legitimate’ businesses identifiable within the international supply chain as being safe and secure. It gives quicker access to certain simplified customs procedures and in some cases the right to ‘fast-track’ shipments through some customs safety and security procedures.

AEO status is for businesses that are actively involved in customs operations and international trade. HMRC has seen a big rise in applications with the UK’s impending departure from the single market. From the point of written ‘acceptance’ of an application, HMRC has 120 days to make a decision regarding whether AEO certification will be awarded to the UK applicant.


Business Brexit Action Point

Our customs duty experts have unrivalled experience with the AEO system and can advise you on all the customs reliefs and procedures available to your business. We can help you to future-proof your business to deal with the demands of Brexit.


The right Brexit experts for your business

We have an experienced team who will approach Brexit with a practical can-do attitude. Our Customs Duty expert is a senior HMRC Brexit strategist and led the Customs team dealing with AEO and Duty suspension regimes.

Please contact Indirect Tax Partner, Alison Horner or Senior Customs Duty Manager, Lucy Sutcliffe if you would like to discuss your Brexit planning strategy.

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