There are lots of speculations around what would happen on the 29th March 2019 for the UK. There are 2 possible scenarios remaining:
- No Deal Brexit divorce happens on the 29th March.
- Article 50 is extended and Brexit is delayed or called off completely (seems to be the most likely scenario)
Option 1 (the ‘No Deal’ scenario) would be complex for VAT. In this case, the UK leaves the customs union and single market and no longer adopts the European VAT directive meaning a somewhat chaotic situation for VAT. Import VAT would have to be paid on all shipments not subject to any newly implemented deferment. There would be difficulty moving goods around Europe to the UK and vice versa (due to increased administration and border checks).
UK businesses might need VAT registrations in several EU countries or will possibly have to start new legal entities in other EU countries. Please contact us if you need more information and help in this regard at firstname.lastname@example.org.
Most significantly, for UK businesses, the 8th Directive would become the 13th Directive for cross-border VAT refunds between the UK and EU.
Option 2: A likely delay of Brexit would provide no certainty in terms of VAT but probably a less hectic deadline for businesses to adapt. If Brexit is delayed all VAT rules and regulations stay the same in the interim but eventually, some kind of deal would need to be reached. For many, this means the UK remaining bound to the EU VAT directive regardless of what may be agreed in terms of the single customs market. In this scenario, the VAT implications would be simpler.