Written by: Keith Tully
Reviewed: Monday 8th January, 2018
Tens of thousands of companies across the UK could soon find themselves having to pay VAT amounts upfront to HMRC on a routine basis.
The prospect has been raised by the chair of a parliamentary committee who has said she will be contacting HMRC seeking clarity about the potential impact of a number of proposed changes to tax-related regulations.
Nicky Morgan, who chairs the Treasury select committee, has explained she wants to know what impact a Customs Bill currently being considered by parliament might have on British companies once the UK is effectively operating outside the EU.
Concerns are that the changes proposed by the bill will leave businesses across the country facing the prospect of paying VAT on products they import from Europe upfront rather than after they’ve sold and receiving income from them.
Currently, goods imported into the UK for sale can be acquired without the need to pay VAT until they’ve been sold but they could soon be regarded for tax purposes as if they’re any other form of import.
The result of the changes is understood to be that companies will soon need to pay VAT on products they import from Europe by the 15th day of the following month, unless Britain were to remain part of the European Customs Union or otherwise redraw the legislation currently being proposed.
“We are beginning to see the reality of how it [Brexit] will bite,” Ms Morgan from the Treasury select committee has said.
The British Retail Consortium (BRC) has expressed concerns about the potential implications for its members of having to pay VAT upfront on imports intended for sale.
“It’s ridiculous to assume that it would be easy to bring forward the timings on such significant amounts of cash,” said Helen Dickinson, the BRC’s chief executive.
The BRC has also expressed concerns about the government’s handling of issues relating to VAT in the context of the UK’s move towards a Brexit transition.
“Retailers need to know what their liability on tax will be, and what measures are going to be taken to avoid this hit to cash flow with new costs on importing goods from Europe and higher potential pressure on prices for ordinary shoppers,” Ms Dickinson said in a statement.
14th February 2019
The bakery chain business Patisserie Valerie has been acquired out of administration by an Irish private equity firm called Causeway Capital Partners.Read More
13th February 2019
The department store operator Debenhams has secured access to a £40 million credit facility that should help it cope with the pressures of its ongoing funding crisis.Read More