Amid the din and white heat of Brexit, tax has barely featured in the political discussions other than, to some extent, the possibility of new tariffs being imposed.
However, businesses should be alive to the possibility of changes to various tax regimes that may come with Brexit. While a “cliff-edge” exit has for the moment been averted, there is still a lot of ground to cover between now and final implementation of Brexit. So businesses should at least be aware of the areas of tax that may be affected by whatever trade deal is eventually negotiated.
Among the issues that all businesses should be considering:
Have you considered the impact of any non UK purchaser of your exports being required to pay import VAT? What about the additional administration of an export declaration or if you have to register for VAT in an EU member state? Do you make electronically supplied services? If so, you may need to transfer your EU VAT mini-one-stop-shop (MOSS) scheme registration to the non EU VAT MOSS scheme.
If you import goods or materials from an EU state, have you considered the potential impact of the cost of customs duty and input VAT to your business?
If you make exempt supplies of financial services to EU persons, have you considered the possibility of the input tax becoming deductible as such service may become outside the scope instead? Or will all supplies wherever made be deemed exempt with the input tax consequences that brings?
Do you also need to consider the impact of stamp duty reserve tax on any issue of shares or securities (currently dis-applied under the Capital Duties Directive) and which HMRC will be obliged to collect upon the UK’s exit from the EU?
Does your product rely on a particular VAT treatment under EU law? This may cease to apply once the UK leaves the EU. Conversely the UK will then be able to add new classes of goods and services to the reduced rate or zero rate schedules; do you make supplies which may be changed?
If you intend to reorganise your group structure (but have one or more companies based in EEA countries) you may need to consider whether this will trigger charges to tax once the EU Mergers Directive ceases to apply.
These are just a snapshot of some of the tax related issues that businesses need to be considering in the context of hard Brexit.