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The impact of Brexit on indirect tax

This page details the indirect tax changes which could arise as a result of Brexit. These impacts are largely based on a No Deal scenario and the UK Government’s draft legislation. Content will be updated to reflect any significant changes in the legislation or political landscape.

Use the filters below to explore the changes, their inbound/outbound effects and our viewpoint. The content has been prepared for informational purposes only - please seek tailored advice from your EY team or one of the contacts listed below.

For Brexit developments and analysis, read weekly VAT news or visit our Brexit hub.

 
 
  • B2C freight transport

    Original legislation reference

    Value Added Tax Act 1994, Schedule 4A, paras 11 and 12

    Current status

    For intra-EU B2C freight transport the place of supply is where transport begins.

    Effect

    Transport between the EU and UK will no longer be intra-EU and so the original legislation will not apply. Instead the place of supply will be in each country the transport goes through. The supply will qualify for zero-rating within the EU but this will not necessarily remove an obligation to register in the countries concerned.

    The value of the transport service will be included in the value on which import VAT is calculated.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, the supply of freight transport services may be treated as where the journey takes place. There may be an obligation to register in each country through which the transport travels. The value of the transport service will likely be included in the import value.

  • B2C services to customers in ‘third countries’

    Original legislation reference

    Value Added Tax Act 1994, Schedule 4A, para 16

    Current status

    For the supply of certain services to non-taxable persons established outside the EU the place of supply is where the customer belongs. These services are as follows:

    – Transfers and assignments of copyright, patents, licences, trademarks and similar rights,
    – Advertising services,
    – Services of consultants, engineers, consultancy bureaux, lawyers, accountants, and similar services, data processing and provision of information, other than any services relating to land,
    – Banking, financial and insurance services (including reinsurance), other than the provision of safe deposit facilities,
    – The provision of access to, or transmission or distribution through a natural gas system situated within the territory of a Member State or any network connected to such a system, or an electricity system, or a network through which heat or cooling is supplied. As well as the provision of other directly linked services,
    – The supply of staff,
    – The letting on hire of goods other than means of transport.

    Inbound effect

    The supply by EU suppliers of these B2C services to UK customers should not be subject to EU VAT.

    Outbound effect

    There may be uncertainty as to whether a supply by UK suppliers of these B2C services to EU27 customers is outside the scope of UK VAT – depending on how the existing UK legislation is interpreted/amended.

    Commentary

    This change simply reflects the fact that the UK will become a “third country” for VAT purposes.

    Please note that certain services may be subject to use and enjoyment overrides, these vary depending on the country in question. For information on the UK position, please see the ‘Use and enjoyment provisions’ section below.

  • B2C Telecommunications, Broadcasting, Electronically Supplied Services and MOSS

    Original legislation reference

    Value Added Tax Act 1994, Schedule 4A, para 15 (place of supply); and Section 3A and Schedule 3B (MOSS)

    Current status

    B2C telecommunications, broadcasting and electronically supplied services are taxed in the country where the customer is established or resides. EU sales trigger VAT registration obligations in each Member State, but Union or non-Union Mini One Stop Shop (MOSS) scheme simplifications are available.

    Inbound effect

    The UK will no longer be part of the VAT MOSS system. This means non-UK businesses will no longer be able to account for UK VAT due on their UK sales via a MOSS registration. Equally they will no longer be able to register and base their MOSS registration in the UK with HMRC collecting and passing on the VAT due to other EU Member States on their behalf. Businesses may still have the option of registering for MOSS in another EU country.

    Non-UK businesses supplying any digital services to a UK consumer will need to register for UK VAT. The current €10,000 threshold for cross-border sales of digital services will no longer apply.

    You’ll need to follow HMRC’s VAT correction process to correct a UK VAT figure submitted in a previous MOSS return. You have up to 4 years from the end of the period relating to that return to do this.

    Outbound effect

    UK companies will no longer be able to use the Union Scheme based out of the UK. If they have other EU establishments, the Union Scheme will need to be moved to one of these Member States. If the UK is the only establishment for VAT purposes, they instead must register for the non-Union Scheme in an EU27 Member State. The non-Union scheme was previously only available where the supplier had no other VAT registrations in the EU, but this criterion was removed from 1 January 2019 so UK suppliers should have unfettered access to the non-Union Scheme.

    Where telecoms, broadcasting and electronically supplied services are supplied on board intra-EU passenger transport there is a rebuttable presumption that the customer is deemed to be resident in the Member State of departure. There is no similar presumption for international passenger transport, so suppliers will need to determine each customer's actual place of residence.

    HMRC has recently released an Order making provision to repeal the changes which came into effect on 1 January 2019 in relation to the place of supply of digital services in the event of a no-deal Brexit. The Order amends Schedule 4A VATA94, removing the low value place of supply simplification which applies where cross-border digital sales are less than £8,818 p.a. Therefore, any B2C supplies of digital services made by a UK business after leaving the EU would be taxable based on the customer’s location.

    Commentary

    For UK businesses supplying digital services to non-business customers in the EU, the ‘place of supply’ will continue to be where the customer resides. Local VAT will be due in those EU27 Member States. In the event of the UK leaving the EU without an agreement, UK businesses should be able to register for the MOSS non-Union scheme in a different EU27 country.

    Similarly, UK VAT will be due on digital services supplied by non-UK businesses to UK customers, and a UK VAT registration required to remit this.

    Non-EU businesses currently registered for the MOSS scheme, with the UK as a Member State of Identification, would need to register for the VAT non-Union MOSS scheme in an EU Member State to account for VAT on other EU sales. The non-Union scheme requires businesses to register for MOSS by the 10th day of the calendar month following the first sale. The MOSS registration will be backdated to the date of the first sale.

    UK businesses registered for Union MOSS in the UK will not be able to apply for MOSS elsewhere in EU27 (Union or non-Union) until Brexit (i.e. after 29 March).

    If they make any relevant sales on 30-31 March, they will need to register for their new non-Union MOSS (in another EU27 country) by 10 April, and submit their first new return on 20 April. This is a very short timeline, and there could be delays and a backlog if lots of applications are received on 30 March.

    (From 1 January 2019, businesses established outside the EU making supplies of digital services to EU consumers may register for the non-Union scheme even if they are registered for VAT in the EU for other reasons).

    The removal of the low value place of supply simplification in the event of a no-deal Brexit means that all UK businesses supplying B2C digital services cross-border into the EU will need to consider their registration requirements, and the possibility of registering under the non-Union MOSS scheme.

  • Call-off stock simplification

    Original legislation reference

    EU VAT Directive, Articles 14 and 20

    Current status

    Customer accounts for acquisition tax according to the acquisition tax point applied by the Member State.

    Inbound effect

    Call-off stock sent from the EU to the UK will give rise to an importation. If the EU Co acts as importer, its supply to the customer will take place in the UK. EU Co will have a liability to register in the UK.

    The issue will not arise if the customer acts as importer, although the customer will need to have title to the goods to recover the import VAT.

    Outbound effect

    Call-off stock sent from the UK to the EU will give rise to an importation. If UK Co acts as importer, its supply to the customer will take place in the EU. Subject to any 'domestic' reverse charge, UK Co will have a liability to register in the relevant Member State.

    This issue will not arise if the customer acts as importer.

    Commentary

    As the simplification provision is only available for intra-Community transactions, it will no longer apply in the event of the UK leaving the EU, with no agreement on transitional arrangements.

    UK suppliers currently using the simplification provisions in other Member States may be required to register in each Member State where stocks are held and supplies made and potentially charge local VAT.

    If the UK removes the call-off stock treatment, goods arriving into the UK from the EU as call off stock may be treated as imports and be subject to import VAT/duty. This would result in a cash flow disadvantage for UK businesses, subject to the anticipated postponed accounting provisions being implemented (see below under ‘Import VAT deferment’).

  • DIY house builders scheme

    Original legislation reference

    Value Added Tax Act 1994, Section 35(1) (c)

    Current status

    VAT incurred in a Member State on materials to build a house in the UK can be recovered under the scheme.

    Inbound effect

    VAT incurred in a Member State on materials to build a house in the UK should be recoverable as import VAT rather than as acquisition tax from a Member State.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, it is expected that the provisions around EU acquisitions in the DIY housebuilders scheme will be removed.

  • Domestic reverse charge and invoicing

    Original legislation reference

    EU VAT Directive, Articles 194 and 219a

    Current status

    Member States may apply a reverse charge to supplies of goods or services made by a non-established business to a business in the relevant member state. This is implemented in a wide variety of scenarios:

    – Installed and assembled goods
    – Services connected with immovable property
    – Services of 'admission'
    – Local supplies of goods.

    Outbound effect

    Currently, UK businesses can apply simplified rules and issue invoices in accordance with the UK invoicing rules. However, this simplification is only available for EU established suppliers.

    After Brexit, UK suppliers will, in theory, need to issue invoices conforming to the rules in each customer’s Member State.

    In addition, where they have no local registration in the applicable EU27 Member State, UK businesses will need to rely on the 13th VAT Directive to claim refunds of VAT.

    Commentary

    The EU VAT Directive provides a framework for Member States to implement a domestic reverse charge in national legislation. In the event of a no deal Brexit, the UK would be able to revise/remove its national legislation in this area.

  • EC sales lists

    Original legislation reference

    Value Added Tax Act 1994, Section 55A, 65 and 66

    Current status

    EC Sales Lists are required to record intra-Community trade.

    Outbound effect

    ECSLs will not be required for intra-Community trade but S55A statements will be needed for missing trader fraud (and failure will be subject to penalties).

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, UK businesses may no longer be required to complete EC Sales Lists.

  • Fiscal representatives

    Original legislation reference

    Value Added Tax Act 1994, section 48

    Commentary

    Under the current rules, HMRC may direct a person to appoint a VAT representative for a tax payer who is not established in the UK and is established in a country which is not a Member State or a country without suitable mutual assistance provisions. The position post Brexit will need to be reviewed for non-UK businesses registered in the UK and also for UK businesses that register in other Member States (where the local rules will have to be complied with).

  • Goods sent for processing or repair

    Original legislation reference

    EU VAT Directive, Article 17

    Current status

    Where goods are sent for processing and returned within the EU, no intra-Community supply or acquisition occurs and no registration liability arises.

    Where goods are sent for processing within the EU but not returned, a fictitious intra-Community supply and acquisition occurs. The supplier is liable to register in the Member State where the goods are processed.

    Inbound effect

    If the UK is the processing country there may be potential VAT implications. If the principal acts as importer, in the absence of a local UK VAT registration they will need to rely on a UK VAT refund scheme (if any).

    If the processor acts as importer of the raw materials, previous CJEU case law (which will still be relied upon in the UK) suggests the processor will have no right to deduct the VAT incurred.

    The impact of VAT and any duty can be mitigated via inward and outward processing reliefs.

    Outbound effect

    Where goods are sent for processing in the EU, the movement of goods will be subject to customs control. The impact of VAT and any duty can be mitigated via inward and outward processing reliefs. If these are applied and all conditions are met:

    – No VAT or duty will be payable in the processor's territory
    – The amount of VAT and any duty due in the UK will be calculated by reference to the value added by the processing.

    Commentary

    The current legislation provides a relief from import VAT and customs duties to EU businesses; this may no longer be available to UK businesses in the event of the UK leaving the EU without an agreement, which could result in import VAT and duty costs. Similarly, the UK may impose import VAT and duties to EU businesses currently using such simplifications for goods entering the UK.

  • Import VAT deferment

    Original legislation reference

    Value Added Tax Act 1994, s1(4) and s16; Customs and Excise Management Act 1979, s43(1)

    Inbound effect

    Currently the requirement is to pay import VAT on or soon after the goods arrive at the UK border and to recover it on a subsequent return, using a C79 form as evidence of right to input VAT recovery.

    Outbound effect

    The new Import VAT Regulations (SI 2019/60) allow UK VAT registered businesses to change the way they account for VAT due on imported goods (import VAT). It enables such businesses that import goods to declare and recover (subject to normal rules) import VAT on their periodic VAT returns rather than declaring and paying import VAT when the goods arrive at the UK border.

    Commentary

    These Regulations address the consequences of the removal of the EU VAT accounting rules for intra-EU trade in goods and the extension of import VAT by removing the cash-flow disadvantage that would occur if current import VAT payment rules were applied to intra-EU trade. These regulations will only come into force in the event that the UK withdraws from the EU without a negotiated arrangement on a date or dates specified in a separate instrument.

    The Irish government has also published the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 to prepare Ireland for a no-deal withdrawal by the UK. The Bill introduces a postponed accounting measure which will allow for import VAT to be accounted for by traders in their VAT returns rather than at importation. The Bill provides for Regulations to be made setting down conditions under which the measure would apply, e.g. financial guarantees being provided. It is worth noting that this measure would apply to imports from all third countries and not just the UK.

    HMRC guidance explains how to account for import VAT on all goods brought into the UK if it leaves the EU without a deal.

  • Import VAT on postal packets

    Original legislation reference

    Value Added Tax Act 1994, Section 16(2)

    Current status

    Current legislation preserves the power to make regulations in relation to import VAT under the Postal Services Act 2000 for goods imported or exported in postal packets.

    Inbound effect

    The new Postal Packets Regulations (SI 2018/1376) make an overseas supplier liable for import VAT on any consignment of goods sent into the UK in a postal packet (letters, parcels, packets or any other article that could be sent by post even if they are sent by different means) if the value of the goods is £135 or less for customs purposes. In addition, it creates a registration and accounting scheme for those suppliers to account for the import VAT and provides for others to be jointly and severally liable for that import VAT in certain circumstances.

    The Regulations also remove the import VAT relief for commercial imports of goods valued at £15 or less [Low Value Consignment Relief (LVCR)].

    Commentary

    The purpose of the Statutory Instrument is to help ensure the flow of parcels into the UK while maintaining tax revenue in the event that the UK leaves the EU without a negotiated settlement.

    Further Regulations have been laid which amend current data gathering legislation to add ‘postal operators’ as a category of data holders from which data may be required. Their purpose is to enable HMRC to ensure that overseas businesses sending goods to the UK in postal packets comply with the new regulations.

    Further Regulations (SI 2019/104) appoint 28th January 2019 for the coming into force of regulations 4, 7, 10 and 12 of the new Postal Packets Regulations (SI 2018/1376. By virtue of the commencement made by these Regulations, suppliers are enabled to register under the Postal Packet Regulations in advance of the rest of the Postal Packet Regulations coming into force.

    You can find further information in HMRC’s Collection on the topic.

    HMRC has also released an impact assessment setting out the impact of the changes made by the new regulations.

    Please also refer to HMRC’s Collection which includes:

    • Import VAT on parcels you sell to UK buyers (VAT notice 1003) - Guidance regarding how to pay import VAT on goods you sell and send to UK buyers if you are based outside the UK, if the UK leaves the EU without a deal.
    • Manage your import VAT on parcels< - Guidance regarding the online service to view the import VAT on parcels reference.
    • Register for import VAT on parcels you sell to UK buyers - Guidance explaining how to register for import VAT on parcels sold to UK buyers and the payment process.

  • Movement of own goods

    Original legislation reference

    Value Added Tax Act 1994, Schedule 4(6)

    Current status

    Movement of own goods between EU member states treated as a supply of goods.

    Inbound effect

    Movement of own goods from EU to UK will be treated as an import.

    Outbound effect

    Movement of own goods from UK to EU will be treated as an export.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, the movement of own goods from the UK to the EU by UK businesses, may be treated as an export and subject to import VAT/duties in the Member State of destination/importation.

    Similarly, own goods moved by EU businesses to the UK may attract UK import VAT and duties.

  • Moving goods post Brexit

    Customs processes and procedures

    The Government has published details of the UK’s temporary tariff regime for a no deal, designed to minimise costs to business and consumers while protecting vulnerable industries. This regime is temporary, applying for up to 12 months while a full consultation and review on a permanent approach to tariffs is undertaken.

    In the event of a no deal exit from the EU, British businesses would not pay customs duties on the majority of goods when importing into the UK. Under the temporary tariff, 87% of total imports to the UK by value would be eligible for tariff free access.

    The temporary tariff regime guidance provides links to tools and explains the procedure for establishing the appropriate temporary customs duty rates which would apply in a no deal scenario. There is also guidance on how to find the temporary rates of customs duty.

    Guidance regarding simplified customs processes for UK businesses trading with the EU. Please also see the section on transitional simplified procedures (TSP) below.

    Guidance detailing how leaving the EU without a deal affects existing authorisations to use customs procedures or other facilitations (simplified procedures). Depending on the type of facilitation, and whether HMRC or another EU customs authority provided that authorisation, businesses should check that they can carry on using it and whether it will be more limited. The customs special procedures covered in this Guidance include:

    • inward processing
    • outward processing
    • temporary admission
    • authorised use (also known as end use)
    • customs warehousing.

    Guidance (in draft form) containing the legal classification and import rate for products being imported into the UK. The Customs Tariff (Establishment) Regulations give effect to this document and establish a UK customs tariff. The tariff classifies goods and contains the rules for determining the correct amount of duty applicable to them. The Regulations establish a tariff by reference to the Tariff of the UK document.

    Guidance providing links to individual documents detailing product duty rates and the preferential rules of origin that will apply as a result of preferential agreements made between the UK and third countries, including Free Trade Agreements. The purpose of the Regulations is to ensure that the UK can set preferential import duties in line with any preferential arrangements that are in place, for example Free Trade Agreements.

    Guidance sets out the product specific rules which determine the origin of imports outside a preferential agreement. Non-Preferential Rules of Origin determine the economic nationality of imports that arrive outside preferential agreements.

    Guidance listing the cases where a relief from import duty may apply. It will be introduced by reference in a Statutory Instrument, The Customs (Reliefs from a liability to Import Duty)(EU Exit) Regulations 2019.

    HMRC has now issued Draft notices to be made under The Customs (Export) (EU Exit) Regulations 2018 and Draft notices to be made under The Customs (Records) (EU Exit) Regulations 2019.

    HMRC has also published Guidance in the form of a partnership pack to provide key stakeholders and intermediaries working with businesses with a high-level guide to customs processes and procedures that are likely to apply in a ‘no deal’ scenario. The following parts of the pack have been recently updated:

    Partnership pack: preparing for changes at the UK border after a no deal EU Exit
    Preparing for a no deal EU Exit - step-by-step guide to importing
    Preparing for a no deal EU Exit - step-by-step guide to exporting
    How this pack will help you prepare for a no deal scenario
    Customs, excise, VAT and regulatory changes you need to know about if there is no deal

    Transitional Simplified Procedures (TSP)

    HMRC has published Guidance and further details explaining whether a business can register to use transitional simplified procedures (TSP) to import goods into the UK. Essentially TSP allow a registered importer to lodge a simplified declaration (with reduced datasets) to clear goods from the EU arriving in the UK and defer payment of import duties.

    For most goods imported using TSP, traders will now be able to delay putting in customs declarations for the first 6 months after EU exit. Businesses will have until 4 October 2019 to submit declarations and pay any import duty for goods imported up to 30 September 2019. After that, customs declarations and payments will need to be made on the fourth working day of the following month.

    HMRC is also giving importing businesses until 30 September 2019 to provide a guarantee that is required to cover any customs duties that they wish to defer. This will apply for all importers, not just those who have registered for TSP.

    Following discussions with stakeholders from across the ports industry, TSP will now be available for any port or airport where goods are being brought in from the EU. This was originally available for priority Roll-on-Roll-off locations like Dover or the Channel Tunnel. HMRC will continue to work with ports, including airports, and other key stakeholders on TSP implementation, recognising that circumstances will be different from port to port.

    TSP is designed to make importing easier for businesses importing goods to the UK from the EU that may be new to import declarations. Once registered for an EORI number they can take the next step and register for TSP.

    The original announcement, ‘HM Revenue and Customs simplifies importing from the EU as part of no deal preparation’, is available here.

    Please also refer to Making declarations using transitional simplified procedures.

    Please also see our EY alert which provides further details regarding how TSP will work, how long the arrangements will be used, and the TSP registration criteria.

    EORI number

    UK businesses trading with the EU will need a UK Economic Operator Registration and Identification (EORI) number to continue trading if the UK leaves the EU with no deal.

    HMRC guidance previously stated that a business with a EU EORI number (a non-UK one) would be able to continue using this number for a temporary period after the UK leaves the EU. However, they have now announced that this will not be possible. Businesses importing or exporting with the UK will need a UK based EORI number.

    Having an EORI number allows a business to:

    • Trade goods into or out of the UK
    • Submit declarations using software (or to give to an agent to make these declarations)
    • apply to be authorised for customs simplifications and procedures

    HMRC has updated its guidance to clarify that:

    • Northern Ireland businesses should also apply for an EORI number unless they only trade across the Northern Ireland-Ireland land border.
    • Businesses which have an EORI number starting with GB do not have to do anything. HMRC will provide further guidance shortly after the UK leaves regarding the process for applying for a UK EORI number.

    HMRC has now released The Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019, SI 2019/714. In the event of a no deal scenario the UK intends to closely model its customs systems on what currently applies under UCC rules. One of the key planks of the Union Customs Code (UCC) is its universal customs identifier (EORI number) which uniquely identifies the registered trader in terms of its name and address, allowing accurate identification of any person making declarations or applying for customs decisions or authorisations. These Regulations address failures of retained EU law to operate effectively or other deficiencies arising from the withdrawal of the UK from the EU.

    The UCC needs to be changed so that it applies specifically to the UK and not the whole customs territory of the EU, and references to ‘customs authorities’ are changed to ‘HMRC’. Certain other minor deletions remove UCC rules not needed once the UK is outside the EU customs territory. The UK will have an independent EORI system that will now only apply to traders resident or operating in the UK after EU exit. The amendments to the retained EU law contained in these Regulations will not have effect in relation to economic operators whose only customs activities consist of the trade of goods between Northern Ireland and Ireland. Further details on the arrangements for trade between Northern Ireland and Ireland will be published separately.

    Entry Summary Declarations

    The government has announced plans to phase in Entry Summary Declarations for EU imports in the event of a no-deal Brexit. From 29 March, there will be a transitional period of 6 months where businesses importing from the EU will not need to submit Entry Summary Declarations for their goods. This transitional period will not affect imports arriving from the rest of the world.

    After the six-month transitional period, carriers will be legally responsible for ensuring Entry Summary Declarations are submitted pre-arrival to HMRC at the time specified by mode of transport.

    Irish Border

    New Guidance sets out the Government’s approach to avoiding a hard border between Northern Ireland and Ireland if the UK leaves the EU without a deal on 29 March. It sets out a unilateral, temporary approach to checks, processes and tariffs in Northern Ireland and confirms that the UK Government would not introduce any new checks or controls on goods at the land border between Ireland and Northern Ireland, including no customs requirements for nearly all goods.

    Because these are unilateral measures, they only mitigate the impacts from exit within the UK Government’s control, and do not set out the position in respect of tariffs or processes to be applied to goods moving from Northern Ireland to Ireland.

    HMRC has also published guidance explaining the import procedures for UK businesses moving goods from Ireland to Northern Ireland. If the UK leaves the EU without a deal, import VAT will be due on goods moving from Ireland to Northern Ireland at the relevant rate. This includes goods that end their journey in Northern Ireland or move through Northern Ireland on the way to Great Britain. This guidance explains the procedures for accounting for import VAT.

    HMRC has also published Guidance explaining the Customs procedures for businesses moving goods from Ireland to Northern Ireland. If the UK leaves the EU without a deal, goods moving between Ireland and Northern Ireland will face different procedures compared to other UK-EU trade. This approach will apply until longer-term arrangements are made. The Government will give advance notice before introducing any new requirements or changing existing ones.

    Temporary relaxation of declarations

    The Customs (Managed Transition Procedure) (EU Exit) Regulations 2019, SI 2019/487 provide HMRC with temporary powers to issue a public notice to relax the requirement to make a declaration by a certain time for certain traders importing or exporting certain goods from or to the EU. These are additional temporary changes to support trade immediately, and will not form part of the longer-term customs model.

    For both imports and exports, details of the traders that will be able to use this easement, the locations at which the easement will apply, the manner in which they will be able to declare the goods so that they can move freely, and the further information required to enable the full declaration process to be completed will be set out in a public notice. HMRC will also specify goods that will not be covered by this instrument in a public notice.

    These regulations will only be invoked if the Commissioners for HMRC believe this is necessary in order to maintain the smooth operation of the border.

    HMRC correspondence

    HMRC has updated its correspondence to VAT-registered businesses only trading with the EU explaining how to prepare for changes to customs, excise and VAT if the UK leaves the EU without a deal. Its latest letter, Letter to EU-only traders about Transitional Simplified Procedures includes information on:

    • How to make customs declarations
    • EORI
    • Simplifying imports under a transitional procedure
    • Deferring VAT on imports
    • Changes to VAT IT systems

    Please also refer to the HM Treasury and HMRC News Story - HM Revenue and Customs simplifies importing from the EU as part of 'no deal' preparation - available here.

    VAT IT system rules and processes

    In the event that the UK leaves the EU without a deal, many UK businesses will need to apply the same processes to EU trade that apply when trading with the rest of the world.

    The rules and processes for VAT IT systems will change. This guidance is for businesses that:

    • Claim VAT refunds from EU countries
    • Need to check the validity of UK VAT registration numbers
    • Report sales of digital services to consumers in the EU using the UK VAT Mini One Stop Shop
    • Are under the VAT digital services threshold and make sales of digital services to consumers in the EU

    HMRC has now issued further Guidance explaining how non-UK businesses will pay VAT on digital services, reclaim VAT, and check UK VAT numbers if the UK leaves the EU without a deal.

    Roll on roll off ports or the Channel Tunnel

    Guidance regarding arrangements for importers or exporters using roll on roll off ports or the Channel Tunnel to transport goods between the EU and the UK.

    A communications pack is also available which explains the changes at roll on roll off ports and Eurotunnel if the UK leaves the EU without a deal.

    HMRC impact assessment

    HMRC have published a second edition of the impact assessment for the movement of goods if the UK leaves the EU without a deal, originally published on 4 December 2018. It has been updated to include the impact of the customs, VAT and excise regulations laid before Parliament in January 2019, alongside those laid in November 2018 under The Taxation (Cross-border Trade) Act 2018 (TCTA 2018) and the EU Withdrawal Act 2018 (EUWA 2018). The first edition is available here.

    As the impact of the regulations will cut across customs, VAT and excise, this impact assessment explains how businesses and individuals moving goods across the UK-EU border will be impacted for all 3 tax regimes.

    A third edition of the impact assessment will include the impacts of the further regulations that will be laid in Parliament in February and March.

  • Reduced Rate for grant funded installation

    Original legislation reference

    Value Added Tax Act 1994, Schedule 7A, Group 3

    Current status

    Grants are currently available from the EU for the funding of ‘relevant schemes’ for the installation of certain types of heating equipment, of security goods and supplies related to connecting a gas supply.

    Effect

    These EU grants will no longer be available.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, ‘relevant schemes’ are unlikely to be funded by the EU, although in practice many are already funded by the UK Government.

  • Registration for distance sellers

    Original legislation reference

    Value Added Tax Act 1994, Schedule 2

    Current status

    Schedule 2 sets out the liability of EU distance sellers to register for UK VAT once they breach the distance selling threshold.

    Inbound effect

    VAT registration no longer applies for distance sellers from EU member states. Sales of goods will be treated as imports and subject to import VAT and customs and excise duty as appropriate.

    Outbound effect

    UK distance sellers will either need the EU customer to act as importer which may be commercially unattractive, or act as importer of the goods themselves triggering a liability to register in the customer's Member State. Possibility of making use of 'low-value consignment relief' but many Member States already exclude goods sold by mail order, also see 'Developments' box.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, distance selling arrangements will no longer apply to UK businesses, however, UK businesses may be able to zero rate sales of goods to EU consumers (where goods are moving from the UK to an EU Member State). UK businesses would need to consider import VAT and customs duties and the cash flow impact these may have.

  • Registration for the non-Union MOSS scheme

    Original legislation reference

    Value Added Tax Act 1994, Section 3A and Schedule 3B

    Current status

    Sch.3B of VATA 1994 set out the registration for the Non-Union VAT Mini One Stop Shop (MOSS) scheme. Non-EU Businesses supplying certain digital services to other EU countries could register and pay VAT in the UK rather than having multiple registrations around the EU.

    Inbound effect

    The UK will no longer be part of the VAT MOSS system. This means businesses will no longer be able to register for the scheme in the UK with HMRC collecting and passing on the VAT due to other EU member states on their behalf. Businesses may still have the option of registering for MOSS in another EU country.

    Commentary

    In the event of the UK leaving the EU without an agreement, UK businesses that sell digital services to consumers in the EU will be able to register for the MOSS non-Union scheme.

    Non-EU businesses currently registered for the MOSS scheme, with the UK as a Member State of identification, would need to register for the VAT non-Union MOSS scheme in an EU Member State.

    The non-Union scheme requires businesses to register for MOSS by the 10th day of the calendar month following the first sale. The MOSS registration will be backdated to the date of the first sale.

    (From 1 January 2019, businesses established outside the EU making supplies of digital services to EU consumers may register for the non-Union scheme even if they are registered for VAT in the EU for other reasons).

  • Repayment claims

    Original legislation reference

    Value Added Tax Act 1994, Section 39A

    Current status

    HMRC is currently obliged to make arrangements for forwarding repayment claim applications to the tax authorities of the relevant EU Member State.

    Outbound effect

    HMRC will no longer have a legal obligation to make arrangements for dealing with applications made to them by UK registered taxpayers for VAT refunds on supplies or importations made in another Member State. HMRC is currently obliged to make arrangements for forwarding such applications to the tax authorities of the relevant EU Member State.

    Commentary

    UK businesses may need to use the existing processes for non-EU businesses in each Member State in which they incur VAT on costs, where they wish to claim a refund. The current paper-based system available to non-EU businesses in the UK may potentially be used in future by EU businesses if no agreement on the UK leaving the EU is reached.

  • Repayment of VAT to overseas businesses

    Original legislation reference

    Value Added Tax Act 1994, Section 39

    Current status

    HMRC may repay VAT on supplies made in the UK or on imports from places outside the Member States, if they were taxable persons in the UK.

    Outbound effect

    In a no-deal scenario, businesses in the EU will no longer be able to use the EU VAT refund electronic system to claim refunds of VAT incurred in the UK after 29 March 2019.

    HMRC has the power to make regulations to allow the recovery of VAT on supplies by those who carry on business outside the UK on supplies, where that VAT would have been deductible had they been VAT registered in the UK. The amendment also permits HMRC to make different provisions in relation to persons carrying on business in different places.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, the current EU refund system will no longer be applicable in the UK.

    EU businesses may apply for a VAT refund in the UK, under a different refund system.

    Similarly, UK businesses may continue to be able to claim refunds of VAT from EU Member States.

    HMRC has updated its guidance Claiming EU VAT refunds to clarify that, in the event of no deal, submissions for refund claims for 2018 made using the EU VAT refund electronic system would need to be made by 5pm on 29 March 2019. Please note that you should allow enough time for your member state to send the claim to the UK. If a claim is sent through the online system after the UK has left the EU, it will not reach the UK.

    After Brexit, EU businesses must use a manual process to reclaim VAT incurred in the UK before 30 March 2019. Information on how to do this will be available after 30 March in VAT Notice 723A. The deadline for EU businesses to submit a VAT refund claim will remain:

    • 30 September 2019 for claims for VAT incurred on expenses in 2018
    • 30 September 2020 for claims for VAT incurred on expenses between 1 January 2019 and 29 March 2019

  • Restaurant and catering services on passenger transport

    Original legislation reference

    Value Added Tax Act 1994, Schedule 4A

    Current status

    For intra-EU transport, the place of supply for restaurant and catering services on board passenger transport is the place of departure. Alternatively, Member States have a simplification option and can exempt the supply of goods for consumption on board.

    Effect

    Transport between EU and UK will no longer be intra-EU so Art 55 of the VAT Directive will apply - the service is supplied where it is physically performed and no simplification is available.

    Commentary

    In the event of the UK leaving the EU without a transitional agreement, the supply of restaurant and catering services on passenger transport may be treated as supplied where the services take place, as opposed to the place of departure.

  • Specified supplies of services

    Original legislation reference

    EU VAT Directive 169(c); and Specified Supplies Order 1999

    Current status

    The VAT Directive provides for deduction on input tax attributable to exempt supplies such as insurance and financial services where the services are made to persons outside the EU or where the services are closely connected with an export of goods. This is transposed into UK legislation via the Specified Supplies Order 1999.

    In the event of a no-deal Brexit, the Value Added Tax (Input Tax)(Specified Supplies)(EU Exit)(No.2) Regulations 2019, SI 2019/408 would come into force which amends the Specified Supplies Order.

    Inbound effect

    The proposed UK legislation does not change the VAT treatment of inbound supplies per se, however, it does ensure that UK businesses will not be put at a commercial disadvantage compared to their EU27 competitors.

    Outbound effect

    These new Regulations extend the existing treatment so that, on EU exit, UK businesses will be able to reclaim VAT in relation to specified supplies made to customers in the EU. This brings the VAT treatment of supplies to EU customers in line with the VAT treatment of supplies to customers in the rest of the world. As before, businesses will not be able to reclaim any VAT they pay on the costs of making similar supplies to UK customers.

    Commentary

    The proposed changes to the Specified Supplies Order are intended to ensure consistency between recovery of VAT on supplies made to the EU27 countries and other third countries. It will also mean reciprocity in the VAT recovery treatment of financial supplies made between the UK and EU27 countries.

    In summary, in the event of a no deal outcome, these Regulations will enable businesses to recover input tax under the SSO in relation to supplies made to customers in the EU but will continue to restrict recovery in relation to similar transactions within the UK. There is already guidance on this on in the partial exemption VAT Notice 706 which will be updated where necessary, with any updates made available prior to commencement of the Regulations.

    The treatment of financial and insurance services to EU customers has been the subject of a great deal of interest, with many lobbying for supplies to EU customers to carry a recovery right. These revised Regulations will be welcomed as they level the playing field with EU businesses.

    The Regulations also ensure that a Partial Exemption Special Method (PESM) agreed before the UK exits the EU will be interpreted in accordance with the VAT treatment that will apply under the SSO after the UK exits the EU. This avoids increased administrative burden on both business and HMRC because, otherwise, businesses would need to apply for a new PESM which would require HMRC approval.

  • Tour Operators Margin Scheme

    Original legislation reference

    EU VAT Directive, Article 307

    Current status

    The Tour Operators Margin Scheme (TOMS) provides a simplification mechanism for 'tour operators' removing the need for a VAT registration in the Member State in which the services are actually enjoyed. The components of the 'tour' are treated as a single service subject to tax on the profit margin in the Member State in which the tour operator is established.

    The tour operator has no right to deduct the input VAT incurred on the components of the 'tour'.

    A non-EU tour operator has no obligation to account for EU VAT on its margin.

    Outbound effect

    Based on the new TOMS Regulations (SI 2019/73), a UK tour operator will have no right to deduct (or claim a refund of) the VAT incurred on tour components. However, under current rules, it will have no liability to account for EU VAT on its margin, even if the tour takes place wholly within the EU27.

    As things stand, UK tour operators will gain a competitive advantage after Brexit, with no liability to account for EU VAT even where a tour takes place wholly within the EU.

    Commentary

    Changes to the TOMS should equalise the treatment of UK tour operators with other non-EU operators, and will give them an advantage over EU tour operators, creating a revenue deficit in the UK. This position presents the easiest legislative solution to TOMS after Brexit, and reflects a logical outcome, as it is fair to assume that after Brexit most EU countries would stop taxing the margin on UK holidays. It is important to note, however, that the new TOMS Regulations are premised on a ‘no deal’ scenario and this position may change depending on any deal negotiated between the UK and EU27 Member States.

  • Triangulation

    Original legislation reference

    EU VAT Directive, Articles 42 and 141

    Current status

    A simplified procedure is available for intermediate suppliers where there is an intra-EU movement of goods and the intermediate supplier is already registered for VAT within the EU but not in the customer's country.

    Inbound effect

    Triangulation: Physical movement of goods into the UK will give rise to an importation so simplification not available for intermediate supplier. Intermediate supplier can minimise its compliance obligations by ensuring:

    – Supply 1 is the supply for export
    – The UK customer is the importer of the goods in the UK.

    The VAT Committee has previously confirmed that the intermediary supplier (B) will escape liability to register in Member State 1 where supply 1 (A to B) is made under FOB terms. B’s supply to C may then be made on the ‘high seas’, thus removing any liability to register in the third country.

    Outbound effect

    Where UK Co (B) is the intermediary between an EU supplier (A) and an EU customer ('C) there will be no scope for simplification and UK Co will need to register where the customer is based. However, once registered this will give access to simplification in the future.

    Commentary

    As the simplification provision is only available to businesses registered in an EU Member State and refers to an intra-Community acquisition of goods, it will no longer apply in the event of the UK leaving the EU with no transitional arrangements.

    UK suppliers currently using the simplification provisions may be required to register in each Member State where supplies are made, and potentially charge local VAT.

    Non-UK suppliers selling goods into the UK may have to register for VAT in the UK (if the customer does not act as importer of record and account for the import VAT).

  • Use and enjoyment provisions

    Original legislation reference

    Value Added Tax Act 1994, Schedule 4A, paras 3, 7, 8, 9, 9D, 9E

    Current status

    Member States currently apply use and enjoyment overrides on certain services. In the UK, these overrides are applied to:

    – the hiring of means of transport,
    – the hire of goods,
    – broadcasting services,
    – electronically-supplied services (B2B only),
    – repair services under contracts of insurance (B2B only),
    – telecommunication services (B2B only).

    If use and enjoyment provisions are applicable, the ‘normal’ place of supply may be overridden, and the supply moved into or out of the scope of EU VAT.

    Inbound effect

    Potential UK registration obligations for EU27 suppliers of applicable services which are used and enjoyed in the UK.

    Scope for relief from EU VAT to the extent that applicable services are used and enjoyed in the UK.

    Outbound effect

    Potential EU27 registration obligations for UK suppliers of applicable services which are used and enjoyed in the EU.

    Scope for relief from UK VAT to the extent that applicable services are used and enjoyed in an EU27 Member State.

    Commentary

    Member States, on the whole, apply use and enjoyment provisions more broadly than the UK, and not always equally to inbound and outbound supplies.

    There is therefore scope for arbitrage, based on the UK’s narrow application compared to an often broader application in the EU27.

    In the event of the UK leaving the EU, the use and enjoyment provisions adopted in the EU27 states may create additional registration obligations for UK suppliers, particularly where provisions are implemented more widely than in the UK.

  • Various statutory instruments

    The European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) (No. 2) Regulations 2019, SI 2019/859

    These Regulations amend the definition of ‘exit day’ in section 20(1) of the European Union (Withdrawal) Act 2018 (the 2018 Act) from 12 April 2019 at 11.00pm to 31 October 2019 at 11.00pm, and consequently amend section 20(2) of the 2018 Act. Various provisions of the 2018 Act, including the repeal of the European Communities Act 1972, and a wide range of primary and secondary legislation, take effect or come into force on ‘exit day’.

    The objective of these Regulations is to ensure the correct functioning of the domestic statute book and to reflect in domestic law the further negotiated extension of the period in Article 50(3) TEU by amending the definition of ‘exit day’. These Regulations do not themselves extend the Article 50 process. The extension was agreed, as a matter of EU and international law, between the UK and the EU by a European Council decision and letter from the Permanent Representative of the United Kingdom to the EU, in accordance with Article 50(3) TEU, on 11 April 2019.

    Please refer to Technical update to the Withdrawal Agreement.

    The Customs (Export) (EU Exit) Regulations 2019, SI 2019/108

    These Regulations, on a contingency basis, lay down the main provisions governing the export of goods from the UK, including replacing provision currently set out in EU law. These Regulations are key in ensuring businesses can prepare for the UK leaving the EU, and are able to operate within the customs regime after EU exit. It will be commenced in full if a deal is not agreed following EU/UK negotiations.

    The Customs (Import Duty, Transit and Miscellaneous Amendments)(EU Exit) Regulations 2019, SI 2019/326

    These Regulations will be necessary to ensure the UK’s customs regime functions as intended after it leaves the EU, and lay down provisions for the import of goods to the UK should it exit without a deal, including replacing provisions currently set out in EU law.

    These Regulations include a range of temporary measures to enable trade to continue to flow while maintaining essential customs procedures.

    • They provide for a simpler process for gaining authorisation to use simplified customs procedures, and include easements for notifying HMRC when goods have arrived in the UK.
    • They simplify and relax the requirements for delaying the time of payment, and for financial guarantees.
    • They relax the liability rules where an intermediary uses their own Customs Freight Simplified Procedure authorisation on behalf of traders.
    • They will also provide for an interim process for arrivals of goods under the Common Transit Convention for a small number of entry ports.

    The Value Added Tax (Miscellaneous Amendments, Revocation and Transitional Provisions) (EU Exit) Regulations 2019, SI 2019/513

    These Regulations deal with the consequences of the UK leaving the EU without a deal and are the second of two miscellaneous instruments (see SI 2019/59 The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019) each of which addresses a number of deficiencies in the UK’s secondary legislation relating to VAT which are a consequence of the its withdrawal from the EU and not covered by other instruments. It makes consequential amendments to the Value Added Tax Regulations 1995 (SI 1995/2518) and other VAT secondary legislation to reflect amendments made to the Value Added Tax Act 1994 by TCTA.

    It also makes other amendments needed to ensure that the UK’s VAT system works as required, including transitional provisions necessary for the smooth implementation of the changes to VAT primary legislation made by TCTA. The amendments also make changes which are required as a consequence of provisions in other EU exit instruments to ensure that import VAT can still be collected.

    The Regulations include:

    • Consequential changes regarding zero-rating and the European Research Infrastructure Consortia (ERIC)
    • Provisions regarding Specified Supplies
    • Provisions regarding Partial Exemption Special Methods agreed with HMRC before the UK exits the EU
    • Transitional provisions in relation to the EU VAT refund system
    • Transitional provisions in respect of Fulfilment Houses. This instrument provides a nine month transitional period for those previously not required to seek approval to operate from HMRC (due to EU trade only) This transitional period gives affected businesses time to obtain the necessary approval to continue their business
    • Provisions for the ability to introduce further transitional provisions in Notices published by HMRC. This would cover, for example, how to make corrections and adjustments for tax declared under the Mini One-Stop Shop (MOSS) system for digital sales and for determining the tax point for supplies made under the Tour Operators Margin Scheme
    • Amendments to the Value Added Tax (Postal Packets and Amendment) (EU Exit) Regulations 2018 to extend the joint and several liability for import VAT on goods valued under £135 imported in postal packets
    • The Taxation (Cross-border Trade) (Miscellaneous Provisions) (EU Exit) Regulations 2019 (SI 2019/486) provides for businesses authorised to use Transitional Simplified procedures that make a simplified declaration within a specified period, to make a supplementary declaration after the end of that period. It provides for details of the period to be specified in a Notice. It is necessary to ensure that import VAT can still be collected as required to avoid risk to the revenue, and that provisions are in place to enable this. These Regulations introduce a power to make provisions that are considered appropriate in relation to the administration of VAT in these circumstances in a public notice.

    The Customs (Contravention of a Relevant Rule) (Amendment) (EU Exit) Regulations 2019, SI 2019/148

    These Regulations introduce customs civil penalties which HM Revenue and Customs (HMRC) can apply in circumstances when customs export requirements are not followed ensuring that there continues to be effective civil penalty provisions for export procedures. The instrument prescribes a range of specific circumstances where penalties can be applied, up to a maximum penalty of £2,500.

    The Customs (Consequential Amendments) (EU Exit) Regulations 2019, SI 2019/140

    These Regulations amend existing UK customs statutory instruments following the UK’s exit from the EU that contained references and terms/phrases that would no longer be appropriate in a post-exit environment (e.g. replace ‘customs territory’ with ‘United Kingdom’).

    The Export Control (Amendment) (EU Exit) Regulations 2019, SI 2019/137

    These Regulations address deficiencies of UK law arising from the withdrawal of the UK from the EU and ensure EU-derived domestic export control legislation operates effectively post-exit.

    The Customs (Records) (EU Exit) Regulations 2019, SI 2019/113

    These Regulations provide a requirement for those involved in customs matters to retain relevant records. The records to be retained, and the form and period of retention of these records will be set out in a notice that will be published before the instrument comes into effect. The Regulations will enable current record-keeping requirements set out in EU law to be replicated in UK law following EU Exit.

    The Statistics of Trade (Amendment etc.) (EU Exit) Regulations 2019, SI 2019/47

    These Regulations amend EU regulations which are being brought into force in the UK by the EU Withdrawal Act, to ensure that UK legislation is in place to collect information required for trade statistics after the UK leaves the EU.

    EU Regulations currently establish a common framework for the production of statistics relating to trade in goods between Member States. On exit from the EU the EU Regulations will no longer apply to the UK as a non-Member State. The Government needs to preserve these Regulations to ensure that trade in goods statistics continue to be collected, compiled and disseminated and remain consistent with worldwide standards. The preserved EU legislation will enable the ongoing collection of Extrastat trade statistics data where a customs declaration is required, and will allow the continuation of Intrastat for trade in goods between the UK and the remaining EU Member States. This is to ensure that there is no loss of statistical data, which is needed to meet international reporting requirements.

    In the event of no agreement being reached when the UK leaves the EU, trade statistics relating to imports and exports of goods will in most cases be collected from customs declarations. This instrument ensures that the UK has the continued right to collect trade statistics both through customs declarations and also through Intrastat declarations should customs declarations not be required. For example, Intrastat declarations might be needed if any changes are introduced which remove the need for customs declarations.

    The Customs Safety and Security Procedures (EU Exit) Regulations 2019, SI 2019/715

    These Regulations temporarily remove the requirement to submit safety and security information via entry summary declarations for goods being imported from territories where the UK does not currently require entry summary declarations. This includes, for example, the EU, Norway, and Switzerland. This transitional period will be in place for 6 months. They also make provisions to support the operation of the UK and Crown Dependencies customs union, namely that the movement of goods between the UK and the Channel Islands or Isle of Man do not require declarations for safety and security purposes.

    The Customs Safety and Security (Penalty) Regulations 2019, SI 2019/121

    The EU introduced a safety and security policy across Europe, governed by the UCC. It requires submission of safety and security declarations in order to risk assess goods before they arrive in or leave the EU. This protects the UK border against trafficking of illegal goods.

    These Regulations form part of legislation to be made under the European Communities Act 1972 to ensure that the UK has a safety and security penalty regime in place. It makes provision for civil penalties for non-compliance with certain safety and security obligations. These Regulations will continue to have effect under the European Union (Withdrawal) Act 2018 in the event of the UK leaving the EU without a deal to ensure the safety and security penalty regime remains operable after the UK’s departure date.

    These Regulations replace the current penalty regime for non-compliant traders who do not adhere to safety and security obligations at the UK border and are a tool to encourage traders to comply with their obligations.

    The Value Added Tax and Excise Personal Reliefs (Special Visitors and Goods Permanently Imported) (Amendment) (EU Exit) Regulations 2019, SI 2019/91

    These Regulations contain consequential measures as a result of the UK’s withdrawal from the EU. They ensure that certain goods brought into the UK by private individuals, diplomats and visiting forces that are currently free of UK VAT and excise duty (where applicable), continue to be so post EU exit.

    The Customs (Enforcement of Intellectual Property Rights) (Amendment) (EU Exit) Regulations 2019, SI 2019/514

    These Regulations ensure that UK legislation is in place after exit day (29 March 2019) enabling HMRC to continue to be able to enforce intellectual property rights at the UK border in the event that it leaves the EU without a deal.

    The Taxation (Cross-border Trade) Act 2018 (Appointed Day No. 5 and Miscellaneous Commencements) (EU Exit) Regulations 2019, SI 2019/819

    These Regulations bring into force on 8 April 2019 customs provisions that enable premises to be approved as transit sheds for imported goods, They also give effect to preparatory provisions in relation to payment and deferment of import duty, as well as simplified procedures in relation to the new Crown Dependencies Customs Union.

    The Taxation (Cross-border Trade) (Miscellaneous Provisions) (EU Exit) Regulations 2019, SI 2019/486

    In the event of the UK leaving the EU without a negotiated deal, these Regulations introduce new arrangements for travellers who bring commercial goods into the UK in accompanied baggage or small vehicles. They modify some of the declaration requirements that will be applicable at Roll on Roll off (RoRo) locations, and make other miscellaneous amendments to existing customs regulations.

    The Customs (Revocation of Retained Direct EU Legislation, etc.) (EU Exit) Regulations 2019, SI 2019/698

    These Regulations revoke retained EU legislation which will not be needed if the UK leaves the EU without a deal, and ensure that imports and exports between the Channel Islands and the UK are excluded from the collection of trade statistics.

    The Customs (Crown Dependencies Customs Union)(EU Exit) Regulations 2018, SI 2019/385 etc.

    The Isle of Man, Jersey and Guernsey have a distinct customs relationship with the UK arising from the terms of the UK’s accession to the EU which allows goods to be imported into the UK from these dependencies free from customs duty.

    These Regulations modify various customs rules to take account of the customs union arrangements between the UK and the Crown Dependencies (Isle of Man, Guernsey and Jersey), which will take effect once the UK and the Crown Dependencies cease to be part of the EU customs territory.

    The regulations below give effect to specific provisions in customs arrangements in order to maintain the current customs relationship after the UK leaves the EU.

    Isle of Man Regulations

    Jersey Regulations

    Guernsey Regulations

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