VAT – Brexit
In just over five months, on 29th March 2019, after two long years of negotiating, the UK will be leaving the EU. Even if the possibility of the UK leaving without a trading agreement in place seems rather unlikely, it is still prudent for businesses who deal with VAT to have a contingency plan in place.
Although the VAT system and procedures are highly unlikely to be affected by a no deal scenario there will be a number of changes to the rules and regulations of UK-EU transactions.
If a business currently imports goods from the EU then, as of 29th March 2019, the current non-EU import rules will apply to these EU imports.
A UK based business which exports goods to EU consumers will be able to zero-rate the sale of these goods. If the business is exporting to EU businesses then they will be able to continue to zero-rate their sales.
Finally, if a UK business is supplying services to the EU the current place of supply rules will remain unchanged.
VAT – for the Construction Industry
As of this month new VAT legislation aimed at main construction contractors will be implemented, the aim of which is to prevent historical defrauding of the VAT system. The new rules are aimed at labour-only construction providers charging the full 20% VAT to their customers, whilst incurring little VAT on their overheads (i.e. subcontractors). In the future subcontractors will issue an invoice to the contractor, who will pay VAT over to HMRC on their behalf, but will also reclaim the VAT from HMRC. Therefore, there will be no financial benefit for the contractor.
The rules for accounting for VAT can be extremely complex and there is a lot of information out there. If you need further clarification or just want to put your mind at ease please do not hesitate to give us a call or send us an email.