Brexit planning for 31 October 2019

Tue 15 Oct 2019

As we approach the next Brexit deadline of 31 October 2019, it may be appropriate to review how we can assist our clients manage the tax issues around the possible changes. Below are some points on indirect and direct tax issues.

Indirect tax

Some high level points concerning indirect taxes and procedures for movements of goods at the border include:

• Businesses moving goods cross border should have or have applied for an EORI number if they have not already been allocated one by HMRC
• Consider whether to apply for the transitional simplified procedure (TSP) to ease the flow of goods into the UK. Note the following though:
  • It is only available to UK established traders 
  • Requires a duty deferment account with associated bank guarantee to operate 
  • Only applies to future imports at Ro-Ro ports from EU countries (not outside EU)
• The following are useful summary links to the latest information:
  • Imports : 
  • Exports: 
• HMRC have also mentioned that they will be implementing a change to the way import VAT is accounted for. It will move from payment on import to declaring via a VAT return. This is a potentially big cashflow saving for business. Details are in VAT for businesses if there’s no Brexit deal

The political landscape continues to change on an almost daily basis. Whilst a Bill has been passed to seemingly prevent a no deal scenario, a no deal scenario remains a possibility.  The message from the UK government, remains very much that we are leaving, deal or no deal, on 31 October 2019.

With respect to the movement of goods, the classification of goods remains difficult.  An update to the UKs temporary tariff regime in a no-deal situation has recently been published.

There will also be a number of implications for financial service businesses, around how services provided to and from the EU are treated for VAT.

Please get in touch with a member of the Mazars indirect tax team for further advice on discussing Brexit indirect tax matters with clients.

Direct taxes

As the 31 October deadline draws ever closer, businesses should also be considering if they have not already done so, the immediate direct tax implications of a no deal Brexit. 

This could include the possibility that the application of certain EU directives may cease to apply, such as the parent subsidiary directive and the interest and royalties directive, both removing withholding taxes in certain instances.   A review of the application of tax treaties between the UK and other EU jurisdictions may be appropriate, as well as a re-examination of cross border intragroup activity and payments.

It may also be worth considering the tax implications of business reorganisations and the tax and social security position of a group’s workforce across Europe.  

For a further discussion of the direct tax issues of Brexit, please get in touch with a member of the Mazars international tax team.