Kassim Meghjee and Nicola Simmons have reviewed the current and likely positions of VAT and customs duty after Brexit to assess what businesses can do to prepare.
Despite recent developments, there is still no clarity on how VAT and customs duty will apply in relation to supplies to and from the EU once the full force of Brexit takes effect. In relation to VAT, the UK government and EU negotiators have jointly confirmed that the existing VAT rules will continue to apply after the UK leaves the EU on 29 March 2019 until 31 December 2020. After this date, the UK will either continue to be treated as within the EU VAT area or be treated by the EU as a ‘third country’ (and vice versa). In relation to customs duty, the government previously proposed two options to negotiate a customs deal; maximum facilitation or a new customs partnership. Cabinet recently proposed a third model which seeks to achieve something in between the two. If no agreement is reached, the UK and EU would treat cross-border supplies in the same way they currently treat trade with third countries.
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