Treasury committee demands govt clarify impact of VAT rule change post-Brexit
Parliament's powerful Treasury select committee has demanded the government clarify how 130,000 UK firms will be affected by post-Brexit tax rules that will see them paying VAT up front on EU imports.
Conservative chair Nicky Morgan said she had written to the head of Revenue and Customs (HMRC) for details on how the government would help businesses avoid avoid extra costs.
In the letter to HMRC head Jon Thompson, Morgan also invited the government to “rule out participation (or close association equivalent to participation) in the EU VAT area as part of the UK’s end-state relationship with the EU”.
The British Retail Consortium warned that firms could have cashflow issues if they were forced to pay VAT up front.
“As the reality of Brexit begins to bite, its implications on tax are yet to be fully explored,” Morgan said.
“Under the Taxation (Cross-Border Trade) Bill, firms would have to pay VAT upfront on goods imported from the EU before they can be released into free circulation in the UK."
“The government has already acknowledged that this would create an additional burden for businesses, and Autumn Budget 2017 committed to ‘look at options to mitigate any cash-flow impacts.’”
“I have written to HMRC to seek clarification on the costs to businesses and consumers arising from this legislation, the options being considered to mitigate these costs, and the likelihood of the UK participating in the EU VAT area as part of its end-state relationship with the EU.”