No Deal No VAT?

Aug 24, 2018

Ireland should match UK VAT proposals, even if a Brexit deal is reached.

 In the event of a No Deal Brexit, the UK government will introduce rules to allow UK importers extra time to pay the VAT due on goods arriving from both inside and outside the EU, according to UK government statements published this week.

The so called ‘postponed method of accounting for import VAT’ would mean that UK importers would not have to pay VAT at the point the goods arrive in the UK but instead declare the VAT in the next VAT return filed with the HMRC, which could be several weeks later.  

Chartered Accountants Ireland is optimistic that there will be comprehensive agreements on future trading between the EU and the UK, and that a No Deal Brexit will not happen.  Nevertheless a similar mechanism to ease the cash-flow burden for Irish traders importing from the UK is badly needed in Ireland.  

Chartered Accountants Ireland has already called for the postponed method of accounting for VAT, most recently in their pre-Budget 2019 submission.  Director of Public Policy and Taxation, Dr Brian Keegan said:

“The UK VAT proposal is practical and Ireland should offer the same.  Post Brexit, Irish traders importing from the UK will face an upfront VAT cost even if there is a future trading deal.  If the current law is not changed in Ireland, this will mean Irish importers will face a heavy cash flow burden as they will be forced to pay VAT, along with customs duties, at the time goods are imported from the UK.  While the VAT costs might be recovered later, Irish business needs this mechanism to reduce cash flow problems after Brexit.“

 Notes to Editors

 About Chartered Accountants Ireland

Chartered Accountants Ireland is Ireland’s largest and longest established professional body of accountants founded in 1888.  The Institute, which is an all-island body, currently represents over 26,500 members around the world.  The Chartered Accountants Ireland Brexit Action Group coordinates extensive lobbying and public information activities to help its members North and South of the border prepare for the departure of the UK from the EU.

Reference: Brendan O’Hora, Communications and Marketing Director, Chartered Accountants Ireland

T: + 353 637 7298 M: +353 86 2432 428

E: Brendan.O’Hora@charteredaccountants.ie