Tax

This year’s budget was much like the budgets in years past. Reading this article, the Budget probably seems a long time ago. However, the proposed changes are still a work in progress, with further changes included in the Finance Bill, prior to enactment in late December. Last year, the President signed the Bill on Christmas Day. Most of what was included in the Budget was well flagged in advance. Like in previous years, the main beneficiaries from a tax perspective were low to middle income earners. What is interesting is what was not said in the Budget speech about personal tax. There was no mention of our high marginal tax rates and no indication that these would be lowered in the future. Given the current political environment, it is difficult to see much movement in the near future on this front, with entrepreneurs also a victim of this atmosphere, with no increase in the €1 million cap on gains subject to the lower 10% capital gains tax (CGT) rate. Exit tax As expected, the 9% VAT rate for the hospitality sector was increased to 13.5%. The lower rate was seen to have served its purpose and a proposal to confine the increase in the rate to large cities was ruled out. On the corporate tax side, the biggest surprise was the introduction, at midnight on Budget Day, of tighter exit tax provisions. The exit tax seeks to prevent Irish companies from migrating tax residence and removing certain assets permanently from the Irish tax net. Prior to the amendment, it was relatively easy to escape the existing exit tax provisions. Going forward, Irish companies that migrate tax residence will suffer a 12.5% tax charge on unrealised gains at the date of migration, payable in six instalments in certain cases. The 12.5% rate increases to the standard 33% CGT rate if the migration is part of an arrangement whereby there is also a disposal of assets by the company.  The new exit provisions will principally impact companies with valuable intellectual property (IP) in Ireland. Going forward, it will not be possible to remove this IP from the Irish tax net without incurring a tax cost. The exit tax comes at a time when many groups are looking at moving IP currently housed offshore to onshore locations such as Ireland.  While the introduction of a revised exit tax regime was mandatory under an EU Directive, its introduction could have been delayed until 2020, so its implementation on Budget Day was surprising.  Controlled Foreign Company regime The Budget also saw the expected introduction of our Controlled Foreign Company (CFC) regime. Broadly, this affects Irish companies with subsidiaries in low-tax jurisdictions where the profits of the low-tax country are essentially driven by activities undertaken in the Irish company. The expectation is that the CFC rules, effective 1 January 2019, will not generate significant tax revenues but will require consideration by some groups. KEEP scheme There was a positive change to the KEEP scheme with an increase to 100% of salary on share value that can qualify for CGT treatment. KEEP is a tax-efficient share option scheme, granting CGT treatment rather than more penal income tax treatment, subject to certain conditions. Unfortunately, the scheme is still difficult to access and uptake has been slow. Many of the hoped for changes did not come to pass and this is likely to mean that no significant additional take-up in the scheme will be seen. EIIS The Budget, and subsequent Finance Bill, also saw fundamental changes made to the EIIS (old BES) relief, which incentivises investors with a tax deduction for qualifying investments. With EU rules making it difficult in many cases to establish whether a particular investment is eligible for relief, the existing EIIS regime has proved difficult to access for many investors. Combined with a resourcing issue in Revenue, this has caused significant delays in the certification process. The Finance Bill has completely rewritten the EIIS rules. The rules are now clearer and less complex, and introduce a new relief for investments in start-up ventures. While some issues remain within the new regime, there is hope that the improvements made will encourage more take-up of the scheme in 2019 and beyond.  Housing In a positive move, full interest relief for landlords in respect of interest charges on residential properties has been fast-forwarded to 1 January 2019.  In a further move to improve supply in the rental market, short-term lettings (less than 28 days) will no longer qualify as tax-exempt rental income under the “rent-a-room” scheme. The objective here is to discourage short-term lettings in favour of longer-term tenancies. Overall, the Budget produced nothing earth-shattering from a tax perspective. However, there were some missed opportunities to do more for Irish entrepreneurs and small businesses in general.  Peter Vale is Tax Partner at Grant Thornton.

The UK Government is carrying out inspections and imposing fines on companies found to be non-compliant with the national minimum wage. Geraldine Browne highlights the common mistakes that organisations sometimes make. Her Majesty’s Revenue and Customs (HMRC) achieved record enforcement results this year, identifying £15.6 million of underpayments. The number of workers identified as underpaid was more than double that in 2016/17 and the highest number since the national minimum wage (NMW) came into force. There is no doubt that the Government’s commitment to this clampdown is working; we are seeing an increase in NMW reviews. There has also been a significant rise in whistleblowing over the NMW. HMRC received a record 5,053 reports of suspected underpayments in 2017, which had doubled from the year before. We expect that this will continue to increase with new payslip rules, which are due to come into force in April 2019. The main change will mean that any worker paid on an hourly basis will be due a payslip showing the number of hours worked. The aim is to help workers establish if they have been paid the correct amount under the NMW.  When we look beyond the headline figures, we see that most businesses take NMW compliance very seriously. In fact, of the 239 employers named and shamed, 85 were found to be underpaying just one employee, indicating that mistakes are being made, not malicious intent. Public naming and shaming has a huge impact on the reputation of a business. Employers tend to focus on ensuring that they are paying the correct rates to the correct categories of employee. They understand the rates but do not always understand the principles of what constitutes time for pay. It is a complex area and worth reviewing some of the common pitfalls. What is work time? There are periods of travelling time when the minimum wage must be paid to a salaried worker. When they are travelling in connection with their work, any rest periods taken during the time they are working counts as time worked, as does waiting for a train, waiting to collect goods, meeting someone in connection with work and travelling to a training venue. Employers need to address how they record and pay for this time. Contrast this to the recent Court of Appeal case on “sleep-ins”. The Court of Appeal decided that sleep-in workers were not entitled to national minimum wage for time spent asleep during a sleep-in shift. This case, Royal Mencap Society v Tomlinson-Blake again focused on time worked with the employee arguing that time asleep was time worked. The outcome left the care sector in limbo as we await to hear if the Supreme Court will hear this appeal. In the meantime, this sector continues to pay employees for sleep-ins until a decision is reached. Many employers have systems whereby their workers clock in and out and this data is passed to a payroll department to process hourly paid workers. This area will be reviewed in detail by a NMW inspector. If they do come across a case where an employee has not been paid for time worked, this will form part of non-compliance with the NMW. This can easily happen. For example, the employee has clocked in at 8.10am, but has been paid from 8.15am. It is worth having your own internal review of this data to ensure compliance. One slip-up can be costly. Deductions It is not just what employers pay that requires review, but also what deductions they make from pay. There are deductions that will not reduce the employee’s pay for minimum wage purposes. These include deduction for income tax, national insurance and accidental overpayment of wages. Deductions can cause unintentional error. The employer may deduct something from the employee’s salary, which may take their pay below the NMW. For example, an employer may deduct the cost of the uniforms from staff salaries, bringing the employee below the NMW. Employers may wish, instead, to provide uniforms free of charge or, alternatively, spread the deductions over several pay periods. Review your pay practices In summary, the Government continues to put measures in place to protect employees from NMW exploitation. This is how it should be, even when it raises additional challenges for business. To safeguard against non-compliance, employers should conduct a thorough review of their pay practices in all areas of NMW. Substantial fines accompany NMW offences and the damage to the employer’s reputation can be significant. It can impact on business sales and on businesses’ ability to attract key talent in the future. You may think you are complying, but one error can lead to the naming and shaming. It’s worth moving this topic further up your organisation’s agenda and investing the time in a thorough review.   Geraldine Browne is Tax Director at BDO Northern Ireland.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. IRISH VAT UPDATES Finance Bill  The Finance Bill (as initiated) contained a small number of provisions in relation to VAT, which are summarised below.  As announced in the Budget, the Bill confirmed that the VAT rate for certain goods and services, mainly in the tourism and hospitality sectors such as hotel accommodation, restaurants and admissions to many attractions, will increase from 9% to 13.5% with effect from 1 January 2019. The 9% VAT rate will continue to apply to newspapers (and similar publications) and the provision of sporting facilities. The 9% VAT rate will also be extended to e-books and digitally supplied publications with effect from 1 January 2019. This follows an EU-wide agreement reached in October to allow member states apply reduced rates of VAT to digital publications. The other VAT-related provisions in the Bill include: a technical amendment relating to the VAT treatment of sales of residential property by liquidators, receivers and mortgagees; and the withdrawal of a VAT relief in situations where VAT has been charged on the supply of a telephone card, which is then used outside the EU. EU VAT UPDATES Share transaction costs The question of a taxpayer’s entitlement to recover VAT on costs in relation to share transactions has been the subject of much debate and case law in recent years. In recent months, there have been two further European Court of Justice (CJEU) decisions, namely Ryanair (C-249/17) and C&D Foods Acquisitions (C-502/17). Ryanair was a referral to the CJEU from the Irish Supreme Court. In its decision, the CJEU confirmed Ryanair’s entitlement to fully recover VAT on professional costs relating to its bid to acquire Aer Lingus. This was on the basis that, if the acquisition had been successful, Ryanair would have provided management supplies to Aer Lingus. Prior CJEU judgments had confirmed that the provision of management services by a parent company to its subsidiary is a VATable “economic activity” giving a right to VAT recovery. While Ryanair only acquired a minority interest in Aer Lingus and did not provide any management services to it, the CJEU judgment confirmed the entitlement to VAT recovery based on the intended taxable economic activity of managing the subsidiary. The C&D Foods Acquisition case, a referral from the Danish courts, bore similarities to the Ryanair case in that it related to an intended but uncompleted share transaction. However, in this case, the taxpayer intended to sell rather than acquire shares. The taxpayer was a holding company which was actively involved in managing its subsidiaries, but engaged various consultants to advise it on the sale of the shares in its subsidiary. The proceeds from the sale were intended to pay down a debt owed to a bank. The CJEU ruled that the VAT on consultancy costs relating to the proposed share disposal was not recoverable as the proceeds of the share sale would not be used for taxable business activities.  The two cases mentioned above highlight the ongoing complexity of the VAT recovery position on costs relating to share transactions and the importance of considering the exact fact pattern in each case. Hire purchase transactions In Volkswagen Financial Services Limited (VWFS) (C-153/17), the CJEU concluded that VWFS is entitled to partial VAT recovery on the overhead costs of its hire purchase business.  This was the case even though these costs were incorporated into the finance charge forming part of the hire purchase contract rather than the cost of the underlying goods. HMRC in the UK had sought to argue that there should be no VAT recovery. By way of background, hire purchase is treated for VAT purposes as both a taxable supply of goods (the initial handing over of the asset/vehicle) and an exempt supply of credit (i.e. the margin earned by the finance provider). Under consumer law, the hirer is required to disclose separately on the hire purchase agreement the price of the vehicle and the finance element. The CJEU first confirmed that the VAT treatment of hire purchase as separate supplies of goods and finance was valid. However, the principal dispute arose in relation to the recovery of input VAT on general overheads in running the VWFS hire purchase business. VWFS argued that the proportion of the input VAT recoverable on overheads should be based on the number of exempt and taxable transactions carried out, with each hire-purchase transaction counting as two transactions (i.e. a taxable supply of goods and an exempt supply of credit). On this basis, half of the general overhead VAT would be recoverable. HMRC argued that the residual input VAT was a cost component of the exempt transactions alone and, therefore, no VAT should be recovered. The CJEU did not accept HMRC’s position that no VAT was recoverable on general overhead costs of the hire purchase business. While it did not specify the exact methodology to use, it nonetheless confirmed that the taxable supply, as well as the exempt supply of credit, should be factored into the calculation.  As the hire purchase VAT rules operate similarly in Ireland to the UK, providers of hire purchase products may wish to review their VAT recovery position in light of the judgment. David Duffy is a VAT Director at KPMG.

Helen Byrne, Senior Tax Manager at EY Ireland, outlines the relevant compliance dates for December 2018 and January 2019. RELEVANT COMPANY DATES 14 December 2018  Dividend withholding tax return filing and payment date (for distributions made in November 2018). 21 December 2018  Due date for payment of preliminary tax for companies with a financial year ended 31 January 2019. If this is paid using ROS, this date is extended to 23 December 2018. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 30 June 2019. If this is paid using ROS, this date is extended to 23 December 2018. 23 December 2018 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 31 March 2018 if filed using ROS.  Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 31 March 2018 may need to be repaid by 23 December 2018 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 31 December 2017 year ends, this should extend the iXBRL deadline to 23 December 2018. 31 December 2018 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 31 March 2018. Latest date for payment of dividends for the period ended 30 June 2017 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental and professional services income arising in that period (close companies only). Contributions made by employers to approved occupational pension schemes are tax deductible on a payment basis, as are charges on income (e.g. patent royalties and certain interest). Companies with 31 December year ends may wish to review their positions to maximise/ minimise deductions before the year end. A two-year time limit applies to some corporation tax group relief and loss relief claims. Potential claims for the period ending 31 December 2016 may need to be considered prior to 31 December 2018.  Research and development (R&D) tax credits in respect of R&D expenditure incurred in an accounting period ended 31 December 2017 must be claimed by 31 December 2018. A similar deadline applies to capital allowance claims for intangible assets.  Country by Country Reporting Notifications relating to the fiscal year ended 31 December 2018 must be made to Revenue no later than 31 December 2018, via ROS (where necessary). 1 January 2019 Controlled foreign company (CFC) rules in effect from this date. 14 January 2019  Dividend withholding tax return filing and payment date (for distributions made in December 2018). 21 January 2019 Due date for payment of preliminary tax for companies with a financial year ended 28 February 2019. If this is paid using ROS, this date is extended to 23 January 2019 Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 31 July 2019. If this is paid using ROS, this date is extended to 23 January 2019. 23 January 2019 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 30 April 2018 if filed using ROS. Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 30 April 2018 may need to be repaid by 23 January 2019 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 31 January 2018 year end, this should extend the iXBRL deadline to 23 January 2019. 31 January 2019 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 30 April 2018. Latest date for payment of dividends for the period ended 31 July 2017 to avoid sections 440 and 441 TCA97 surcharges on investment, rental and professional services income arising in that period (close companies only). Country by Country Reporting Notifications relating to the fiscal year ended 31 January 2019 must be made to Revenue no later than 31 January 2019, via ROS (where necessary). PERSONAL TAXES 15 December 2018  Capital gains tax due in respect of any chargeable gains arising on disposals in the period 1 January 2018 to 30 November 2018 must be paid on or before 15 December 2018.  31 January 2019   Capital gains tax due in respect of any gains arising on any disposals in the period 1 December to 31 December 2018 must be paid on or before 31 January 2019. GENERAL 31 December 2018  Valuation date for 2018 domicile levy. Irish assets held on this date will be taken into account in ascertaining if the €5 million ‘Irish asset test’ has been met. A four-year time limit generally applies to repayment claims. A claim for repayment of corporation tax for the year ended 31 December 2014 must generally be lodged with Revenue by 31 December 2018. Claims for repayments of income tax for the year of assessment 2014 must also be submitted by 31 December 2018.  Termination of Home Renovation Incentive Scheme, with the exception of cases where planning permission is in place by 31 December 2018 and work is carried out by 31 March 2019. Expiration of young trained farmers stamp duty relief. 1 January 2019 Removal of five-year exemption from IREF withholding tax for disposals occurring or unrealised profits or gains recognised in the income statement on or after 1 January 2019. Employers will be required to report employee remuneration and PAYE to Revenue on a real-time basis. 8 January 2019        Under mandatory reporting rules, promoters of certain transactions may be required to submit quarterly ‘client lists’ in respect of disclosed transactions made available in the relevant quarter. Any quarterly returns for the period to 31 December are due on 8 January. Due date for submission of return and payment of IREF withholding tax in connection with the accounting period ended on or before 30 June 2018. Note: The above does not take account of Budget 2019 and Finance Bill 2018.

Helen Byrne, Senior Tax Manager at EY Ireland, outlines the relevant compliance dates for October and November. RELEVANT COMPANY DATES 14 October 2018 Dividend withholding tax return filing and payment date (for distributions made in September 2018). 21 October 2018 Due date for payment of preliminary tax for companies with a financial year ended 30 November 2018. If this is paid using ROS, this date is extended to 23 October 2018. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 30 April 2019. If this is paid using ROS, this date is extended to 23 October 2018. 23 October 2018 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 31 January 2018 if filed using ROS. Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 31 January 2018 may need to be repaid by 23 October 2018 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 31 October 2017 year ends, this should extend the iXBRL deadline to 23 October 2018. 31 October 2018 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 31 January 2018. Latest date for payment of dividends for the period ended 30 April 2017 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental and professional services income arising in that period (close companies only). Country-by-Country Reporting Notifications relating to the fiscal year ended 31 October 2018 must be made to Revenue no later than 31 October 2018 via ROS (where necessary). 14 November 2018 Dividend withholding tax return filing and payment date (for distributions made in October 2018). 21 November 2018 Due date for payment of preliminary tax for companies with a financial year ended 31 December 2018. If this is paid using ROS, this date is extended to 23 November 2018. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 31 May 2019. If this is paid using ROS, this date is extended to 23 November 2018. 23 November 2018 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 28 February 2018 if filed using ROS. Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 28 February 2018 may need to be repaid by 23 November 2018 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 30 November 2017 year ends, this should extend the iXBRL deadline to 23 November 2018. 30 November 2018 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 28 February 2018. Latest date for the payment of dividends for the period ended 31 May 2017 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental and professional services income arising in that period (close companies only). Country-by-Country Reporting Notifications relating to the fiscal year ended 30 November 2018 must be made to Revenue no later than 30 November 2018 via ROS (where necessary). PERSONAL TAXES 31 October 2018 Due date for payment of preliminary income tax (inclusive of the USC) for the tax year 2018 (assuming the ROS ‘pay and file’ 14 November 2018 extension is not availed of). Due date by which self-assessed income tax and capital gains tax returns must be made for the year of assessment 2017 (see 14 November 2018 ROS ‘pay and file’ deadline extension). Due date for payment of any balance of income tax for the tax year 2017, assuming adequate preliminary tax was paid for 2017. Due date for payment and return of €200,000 Domicile Levy for 2017. Latest date for making contributions to a PRSA, an AVC or an RAC for the tax year 2017 (subject to an extension to 14 November 2018 for ROS pay and filers). 14 November 2018 An extension of the income tax ‘pay and file’ date of 31 October 2018 to 14 November 2018 may be availed of if taxpayers submit their payment and file their tax return through ROS. Extended due date for payment of capital acquisitions tax and filing of returns in respect of gifts and inheritances taken in the 12-month period ended 31 August 2018 (if done through ROS, otherwise 31 October 2018).  GENERAL 5 October 2018 Under mandatory reporting rules, promoters of certain transactions may be required to submit quarterly ‘client lists’ in respect of disclosed transactions made available in the relevant quarter. Any quarterly returns for the period to 30 September are due on 5 October. 1 November 2018 Date on which residential property must be held in order to be liable for 2019 Local Property Tax. Note: this article does not take account of any amendments proposed in Budget 2019 or Finance Bill 2018, both of which are expected to be published in December 2018.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. IRISH VAT UPDATES Transfer of business Revenue eBrief No. 150/18 provides a link to the updated VAT Tax and Duty Manual (TDM) in respect of VAT transfer of business (TOB) relief. This updates the previous guidance dated December 2017. The new guidance applies to asset transfers from 31 July 2018 onwards. However, where there was a binding contract in place before 31 July 2018 in respect of a transaction, previous guidance will apply to that transaction. The guidance includes examples of transactions that, in Revenue’s view, qualify for TOB relief. This includes detailed comments on the circumstances in which a sale of property can qualify for TOB relief. The guidance states that the sale of a property that is subject to an existing letting agreement, an agreement to lease or a licence to occupy qualifies for TOB relief provided the buyer is an accountable person. However, the sale of vacant property or the sale of a let property to the tenant would generally not qualify for TOB relief, unless those sales are accompanied by other assets which, together with the property, constitute a business.  The guidance also sets out the VAT deductibility position on costs in relation to a transfer of business and comments on the application of the relief in scenarios where multiple assets and businesses are transferring. Compulsory purchase orders Revenue has updated the VAT on Property Guide (available through the Revenue website) to include comments on the VAT treatment of compulsory purchase orders of land. The guidance states that, where a supply of property takes place on foot of a compulsory purchase order, Revenue will not, in general, consider the supply to be subject to VAT solely by virtue of development work carried out by the acquiring body under its statutory powers, after the notice to treat has issued. EU VAT UPDATES VAT treatment of payment processing service The Court of Justice of the European Union (CJEU) judgment in DPAS Limited (C-5/17) concerns the VAT treatment of certain payment-related services. This is the latest in a number of CJEU cases which have considered the scope of the VAT exemption for transactions concerning payments. This is a complex area and each scenario should be considered on a case-by-case basis. This judgment held that DPAS’s service to dental patients of facilitating their direct debit payments to their dentist did not constitute a VAT-exempt financial transaction. Therefore, VAT was applicable on this service. The CJEU had previously determined in AXA UK (C 175/09) that similar services provided to dentists should be regarded as debt collection, an activity that is subject to VAT. However, DPAS sought to argue that its services were different to those in AXA UK as DPAS contractually provided its services to the patients who made the payments rather than the dentists who received the payments. However, the CJEU considered that DPAS’s arrangement did not meet the conditions for VAT exemption. In reaching its judgment, the CJEU considered it significant that DPAS was not responsible for the failure or cancellation of a payment as a result of the direct debit, as this was ultimately the responsibility of the relevant party’s banks. Change of use In the case of Gmina Ryjewo (C-140/17), a Polish local authority constructed a property that was initially used for activities which were outside the scope of VAT. On that basis, the local authority did not recover VAT on the construction of the building. Four years later (i.e. still within the period for the adjustment of input tax in Poland), the authority began to use part of the building for VATable activities and sought to reclaim a portion of input VAT previously disallowed. The Polish tax authorities denied this VAT recovery on the ground that the authority had constructed the property for an ‘outside the scope of VAT’ activity. However, the CJEU found in the local authority’s favour. In Ireland, we have provisions known as the Capital Goods Scheme, which can result in additional VAT recovery or VAT clawbacks on property-related costs where the level of VATable activity in a property changes over a period of time, typically 20 years. Brexit The UK Government issued a number of papers on 23 August 2018 on the potential impact of a no-deal Brexit scenario, two of which deal with the potential VAT implications for UK businesses. While the Brexit landscape continues to evolve and at this point is far from certain, the papers set out the likely VAT implications if there is no deal between the EU and the UK. The first paper entitled Trading with the EU If There’s No Brexit Deal states that UK businesses would in those circumstances have to apply the same customs and excise rules to goods moving between the UK and the remaining EU countries as currently apply in cases where goods move between the UK and a non-EU country. Customs declarations would be required when goods enter or leave the UK. The paper assumes that the remaining EU countries would also apply customs and excise rules and requirements to trade with the UK, as is currently the case with other non-EU countries. The second paper entitled VAT for Businesses If There’s No Brexit Deal states that the UK’s VAT regime would mirror the current VAT system as closely as possible. However, some specific changes would be required to deal with the fact that the UK would not be part of the EU. For example, the movement of goods in and out of the UK from the EU would be regarded as imports and exports. To help reduce the potential cash flow implications, the UK Government may introduce a postponed accounting system for UK businesses for import VAT. This would allow UK businesses to account for import VAT when filing their VAT returns rather than at the time of import. The papers focus on the position from a UK perspective. However, similar VAT implications could arise for Irish businesses trading with the UK in the event of a no-deal Brexit.   David Duffy ACA, AITI Chartered Tax Advisor, is a VAT Director at KPMG.