HMRC responds to Institute’s letter on soft landing for Brexit VAT changes

Mar 23, 2021

HMRC has responded to our recent letter regarding the need for a soft-landing in respect of VAT changes due to the UK’s exit from the EU. The response received confirms that HMRC has taken our points into account regarding its proposed approach to compliance with the new NI VAT regime in particular. The Institute continues to discuss tax and related EU issues with the Government and is happy to accept member’s feedback at any time. You can email us at

HMRC’s compliance approach will look different in some areas during the first phase, when HMRC will focus compliance activity on the areas of highest risk. Where HMRC finds non-compliance, it will be tailoring its response. HMRC will continue to respond firmly to evasion, fraud, or other deliberate non-compliance.

As with GB-to-EU controls, HMRC will be focusing on high-risk traders and organised fraud. While doing this, HMRC will be building up a picture of compliance risk.

HMRC will not be taking a punitive approach to traders who are trying to do the right thing but make a mistake. Instead, HMRC is aiming to provide support to get on the right footing so they can comply with their obligations for the future. However, penalties will be charged if there is deliberate non-compliance.