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VAT & Brexit – What Will Happen?

With COVID happening, we all (mostly) forgot about Brexit. Now, with only a month left until we officially, officially, officially leave the EU, we need to take another look.

Here, we’ve outlined the basics of what we think you, as a small business owner, should know about how Brexit will affect your VAT returns. Keep in mind: this is all still being finalized, so at this moment, anything could happen.

If you are unsure whether you should be VAT registered, check out our article here.

Firstly, this will all begin after 31 December, 2020.


+ There will be limited changes on business to business transactions.

+ Any services provided from the UK to businesses in the EU will not have to charge VAT. There are varying rules for non-business services.

– Any goods moving between the UK and EU after this date will require a customs declaration and may be subject to tariffs.

* Currently there is a minimum VAT rate of 15% imposed by the EU that the UK has to comply with. Once we are out of the EU, we no longer have to comply to this.

* Northern Ireland will enter a special relationship with the EU.

* UK businesses incurring EU VAT on travel, hotel or other expenses will use the 13th Directive paper-based reclaim process.


There are also a few special areas that you may be affected by:

  • Postponed Accounting Import VAT

Postponed Accounting Import VAT

What is it?

Essentially, you’re ‘supposed’ to pay VAT immediately upon the good entering the country. Currently, there is an agreement with the EU that you’ll have a pay window up to the 15th of the following month. The idea is, you will have a net cash impact on your business when

buying/ selling your VAT incurring products within the EU.

How will it be affected by BREXIT?

With this new rule starting January 1st, 2021, it will now apply regardless of where the goods coming from, EU or not. This is with the aim to help with cash flow for businesses.


What is it?

VAT MOSS is a way of paying VAT if your business supplies digital services to other EU countries. You’re basically supposed to pay VAT on the country that the service is provided, but for some businesses this could get super complicated super quickly. Therefore, they introduced VAT MOSS (which stands for Value Added Tax: Mini One Stop Shop) so UK sellers could just pay everything to HMRC.

How will it be affected by BREXIT?

Once BREXIT happens, if you are currently taking advantage of the VAT MOSS scheme, you’ll have to register for MOSS in the EU and the UK separately, which basically means two VAT returns to file each quarter!


We have been working with VAT returns for years, and are up to date on the latest news from HMRC regarding the changes. ,,If you have questions, reach out! We’ll be happy to help.