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Businesses that trade with the EU will broadly follow the same customs controls as businesses trading with the rest of the world – so they will need to adapt their business to comply with these systems, processes and controls.
How VAT accounting processes will change
If the UK leaves the EU without an agreement, the main VAT place of supply rules will remain the same for UK businesses.
The current ‘place of supply’ rules determine the country in which you need to charge and account for VAT. These rules are in line with international standards set out by the Organisation for Economic Co-operation and Development (OECD).
The rules around place of supply will continue to apply in broadly the same way that they do now. If you’re supplying digital services to non-business customers in the EU the place of supply will continue to be where the customer resides. VAT on services will be due in the EU country within which your customer is a resident.
The Tour Operators Margin Scheme is an EU VAT accounting scheme for businesses that buy and sell on certain travel services that take place in the EU. HMRC has been engaging with the travel industry and will continue to work with businesses to minimise any impact.
Changes to VAT IT systems
If the UK leaves the EU without an agreement, the UK will stop being part of EU-wide VAT IT systems.
EU VAT Registration Number Validation
This service allows you to check whether a customer or supplier’s VAT number is valid. You will still be able to use the EU VAT number validation service to check the validity of EU business VAT registration numbers.
UK VAT registration numbers will no longer be part of this service. In the event of ‘no deal’, HMRC is developing a system so that UK VAT numbers can continue to be validated. We know this is important for certain businesses to carry out due diligence.
Things you can do now
If you expect to be operating in the EU after 29 March 2019, you should consider now the effect of a ‘no deal’ exit on your business:
- consider any changes you may need to make to adapt to new processes and systems
- stay up-to-date with these changes by registering for email alerts. Follow the link, add your email address, select ‘Submit’, select ‘Add subscription’ and choose ‘EU Exit’ then select ‘Submit’