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VAT Refund Claims to be Affected if No Deal Brexit Occurs

A no deal departure from the European Union(EU) will mean that many UK businesses will need to apply the same processes to EU trade as the other countries of the world who are not a Member State of the EU.

News recently published has informed that should the UK leave the European Union without a deal in place, then electronic EU VAT refund claims will no longer be possible; this is for refund claims both to and from the UK.

Brexit has dominated the news lately and immense pressure is being put on the Government by some to secure a deal before the UK’s departure, which is set to be on 29th March 2019. However, as time ticks on, the securing of a deal looks to be becoming more and more difficult.

Should the UK leave without a deal, then any electronic EU VAT refund claims will need to be submitted before the departure date of 29th March. HMRC are urging businesses to submit these before this date instead of waiting till the usual deadline, which would be 30th September 2019.

Currently, EU Directive 2008/09/EC makes it possible for businesses within the EU to claim VAT refunds acquired in other Member States through its electronic system. However, leaving with no deal will mean the UK no longer has access to this system, and, in turn, EU businesses will also not be able to make these claims to the UK.

Any business who does not submit these refund claims before the 29th March 2019 will from then on need to submit them to the relevant countries via the same methods as a non-EU business must and will also find themselves subject to the same rules and condition.

Further to these VAT refund claims, any business within the UK who supplies digital services to EU private individuals that are registered under the ‘Mini -One-Stop Shop (MOSS)’ for UK provisions will find their registration cancelled as of 1st April this year. These businesses will have to re-register for MOSS in an EU Member State by the 10th April 2019. However, it must be kept in mind that should the UK leave the EU with a deal in place, which is agreed and finalised by the 29th March 2019 between the 28 Member States, or should an extension to Article 50 be decided upon, then there will be no change to the current procedures for EU VAT refunds.

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