HMRC has written to UK companies who trade with the EU warning how they could be affected by a no-deal Brexit.
The letter has been sent to 145,000 firms with turnover above the VAT threshold, but its key messages also apply to another 100,000 firms whose turnover falls below the threshold.
What are the implications?
HMRC’s letter states that if we leave the EU without a deal in March 2019, there would be immediate changes to the way UK businesses trade with the EU.
At a stroke, companies would face procedures akin to import-export businesses.
‘The steps and obligations you may need to take to continue to trade with the EU if the UK leaves without a deal are broadly the same as those that apply to businesses that trade with countries outside of the EU,’ the letter says.
All firms trading with the EU will have to complete customs declarations from March 2019and the following procedures would apply:
- UK businesses would have to apply customs, excise and VAT procedures to goods traded with the EU, in the same way that already applies for goods traded outside of the EU.
- Trading partners in the EU would similarly have to apply customs, excise and VAT procedures to goods they receive from UK firms, in the same way that they do for goods received from outside of the EU.
Is it a ‘done deal’?
HMRC calls a No Deal exit ‘unlikely’, but makes no predictions that it can be avoided:
‘[G]overnment continues to prepare for all scenarios, including the unlikely outcome that the UK leaves the EU at the end of March 2019 without a deal.’
The cost and disruption envisaged in the letter could be avoided. However HMRC advises business owners:
‘You may wish to use the coming months to understand more about what leaving the EU without a deal would mean for you.’
Government advice on international trade is available from the following sites:
The full text of the letter is available here:
David Nunn is Content Manager at AAT.