VAT partner Alan Pearce discusses what the Chancellor should announce in his first ever Autumn Budget.
With regards to VAT
The UK should
re-introduce 'Postponed Accounting for import VAT'. This would allow importers to off-set import VAT via their quarterly VAT returns rather than have to pay it at the point of importation and then claim it back up to 3 months later. This would be a significant administrative easement and assist cash flow for UK businesses importing goods. Apart from the one-off cash flow hit, it should not affect Government revenues.
This would also allow the UK to compete on an equal footing with many other EU countries, notably the Netherlands (and France who adopted this treatment last year). Those EU countries that already operate a postponed accounting regime have a competitive edge over the UK and often promote it as an incentive to do business there rather than the UK.
This issue will become more important in the run up to Brexit and beyond. A change to the UK’s current policy of collecting VAT at the time of importation will demonstrate that we are open for business and would simplify the import regime for trade with third countries and, in the event of a 'no trade deal' on transactions with EU countries post Brexit. (Alan Pearce, VAT partner)
For more information, please contact Alan Pearce.