HMRC outlines no deal preparations for EU-only UK traders

HMRC has written to 145,000 VAT-registered businesses across the UK, including Northern Ireland, which only trade with the EU, explaining changes to customs, excise and VAT in the event of a no deal Brexit, which would require them to complete customs declarations for the first time

While HMRC stresses that it is ‘unlikely’ the UK will leave the EU in March next year without a deal being agreed, the letter points out that this outcome would require immediate changes to the way UK businesses trade with the EU.

This would include UK businesses having 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.

Equally, trading partners in the EU would be required to apply customs, excise and VAT procedures to goods they receive from UK businesses, in the same way that they do for goods received from outside of the EU.

HMRC highlights that if a business currently trades only with the EU, then it would have to start completing customs declarations from March 2019 and customs checks would apply to the business for the first time.

There is a separate version of the letter for businesses in Northern Ireland, which says that the government is committed to avoiding a hard border between Northern Ireland and Ireland.

It states: ‘If we leave the EU without a deal in March 2019, the UK would stand ready to engage constructively to meet these commitments and act in the best interests of the people of Northern Ireland, recognising the challenges that the lack of a UK-EU legal agreement would pose in this unique context.

‘This would include engagement on arrangements for land border trade. We will update you on the UK’s different customs arrangements and any actions you may need to take in due course.

 ‘The Irish Government have indicated they would need to discuss arrangements in the event of no deal with the European Commission and EU member states.’

Both letters provide links to sources of government guidance, including the technical notes published over the summer, and state that further advice will be made available in due course.

This week a first economic impact report of a hard Brexit by the Economists for Free Trade (EFT) group suggested a boost to UK revenues of £80bn over 15 years.

However a poll of 100 leading UK business leaders, mostly chairs and chief executives of top FTSE companies including Sainsbury’s, RBS, BT, AON, HSBC, TSB and Dixons Carphone by global executive search firm Odgers Berndtson, found 75%, said they were concerned or very concerned that the UK leaving without a deal would have a significant impact and impose ‘material disruption and cost’ to their businesses.

Only 1% said a hard Brexit would be positive for their business. Over half said their preferred outcome for the negotiations was for Brexit to stop it altogether (53%), while 41% preferred an interim or transition arrangement.

Letter to EU-only traders excluding Northern Ireland is here.

Letter to EU-only traders in Norther Ireland is here.

Report by Pat Sweet

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