Forward Thinking Business Blog –
Since Boris Johnson assumed the role of Prime Minister in the UK, the prospects of a no deal Brexit have increased markedly with Mr Johnson guaranteeing exit from the EU on 31 October ‘do or die’. Whilst he has emphasised that he’d prefer to leave with a deal, it would appear he is willing to do so without one to achieve these objectives. We acknowledge that we do not know with any great certainty what will happen in the short term – whether tariffs and checks be applied from day one, what precisely will happen on the Irish border, and so on, but we do know what no deal ultimately means. It means that the UK will no longer be able to trade as it does now with the European Union. That as a ‘third country,’ the UK will see checks and tariffs/VAT applied to its products at the EU border.
The UK government has announced that in a ‘no deal’ scenario it would introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods from the EU and non-EU countries to the UK would be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. The Irish Government have recently announced that they too will introduce postpone accounting for import VAT to support trading with the UK.
In terms of Northern Ireland companies selling to the Republic of Ireland, depending on the goods, additional tariffs may become payable by the customer in the Republic of Ireland (the importer) coupled with the unenviable completion and submission of customs declarations. Without taking into account volatility of exchange rates, labour issues, regulations/certifications, labelling etc., these factors alone, both increased costs and administrative burdens, may mean that, many businesses in Northern Ireland will no longer be able to export to the Republic of Ireland as their competitiveness will be eroded.