Knowledge Base: E-commerce Accounting and VAT Compliance


The UK Brexit Customs and VAT Bill

Last week, the UK Parliament had its second reading of the ‘Taxation (Cross Border Trade) Bill’, which lays the ground for the post-Brexit Customs, VAT and Excise regimes. The Bill was published on 20th November, 2017, and is part of a series of Brexit laws to regulate UK legislation for post Brexit. This includes the ‘Trade Bill’ and ‘EU Withdrawal Bills’.

This Bill is being presented prior to the conclusion of future relations with the EU after Brexit. It is therefore being created to enable adjustment once the outcome of these negotiations are known. Key components include:

1. ‘Customs Duties’

‘Custom Duties’ are tariffs on goods being imported into the UK. As a member of the EU Customs Union, there are no duties on imports or exports between the UK and other Member States – only with countries outside the EU Customs Union. The EU also negotiates on behalf for the 28 Member States the duties on goods from non-EU countries.

The ‘Taxation Bill’ will allow the UK to create a post-Brexit customs law and rates, and standalone regime. This includes setting new import rates and goods’ classifications rules. Nonetheless, the rules will be very similar to the current EU regime to lessen any unnecessary friction with a key UK trading partner.

2. VAT regime – obligation of 20% import VAT

VAT is an EU capability, and the UK VAT Act mirrors the EU VAT Directive. This has been highly prolific in promoting the cross-border sales of goods and services within the EU.

The standard change post-Brexit, and reflected in the Bill, is the elimination of zero-rating of EU VAT on imports (acquisitions) and exports (dispatches). This means that importers will have to pay VAT at the time of clearing the goods into the UK from other EU Member States. The 20% import VAT will then be refundable in the company’s next VAT return – so this will create a cash flow delay problem.

3. Trade Defence and the Remedies

The EU presently acts for the UK and all Member States in cases where there are suspected unfair trade practices (e.g. goods dumping and excessive subsidies) by other countries. The Bill puts in place a UK trade remedies system to carry out investigations into allegations of dumping and subsidy, and to recommend remedies. This new UK system will replace the EU system and will be executed by new public body, the Trade Remedies Authority (TRA). The Trade Bill establishes the TRA.

4. Delegated Powers for Government – ‘Henry VII Powers’

The Bill also gives significant delegating powers in relation to the above. This is so the government can swiftly adjust the final legislation at Brexit. The UK Government claims that ‘framework’ primary legislation with supplementary secondary legislation is usual practice for indirect taxation. For example, customs tariffs includes thousands of different codes which would be unreasonable to introduce via primary legislation.

Please note: since the Bill relates to taxation, it only concerns the House of Commons.

amavat® provides a one-stop-shop solution for VAT Compliance within Europe. We assist clients with a single point of contact that speaks their language and handles all VAT related issues with a standard and cost efficient approach.

If you have any queries or questions, please do not hesitate to contact amavat®.

To find out more information please visit

Need help?

Speak to a Customer Relations Consultant for Online Sellers. An expert will respond shortly.

International Sales Manager
Customer Relations Consultant for Online Sellers