But what is currently a “paper exercise” will become a huge cashflow problem from UK importers, the instant Brexit comes into force, if it is allowed to happen on March 29, 2019 as Theresa May demands.
As a result of leaving the EU-VAT area – which is what hard Brexiters really, really want, remember – importers will have to pay VAT up-front on machine parts or ready-for-sale goods brought in from the EU, putting them seriously out-of-pocket.
Possible measures to avoid the issue involve staying in the Customs Union or negotiating to stay in the EU-VAT area. Neither would be tolerated by Brexiters.
This Writer wonders how many of the businesspeople affected by the change voted for Brexit. How many of their employees did?
Did they know they would be putting their livelihoods in danger? That’s the logical result of this situation; businesses may not be able to fund the deficit created by the change, with disastrous results.
Ah, but Brexit was the patriotic thing to do, wasn’t it? We had to get away from being ruled by those terrible unelected Eurocrats.
But there never were any unelected Eurocrats forcing us into anything – that was a lie. And it isn’t patriotic to lead your country into a no-win situation.
More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit, under controversial legislation to be considered by MPs on Monday.
The VAT changes spelled out in the taxation (cross-border trade) bill – one of a string of Brexit laws passing through parliament – are causing uproar among UK business groups, which say that they will create acute cashflow problems and huge additional bureaucracy.
Labour and Tory MPs and peers said that the only way to avoid the VAT Brexit penalty would be to stay in the customs union or negotiate to remain in the EU-VAT area.
The Labour MP and former minister Chris Leslie said that the VAT hit to firms was “yet another aspect of Brexit that the Leave campaign failed to inform the public about”. He added that he would be tabling urgent amendments to ensure the UK remained in the EU VAT area – a move that would enrage pro-Brexit MPs.
UK companies that import machine parts or goods ready for sale from the EU can currently register with HMRC to bring them into the UK free of VAT. They register the VAT charge and reclaim it later, all as a paper exercise. VAT is added to the price of the product whenever it is sold to the final customer.
Without a VAT deal with Brussels, importers will have to pay the VAT upfront in cash and then recover the money later, creating a huge outflow of funds before they can be recouped.
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