For those monitoring the impact of a no deal Brexit the publication released earlier this year by the government highlighting details of the UK’s temporary tariff regime, is a must read.

Designed to minimise costs to business and consumers the tariffs will protect vulnerable industries, however the regime is temporary with up to 12 months application whilst reviewing a permanent approach.

What do you need to know?

British businesses would not pay customs duties on the majority of goods when importing into the UK if we leave the European Union without an agreement.

Under the temporary tariff, 87% of total imports to the UK by value would be eligible for tariff free access.

Tariffs would still apply to 13% of goods imported into the UK. This includes:

  • a mixture of tariffs and quotas on beef, lamb, pork, poultry and some dairy to support farmers and producers who have historically been protected through high EU tariffs
  • retaining a number of tariffs on finished vehicles in order to support the automotive sector and in light of broader challenging market conditions. However, car makers relying on EU supply chains would not face additional tariffs on car parts imported from the EU to prevent disruption to supply chains
  • in addition, there are a number of sectors where tariffs help provide support for UK producers against unfair global trading practices, such as dumping and state subsidies. Tariffs would be retained for these products, including certain ceramics, fertiliser and bioethanol
  • to meet our long-standing commitment to reduce poverty through trade, the government currently offers preferential access to the UK market for developing countries. To ensure that access for developing countries is maintained, we would retain tariffs on a set of goods, including bananas, raw cane sugar, and certain kinds of fish

More information on the government website can be found here.

The government has published a series of 106 technical notices setting out information that allows businesses to understand what they would need to do in a no deal scenario so they can make informed plans and mitigate risk.

If there’s a no deal

The UK will continue to have a VAT system after it leaves the EU. The VAT rules relating to UK domestic transactions will continue to apply to businesses as they do now. If the UK leaves the EU without a deal, the government’s aim will be to keep VAT procedures as close as possible to what they are now. This will provide continuity and certainty for businesses. However, if the UK leaves the EU with no agreement, then there will be some specific changes to the VAT rules and procedures that apply to transactions between the UK and EU member states.

Accounting for import VAT on goods imported into the UK

If the UK leaves the EU without an agreement, the government will introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods to the UK will 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. This will apply both to imports from the EU and non-EU countries.

For more information visit the government website