Fears no-deal Brexit clash with new online VAT system could harm local SMEs
THERE are concerns a no-deal Brexit could impact on small businesses in the north preparing for the introduction of a new online VAT system
HMRC's new Making Tax Digital (MTD) system is due to come into effect in April, just days after the UK officially leaves the European Union and the Association of Certified Chartered Accountants (ACCA) has called for greater support local SMEs in the transition.
At present companies in the EU are able to obtain VAT refunds from other member states through a straightforward single-market mechanism.
This could cease in the event of a no-deal Brexit, with UK businesses missing out on refunds, like those in the US and other countries not formally part of the European Union (third countries).
UK businesses may also be required to change their IT systems if re-categorised by the European Union post March 29, adding further complexity to the VAT system.
Ahead of the potential clash ACCA is calling for the UK Government to publish specific scenario plans for the various potential outcomes of a no-deal Brexit on VAT.
ACCA head of taxation, Chas Roy-Chowdhury said businesses must be provided with clarity or the new online tax system must be delayed.
“This issue is of considerable concern for SMEs with many businesses reviewing how they will adhere to a new digital system MTD in April," he said.
"A scenario whereby just three days prior to that, the UK might crash out of the European Union, with all the impacts that could have for those trading with the bloc would present unnecessary challenges for businesses."
"We are stating that the government must be specific with the various outcomes of a no-deal and provide detailed scenario planning guidelines for businesses to follow. A failure to do so would, indeed, require a delay to the introduction of the new online tax system until businesses have had time to address issues relating to a no deal Brexit," Mr Roy-Chowdhury added.