Categories
The UK and the European Union (EU) are now more than a month into their new trading relationship, following the end of the previous Brexit transitional period.
Among the changes brought by the new arrangements is the need for small businesses in the UK to register for VAT in each EU country where they sell directly to customers. UK businesses in this situation will also be required to have a physical business representative in each country, and cannot simply be a “brass-plate” company.
Businesses that still have work to do to adapt to the new rules are advised to consult our previous article on the steps they will need to take after the transition period.
However, with registering for VAT costing between £3,000 and £5,000 for each EU country, some small businesses in the UK could find themselves having to pay up to £130,000 simply for the right to pay VAT in every jurisdiction. Is there any way, then, to avoid this potentially crippling bill?
There’s hope for 1st July
Fortunately for UK businesses, 1st July will see the situation change again, when the EU introduces a one-stop-shop for VAT registration across the bloc. This will mean British companies simply having to register once to be able to pay VAT throughout the continent.
This change arose out of the EU’s continued efforts to harmonise arrangements across member states, and has no direct connection to Brexit.
Even this welcome situation, however, still leaves small B2C firms exporting from the UK to the EU with a potentially agonising – if not also business-ending – six-month gap. So, what can these firms do in the meantime to lessen the time and financial cost?
Could now be the moment for your firm to set up in Europe?
There is a possible workaround that it may be a good idea for your British small business to investigate, especially given the tens of thousands of pounds it could ultimately save you.
That solution is to establish an office in a business-friendly EU member state, such as the Netherlands, before delivering your products into the EU country through a warehouse that would then enable you to distribute goods elsewhere in the bloc.
Indeed, the Observer recently reported that this is precisely what UK government trade advisers have been telling businesses frustrated by Brexit-related charges, paperwork and taxes to do.
Predictably, however, reports have also emerged of distributors seeing the opportunity that this represents charging higher prices for the shipping of UK goods into the EU.
In short, while there is hope of greater certainty eventually emerging as to the likely long-term arrangements for moving products into Europe, it is presently an arduous and costly process for many firms.
If you would appreciate further guidance as to the situation for your own small business as you adapt to the latest UK-EU trading rules, please don’t hesitate to reach out to TS Partners today. We can provide expert tax advice and VAT services for Plymouth and Wellington companies.
Latest Posts
- 28
- Jun
On 23rd June, HM Revenue & Customs released its data concerning the ‘tax gap’ for the 2020 to 2021 tax year. The non-ministerial department said that the estimated ‘tax gap’ – defined as…
- 23
- Jun
With Thursday 16th June having been National Freelancers Day, it is fascinating to see the recently released data indicating that many firms have called upon freelance skills to an even greater extent…
- 21
- Jun
As a business owner, you will naturally want to make the most of all available resources and sources of support to better your firm’s survival and growth prospects. That’s just one reason why you …
- 20
- Jun
Farmers in England can apply for between £25,000 and £300,000 in funding to help promote their business and increase their produce’s value. The funding is available through the new £30M Farmi…
- 18
- Jun
To say that recent months have presented stern challenges for businesses would be quite the understatement – and recent research has shed greater light on precisely what keeps small-business owners …
- 15
- Jun
The Plymouth Workplace Travel Grants are a part of Plymouth City Council’s Productive Plymouth Programme to promote sustainable transport measures. The grants are funded by the Department for Tr…
- 14
- Jun
There was, unsurprisingly, further bad news for ‘UK plc’ in the latest Government figures, with the Office for National Statistics (ONS) revealing that the economy declined by a larger than antici…
- 10
- Jun
UK registered organisations can apply for a share of up to £12 million for creative, new and improved sustainable maritime projects. This funding is from The Department for Transport. Entries open: W…
- 7
- Jun
Escalating costs continue to be a matter pressing on the minds of individuals and businesses alike. However, while the former has now received some much-needed help with their energy bills from Chance…
- 1
- Jun
The Forestry Commission open their Tree Production Capital Grants, giving businesses within the sector apply for a share of £8.8 million in funding. Tree seed and sapling suppliers can apply for a sh…
- 27
- May
In partnership with UK Research & Innovation, the Department for Environment, Food & Rural Affairs has launched a second round of the Farming Innovation Programme. The programme supports colla…
- 25
- May
The UK Government’s decision to put up Corporation Tax from 19% to 25%, taking effect from next April, will cause the country to fall 16 places on the global ‘league table’ for corporate tax, fr…
- 20
- May
Marine Management Organisation Relaunch the Fisheries and Seafood Scheme The Marine Management Organisation (MMO) has relaunched the Fisheries and Seafood Scheme to safeguard the long-term sustainabil…
- 16
- May
With the latest State Opening of Parliament taking place amid considerable economic uncertainly brought on by such factors as escalating inflation, cost-of-living pressures, and the continuing …
- 16
- May
With the last year or so having seen the widespread removal of coronavirus restrictions, many small-to-medium-sized enterprises (SMEs) in the UK might have reasonably hoped that 2022 would be a…
- 9
- May
Independent shops have written to the UK’s Chancellor of the Exchequer, Rishi Sunak, expressing their openness to the notion of an Online Sales Tax (OST), as a potential solution for funding a major…
- 3
- May
While the cost-of-living crisis has long been far from an abstract concept for many people – the impacts being very much felt in their living standards – we are now starting to see many of those i…
- 3
- May
Key observers from across UK business have given a largely positive reception to the Government’s announcement that it will not put in place additional checks on goods arriving in the UK from the Eu…