Tens of thousands of British firms facing post-Brexit VAT hit
2 min read
Business groups and MPs have hit out at proposals that could see British companies hit with an extra post-Brexit VAT bill.
The Government's Taxation (Cross-Border Trade) Bill stipulates that firms will have to pay import VAT on all goods brought in from the bloc.
The pro-European chair of the influential Treasury Select Committee, Nicky Morgan, has promised an investigation into the changes.
She told the Observer: "As Brexit comes closer we are beginning to see the reality of how it will bite. The same businesses that are going to be hit by new customs arrangements also face being affected by new VAT rules.”
The British Retail Consortium, a trade group representing thousands of firms, said that could mean extra cost and bureaucracy for its members, leading to increases in prices for consumers.
“If the bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU-27 for the first time," they said in a briefing to MPs.
The BRC said companies could get around the levy by using a revolving credit facility, or import VAT deferment reliefs.
But they warned both measures would mean firms taking out "costly bank or insurance-backed guarantees, so would increase the costs of importing goods from the EU".
Labour's Chris Leslie, a member of the pro-EU Open Britain group, said the potential change was "yet another aspect of Brexit that the Leave campaign failed to inform the public about".
He said he would be tabling amendments to keep the UK in the EU's VAT area.
PoliticsHome Newsletters
PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe
