Upfront Tax Burden – Time To Look at Options Closer to Home
The Treasury has said the UK will seek to mitigate any cash flow impacts if Britain leaves the EU VAT area after Brexit, this will mean that businesses will be forced to pay the tax upfront, creating cashflow burdens that could cripple small businesses.
Legislation is currently being considered by MPs that could see over 130,000 UK firms forced to pay VAT upfront for the first time on all goods imported from the EU. The VAT changes spelled out in the Taxation (Cross-Border Trade) Bill, is one of several Brexit laws passing through parliament. Presently businesses that import goods from the EU can register with HMRC to bring them into the UK free of VAT. However, without a deal importers will have to pay the money upfront and then recover it later, creating a cashflow problem, particularly for small businesses that would need to spend significant sums out before they can be recouped in sales.
(Buy UK! – Fashion Enter Factory in North London)
Jenny Holloway, CEO of FashionCapital & Fashion Enter commented:
“If you are a designer or retailer importing from the EU after Brexit it means you will need to pay the VAT upfront. Small firms are already having issues with their cash flow with an estimated £18bn being withheld from them due to the late payment crisis. So buy UK! Look seriously at all the benefits there are by having production locally! You can save on transport and freight improving the carbon footprint. No communication issues; drop in visits for in-work checks and AQLs. Being so local means you can ensure ethical trading is occurring! The UK has so much to offer.”