Committee chair asks for clarity on post-Brexit VAT

The chair of the Commons Treasury Committee has called for more clarity on what impact Brexit will have on VAT bills for firms importing goods from the EU.

Former Cabinet minister Nicky Morgan, who was a leading figure in the Remain campaign, has written to Her Majesty's Revenue and Customs (HMRC) to seek guidance on what will happen after Britain withdraws from the EU.

Mrs Morgan took the action because she said the Taxation (Cross-Border Trade) Bill currently going through Parliament could force firms to pay VAT upfront on goods imported from the EU.

The British Retail Consortium (BRC) has said the changes could create additional cash flow burdens for 130,000 companies, and has warned that the processing time at ports and border entry points attached to the customs process could increase.

Mrs Morgan said: "As the reality of Brexit begins to bite, its implications on tax are yet to be fully explored.

"Under the Taxation (Cross-Border Trade) Bill, firms would have to pay VAT upfront on goods imported from the EU before they can be released into free circulation in the UK.

"The Government has already acknowledged that this would create an additional burden for businesses, and autumn Budget 2017 committed to 'look at options to mitigate any cash-flow impacts.'

"I have written to HMRC to seek clarification on the costs to businesses and consumers arising from this legislation, the options being considered to mitigate these costs, and the likelihood of the UK participating in the EU VAT area as part of its end-state relationship with the EU."