As the next step in our Brexit Contingency Action Plan, the Government today agreed a measure in relation to VAT, to mitigate the cash-flow burden on businesses post Brexit. It also received an update on arrangements to make necessary infrastructural changes at Ports and Airports.
While ratification of the Withdrawal Agreement is still the Government's preferred outcome, this work is the next step in a series of measures that the Government is taking, both nationally and in conjunction with the EU, in preparation for the possibility that the UK fails to agree a deal for their departure from the European Union on 29 March.
When the UK withdraws from the EU they will become a third country for VAT purposes. This will impact on the tax treatment of goods sold between businesses in Ireland and the UK post withdrawal date.
In order to mitigate against this cash-flow burden on businesses, Minister Donohoe proposes to introduce a legislative change to introduce a system of postponed accounting. The purpose of this measure is to alleviate the cash flow impact on business as a result of the UK’s status as a third country and, as a consequence, the requirement for business to pay VAT at the point of import rather than at the time of filing their bi-monthly VAT returns.
While the introduction of the scheme will be provided to all traders for a period to alleviate the immediate cash flow issues arising from Brexit, continued qualification for postponed accounting will depend on Revenue authorisation from a later date to be agreed.
Minister Donohoe said:
I believe this in an important measure and will go some way towards alleviating the cash flow impact on business as a result of the UK withdrawing from the EU.
Preparations at ports and airports
A no deal Brexit would mean that the UK, in addition to being outside the Single Market and Customs Union, would no longer be part of the framework of EU law, becoming a ‘third country’. This means additional checks would be required at our ports and airport, to allow for trade to continue to flow on an East-West basis.
Infrastructure will be required in Dublin Airport, Dublin Port and Rosslare Port, with specific requirements to be in place by 29 March 2019 under a disorderly Brexit and by end 2020 in an orderly situation. An update on steps necessary to provide for the required infrastructure in both scenarios was provided to Government.
Notes to Editors:
The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, today addressed the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in relation to Brexit planning. You can read his opening statement here.
The Minister for Business, Enterprise and Innovation, Heather Humphreys TD, today reminded businesses sourcing products from the UK that they will take on additional responsibilities as EU importers after Brexit.