Welcome for VAT changes to ease Brexit cash flow for retailers
The Minister for Business, Enterprise and Innovation, Heather Humphreys TD, this afternoon (February 19, 2019) told retailers that she had listened to their concerns about VAT impacts on cash flow post Brexit. Minister Humphreys hosted a Brexit review meeting of the Retail Forum and key players from the Irish grocery and distribution sector, together with Revenue, Departments of Transport and Agriculture, Food and Marine, Dublin Port and the Food Safety Authority.
Speaking following her meeting with retailers today Minister Humphreys said she had raised the concerns of businesses in relation to VAT being payable at point of import post-Brexit with her colleague the Minister for Finance and Public Expenditure and Reform Paschal Donohoe TD, who recently confirmed that the Government will introduce a system of postponed accounting for all traders for a period after Brexit.
The Minister said, “I highlighted the concerns of businesses to Minister Donohoe about the cash flow impacts of VAT at the point of entry and welcome his recent confirmation to introduce a system of postponed accounting for all traders for a period post Brexit.”
“This will mean that businesses will not have to pay VAT at the point of import of their goods coming from the UK. This will benefit businesses by helping to lessen the initial impacts on their cashflow post Brexit. While Government continues to negotiate for the best outcome, we are also working very hard to ease the impacts of Brexit where we can.”
Minister Humphreys continued, “It is important for businesses to understand and plan for how Brexit will impact their cashflow. Last week I met with the CEOs of the three pillar banks, AIB, Bank of Ireland and Ulster Bank, and emphasised to them the need for the banking sector to be ready to stand behind Irish businesses in the face of challenges posed by Brexit.”
“The heads of the three banks have assured me that stand ready to support the working capital needs of businesses as they deal with the immediate impacts of Brexit. The Banks are also working closely with the SBCI to increase take-up of the Government’s Brexit Working Capital Loan Scheme. This is a very attractive loan scheme and I would encourage all Brexit exposed firms to ensure they have the required working capital facilities in place in advance of March 29th”.
Businesses can avail of the range of Government supports available through InterTradeIreland, the Local Enterprise Offices, Microfinance Ireland and Enterprise Ireland. Business can apply for a working capital loan through the Strategic Banking Corporation of Ireland (SBCI) of up to €1.5 million under the Government’s Brexit Loan Scheme. Once the loan is sanctioned by one of the participating banks, it will be available for draw down as and when needed.
Businesses who have not started to plan for Brexit, and are unsure of where to start, should contact their nearest Local Enterprise Office who can help point them in the right direction.
NOTES TO EDITOR
The Retail and Grocery Distribution Sector in Ireland – Brexit Workshop
Minister Humphreys convened the Brexit workshop today with key players in Grocery Retail and Distribution as part of her continuing engagement with the sector. Distribution chains within the retail sector are highly integrated across Ireland and the UK and the Minister’s continued dialogue with this sector reflects the importance that Government attaches to the sector and its recognition of the challenges that it faces.
Officials from the Department of Business, Enterprise and Innovation, the Department of Agriculture, Food and Marine, the Department of Transport, Tourism and Sport, and Revenue, and a representative of Dublin Port provided updates on preparations for Brexit. Attendees included major retail grocery businesses/wholesalers/distributors, retail representative bodies and haulier representative bodies.
Legislative change to VAT at the point of entry
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.