With significant changes to VAT import taxes potentially due this year, our Managing Director Peter Alderson discusses how small businesses need to be better represented.
Recent press surrounding the proposed controversial changes in VAT on goods imported from the European Union after Brexit will no doubt be a keen discussion point for many businesses. If the changes currently passing through parliament become a reality, it could result in some 200,000 UK firms, who are required to import goods as part of their core business, having to find a solution to covering the cost of VAT duties upfront.
Presently, UK firms who import machine parts or any goods ready for sale from the EU can register with HMRC to bring them in free of VAT. They simply register the VAT charge and reclaim it, as VAT is only added to the price of the product when it’s sold to the final customer. Once the UK leaves the EU, however, that could change, and by frontloading VAT, it will no doubt create additional cash flow burdens for UK businesses, along with potential delays to the customs process.
The British Retail Consortium, who represent 70% of the UK retail industry indicate that there are potential mitigation measures to be considered, including suggestions that the Treasury either provide greater assurances on VAT deferment schemes, look to introduce postponed accounting periods for VAT payments, or alternatively, that businesses explore revolving credit facilities with banks and other financial providers to navigate these changes.
Either way, as a nation with great history in trade, it’s vital that whatever the outcome, both our ability to trade and the success of our economy must be protected.
With Brexit front of mind for business leaders, it feels like another blow for small businesses and the pressure is on for government to quickly remove the uncertainty and provide businesses with clarity around this subject. Whilst changes remain a possibility however, businesses should look to explore the options available to them to meet these obligations.
Our short-term business loans can be used for a variety of businesses purposes, including assisting small business owners to spread the cost of VAT. We continue to help thousands of business to spread the cost of essential outlay such as Corporation Tax, Personal Tax and VAT every year.
If you’d like to discuss how an LDF loan facility could assist your business, please get in touch.