VAT - ANOTHER BREXIT HEADACHE

VAT is a Europe wide taxation system which we joined when we first became a member of the EEC and although it seemed a complicated tax to we non accountants, it quickly settled down and we are all familiar with it now. It also raises a lot of revenue, £120 billion in 2016-17. Brexit threatens to create VAT problems for exporters and importers to the EU. After Brexit, any company importing goods from an EU state will (absent any agreement to the contrary) will have to pay VAT upfront or the goods will not be allowed in. They will then be able to claim it back later in their own quarterly VAT return to HMRC. But this will tie up an awful lot of money for the businesses involved.