The Customs Bill, currently being debated in parliament, could lead to VAT being immediately applicable on imported goods post-Brexit.
Importers could be crippled by VAT demands once Britain leaves the EU
Current rules mean VAT payments on imports are treated the same as any business purchase, e.g. deferred and outset against other costs. However, these rules will change when the UK leaves the EU, meaning that VAT will be payable at the point of import. More than 130,000 UK companies would be affected by the change.
The cashflow implications of this would be huge. Haulage firms, importers, and logistics companies are already under great strain, with busy roads, high fuel costs and dwindling margins making cashflow a perpetual problem. If VAT were to be immediately charged, many companies would be unable to cope and will likely go under.
As with many aspects of Brexit, there is no definitive answer at this stage. However, the scale of the problem and the crippling impact of levying VAT at the point of import to so many business means that it is likely that changes will be introduced to safeguard UK interests .