Sunday, 7 January 2018

More VAT-Brexit-related fuckwittery

From The Guardian:

More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit, under controversial legislation to be considered by MPs on Monday.

The VAT changes spelled out in the taxation (cross-border trade) bill – one of a string of Brexit laws passing through parliament – are causing uproar among UK business groups, which say that they will create acute cashflow problems and huge additional bureaucracy.

Labour and Tory MPs and peers said that the only way to avoid the VAT Brexit penalty would be to stay in the customs union or negotiate to remain in the EU-VAT area...


This is a typical spat between incompetent government and hard-core Bremoaners, with long-suffering UK businesses caught in the crossfire.

VAT is the most damaging tax, but all the same, it can be made administratively as painless as possible. Before wading in, it is important to know how it currently works on a day-to-day level. When a UK VAT-able business imports from the EU, VAT is nominally due, but it is not paid up-front - what happens is that the notional import VAT is added to the total VAT payable on the next VAT-return, but the importer can also reclaim the notional import VAT is input tax, so the overall payment is nothing.

This defers the business' cash outflow by a few weeks or months - the apparent proposed new system is to collect VAT at point/time of import (a massive administrative burden) and not to credit it as input VAT until the next return (usually quarterly).

There is nothing to stop the UK government from continuing current practice post-Brexit (in fact, we could do this for most import duties). And despite what 'Labour and Tory MPs' have said, there is absolutely no need for the UK to remain in the Customs Union or the Eu-VAT area to be able to do this - remember that post-Brexit, it is entirely up to the UK government whether or not it imposes import duties, import VAT or even VAT at all.

18 comments:

Lola said...

The bureaucrat's idea is to make things as complicated and expensive as possible in order that Brexit appears problematic and that they can continue to justify their pointless sinecures. Sadly Parliament seems not have enough (any?) MP's capable of cutting through all this crap. (See the rushed implementation of MiFiDII for another example of something pointless that we don't have to do post Brexit)

Mark Wadsworth said...

L, I thought the idea was to mess it up badly and have a second referendum.

Dinero said...

There is another dimension to this, the retail side. All else being equal, it seems that hmrc will be getting vat on goods retail shipped from the EU, VAT that previously went to the EU country, and there will not be vat on retail sales shipped to a country in the EU.

Mark Wadsworth said...

Din, they keep changing the rules on that and we'll see.

Please note - there won't be any UK VAT on sales to EU (no VAT on exports, as a general rule), but there might well be EU import VAT on them.

DBC Reed said...

Theresa May interrupted Andrew Marr's stream of right-wing consciousness yesterday to indicate that its Brexitino: Brexit in name only.
Perhaps this blog will start concentrating on its signature issue instead of associating it with the latest crackpot schemes from entitled third raters in the Tory party with too much time and money who have caught the eye of "our" unrepresentative Press.

Mike W said...

DBC Reed: 'Brexitino: Brexit in name only'. Very Good :) Is that one of yours? Our democracy is so distorted,we could also imagine a situation(at least in principle) where we have the government delivering a Remainino. My one thought about both of these situations is that, like headboy, Cameroon running back to the country with his 'hard won' concessions from Europe: such a primeminister, who tries the mother of all 'fudges', is surely dead in the water once again?

* I wish to coin the term for such an unholy political grail as, the 'European/Meta/ArseFudge'.

** Fortunatley there are no Economists/ Politicians/Bankers/Lawyers alive who could so distort thinking, language and logic that this EMAF could ever be devised in reality.

Mark Wadsworth said...

DBC, this blog does not have a core issue. I wasn't even particularly Georgist when I started it, that has developed over time. The other contributors can speak for themselves, there is no editorial policy whatsoever, where's the fun in that.

DBC Reed said...

@MC
This blog declares that it represents a Young People's Party whose manifesto starts "We are a Georgist party" . So there is a core issue and it aint Brexit.

Mark Wadsworth said...

DBC, fair point.

Which is why contributors here, on the whole, are in favour of a "Georgist Brexit" - no tariffs, no VAT, free trade etc.

Banging on about LVT all the time is a bit wearisome, even for me. Out of twelve thousand posts here, only about seven hundred relate directly to LVT and a couple of thousand relate to it indirectly. The rest is other important stuff, which also needs to be covered. Like cars.

Lola said...

MW @ 04.46 (Wow, that's early! Or maybe it was 'late'?)
That too.

Lola said...

DNCR. Georgism is about liberty, IMHO. The liberty from the enslavement by the rent seeker. Once you have sorted an acceptance of Georgism then you have to put it in the overall framework of liberty and personal responsibility. You may prefer to put it into a framework of collectivism. I don't, as that is just another form of slavery / rent seeking. Hence all the peripheral stuff....and cars.

Physiocrat said...

The bloody tax should be scrapped in two phases - down to 15% now and abolished on B-day.

It raises bugger-all revenue. Here's why

Shiney said...

@DBCR

"Perhaps this blog will start concentrating on its signature issue"

What all the others said, plus...... as long as we are in the EU, in my opinion at least, LVT is a non starter as you can't abolish VAT as the counterweight. A good enough reason for us to leave on its own without all the other crap.

Respectfully.... (and I've asked this before and neither you nor @pc156 answered) - why are lefties like you so in favour of the EU? They are shills for the bankers and (mainly German) big business and thus corporatist-fascists to the core.

Mark Wadsworth said...

L, it was early, couldn't sleep, thought I'd try a bit of internet to send myself to sleep, didn't work, am poorly. As to personal freedom, agreed, LVT is just one facet (albeit the main one).

Ph, agreed.

Sh, also agreed. That was one of the main reasons I voted Leave. I accept that the UK government (whether Tory or Labour) will keep VAT and refuse to have LVT, but at least we can discuss it as a serious option.

Also, I do not understand the knee-jerk left wing pro-EU bias, the fact that stereotypical right wingers, racists and so on are anti-EU shouldn't blind them - these right wingers are correct but for the wrong reasons.

Lola said...

Shiney. That baffles me too. The EU is an appalling crony corporatist construct to enable the latest in a long line of 'extractive classes'.

Shiney said...

@MW

"the fact that stereotypical right wingers, racists and so on are anti-EU shouldn't blind them - these right wingers are correct but for the wrong reasons"

Nice - I shall use that one myself.

DBC Reed said...

@Shiney
All your descriptions of the corporatist EU read exactly like what Tony Benn was saying to lefty Leavers (like me) in 1975. I also voted more recently for Bob Crowe's No2EU in Euro elections (the appropriate elections surely?) .
I had n't realised that you were supporting nationalisation and free collective bargaining, as Benn&Crowe did.I admire your bravery.

I am naturally disinclined to support the present right wing Brexit as I see no plans from the Conservative Party, which has taken over UKIP policies, to decrease immediately the powers of the banks and monopoly capitalists.All I see is a Conservative Party that secured and maintained power by bribing homeowners to pump up land prices in the hopes that they would become middle-class enough to pay for their own health insurance and school fees etc ,while not realising (Conservatives being very, very stupid) that houses would become too expensive for people to buy or even rent leaving them with no ready money to spend in the shops: result Georgist economic stagnation.Which is what we've got now and have had for some time Brexit being a ploy to divert a more fundamental anger.
So the awful truth has dawned on the awful Tories that they have blown their reputation as guardians of popular homeownership and have latched onto Brexit with nowhere else to go (But even this didn't play out in the last election).
At the moment we have Theresa May making housing the Government's priority while toning down the Brexit bullshit.
As far as I can see the Conservatives have no practicable policies and no political identity. Not a good look.Not something to support.

Mark Wadsworth said...

BC, it is most irritating that you put words in other people's mouths. People can speak for themselves.

Yes, we disagree in what should happen post brexit, but at least we don't have to argue whether we are even allowed to renationalise everything or scrap vat. Neither will happen, but at least we could do them if we wanted.