Brexit: What might this mean for our future taxes? 22nd April 2017 As we are now potentially within 2 years of Brexit, it seems natural to speculate over what changes we should expect. As tax is a key component of our fiscal policy, to finance the public purse and influence our behaviour, various tax commentators are now dusting off their crystal balls. Within the EU, tax has always been a reserved policy area for each individual country, so we have always been free to design our tax system as we see fit (subject to our tax system complying with the EU treaties). The most likely immediate tax impact of Brexit may be changes to VAT, where we have, hitherto, adopted the same basic VAT system as all the other EU member states. We will soon be free to amend our VAT system when we are no longer in the EU, perhaps as follows: Abolition of Intrastat returns, for movement of goods to and from the UK; Abolition of EC Sales Lists, for sales from the UK to the remaining EU countries; Introduction of new import and export rules for supplies between the UK and the remaining EU countries; Increase in duty deferment facility, to cover import VAT and possibly customs and excise duties relating to imports from EU countries; The distance selling thresholds will no longer apply for small value of exports to remaining EU countries; Changes to the Mini One Stop Shop – VAT will still need to be charged and accounted for in relation to affected supplies to customers in the remaining EU countries. This may mean registering for the non-Union Mini One Stop Shop scheme in a remaining EU country if HMRC is unable to continue operating a UK scheme; Refunds of VAT incurred within the EU may become more difficult, having to rely upon the 13th Directive refund scheme; EU VAT law and rulings of the CJEU will cease to have direct effect, with the UK law and courts becoming the ultimate; In theory, VAT rates could change up or down, including items currently subject to VAT at 5% becoming zero-rated, although such changes are not currently permitted under the UK VAT Lock legislation; and The tour operators’ margin scheme could be changed or abolished.