VAT

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HMRC, the EU Commission and the Law Society of England and Wales have published guidance on the consequences for VAT and customs duty if the UK leaves the EU without a withdrawal agreement. For a general overview of the potential impact of Brexit on tax, including VAT, see Practice Note: Brexit—UK tax consequences [Archived].

What is VAT?

The UK value added tax (VAT) system is:

  1. •

    derived from the Archived Directive 2006/112/EC of the European Parliament and of the Council of 28 November 2006 on the common system of value added tax (the Archived VAT Directive), and

  2. •

    mainly set out in the Value Added Tax Act 1994

All other EU member states also have a system of VAT, but this overview is concerned with the way the common system of VAT is implemented in the UK.

VAT is intended to be a tax on consumer expenditure, so that the ultimate burden of the tax is borne by the final user or consumer of goods or services. This is achieved by:

  1. •

    requiring each person in a chain of transactions (eg a chain from raw materials

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