On 19 November 2020, HM Revenue & Customs (HMRC) published a policy paper announcing changes to existing value added tax (VAT) legislation required in light of the United Kingdom (UK) leaving the European Union (EU) (Brexit). The changes will be effective as from 23:00 GMT on 31 December 2020 and include the following:
- the VAT zero-rate that currently applies at airports for the handling of qualifying aircraft and the storage of goods, currently relies in part on the direct effect of EU legislation. An amendment to the VAT Act 1994 Schedule 8 Group 8 will ensure that the zero-rating will continue to apply;
- the zero-rate will, also, be extended to cover the handling of international trains and the storage of goods carried in them;
- changes will be made to remove the exemption from VAT of pension fund management services supplied to pension funds established in the EU. The VAT treatment will be the same as for services provided to pension funds in the rest of the world; and
- a provision of the Taxation (Cross-Border Trade) Act 2018 (paragraph 94(4)(c)) is to be removed as it has been superseded by changes in the Value Added Tax (Tour Operators) (Amendment) (EU Exit) Regulations 2019 concerning the VAT treatment of designated travel services.