Sean Turner – Transport & Logistics Specialist
This was a budget set against the background of the Coronavirus epidemic, for the Chancellor to provide the fiscal support to impacted businesses and services, while planning for the Government’s long-term priorities.
This was a budget to turn the spending taps on full: to invest in public services and to provide the promised Infrastructure Revolution; for ‘levelling-up’ opportunity across regions of the country that have supported the Conservative Party for the first time. Overall, it will be seen as good news for businesses, although there were relatively few tax measures overall with the majority of attention focussed on spending.
The key Budget 2020 takeaways for the UK Transport & Logistics sector
VAT on imports update
Following the Budget, it was announced that, from 1 January 2021, postponed accounting for VAT on imports will apply to all imports of goods, including from the EU. This is welcome news and will be very helpful to VAT registered businesses within international supply chains, particularly those having to deal with third country imports for the first time, easing the cash flow burden of paying and reclaiming import VAT. Rather than having to pay or defer import VAT on submission of the import entry and later reclaim through the VAT return, using the C79 import VAT certificate, this method of accounting allows the import VAT to be declared on the VAT return as a payment, whilst reclaiming at the same time, resulting in a nil net cash flow position for the importer, subject to any VAT recovery restriction.
The Chancellor has promised investment in roads and rail of around £30bn.
Fuel duty rates are to be frozen for the 2020 and 2021 tax years.
The environment & sustainability
On the environment and energy, importers whose products have less that 30% recyclable material will be charged £200 per tonne. Red diesel subsidies for fuel used in off-road vehicles will be scrapped for most sectors in two years’ time, but these will remain for rail operators.
To discuss any of the above or the implications of Budget 2020 on you or your transport & logistics business, please contact your Menzies Relationship Partner.