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This is right. If you are to run a coherent VAT regime, you need to impose VAT at your border on goods bought by your nationals overseas - goods which either incurred no VAT or where VAT paid can be reclaimed on export.
That’s why you have to declare and pay VAT on all purchases above a certain threshold when you arrive at Heathrow from (say) the US.
Within the EU, you don’t need to do that. VAT at a minimum rate will have been paid on all purchases by your nationals in another EU country and it can’t be reclaimed on export back home.
On no deal, the Govt is planning not to impose VAT on things we buy in the EU and which we then bring home.
So when you buy a large value item in Ireland or Calais, you can then claim back the VAT (saving yourself the VAT) and then import back home without VAT.
Bad news for furniture retailers in Northern Ireland (and Kent).
The Govt is obviously hoping effects will be limited. Perhaps people will find it a hassle to reclaim VAT.
But commerce, once it finds a gap, often moves quickly to exploit it, and large leakage can occur very fast.
