If you import from or export to the EU, how will Brexit affect the way you operate?
15th October 2020
Although the UK officially left the EU on the 31st January, Brexit has since been overtaken by other world events. It is therefore no surprise that while businesses have battled for their survival during the ongoing pandemic, many may have forgotten we are now less than 5 months away from the end of the agreed transition period.
The last thing we want to do is give anyone even more to worry about. However, we are duty bound to remind clients that if you are not totally prepared for the changes that will come in on the 31st December 2020, you could find yourself with even more challenges to navigate.
There is still a lot of work to be done before any type of concrete resolution is reached between the UK and the EU but that doesn’t mean that ‘no deal’ will actually be the outcome. It is of course impossible to make any final plans while so much is uncertain but we would like to highlight one issue we know you definitely will need to plan for if you either export to or import from the EU, the need to make import and export declarations.
During the transition period (31st January – 31st December 2020) nothing has really changed for the businesses or individuals in the EU or the UK. The UK has continued to operate under EU law and as such, there’s been no impact on customs or taxation during the transition period.
However, this will all change on New Year’s Eve. If your company:
- Sells goods or services to the EU from the UK
- Buys goods or from the EU from the UK
- Moves goods through the EU
- Trades materials or goods with EU members under preferential EU schemes
You will need to start filing customs declarations when importing from or exporting goods to the EU.
When it recently released its Border Operating Model the government said they would like to see an additional 6 month delay put in place so that businesses can make sure they have the people in place to deal with customs declarations. Better still, to support that initiative the government has recently reopened a fund you can access to pay to train your staff to make customs declarations.
We covered the potential grants and the eligibility criteria in a recent blog so it may be worth you checking the detail in case you could make an application for your business.
In addition to your customs declarations, you may also need to provide security and safety data and obtain special licences to import or export certain types of goods (e.g. waste, certain hazardous chemicals and GMOs). If applicable you will also need to comply with additional formalities if you import or export any goods that are subject to excise tariffs (e.g. alcohol, tobacco and fuel).
This will be a huge change to the way you operated as an EU member and one of the main considerations will be VAT.
The rules will depend on what the final trade agreement looks like but however it’s constructed there will be new rules as to how and where VAT will be charged on imports and exports and this is something you should start to look into now so you are not caught cold when the transition period ends.
We are, of course, available, email us if you’d like to find out more. Also, please remember that if you feel you need more detailed advice or even greater support during the remainder of the transition period, the government has made a professional services grant available to cover at least some of the cost of the external advice you need.
Another potential addition to your operating costs in the event of a ‘no deal’ Brexit will be the need to pay higher customs on duties on goods you import from the EU and the likelihood quotas for certain types of goods could also be imposed which will make planning, cashflow and logistics even more challenging.
While it’s impossible to predict how this will pan out, you will need to keep an eye on developments (and we will try our best to keep you up to date as well).
As things are so fluid the general advice we’d offer at this stage would be:
- Talk to your partners, suppliers and everyone else in your supply chain about what you will all need to do to mitigate the potential impact of the end of the transition period.
- Stay in contact with your local authorities and your advisors to get their perspective on what you should be doing to prepare.
- Keep an eye on the updates being posted by the UK government and EU.
- Take action! Don’t wait until the 31st December. Get ready now so you are both fully prepared and able to factor in the time it’ll take to make some of the fundamental changes you will need to make.
As always you can either email us at email@example.com or call us on 0116 2827000 if you’d like to discuss any of the issues raised here in more detail. We can’t promise the next few months won’t require significant changes but we will promise we’ll do everything we can to make those changes as easy as possible for you.