The UK is scheduled to leave the EU single market and customs market on 31 December 2020. After this date, the UK will no longer be following EU rules. The period leading up to 31 December (known as the “transition”) and the months following this date are likely to affect your business particularly if you trade with EU countries and/or employ staff from the EU.
There are various steps you can take now to start planning ahead. Here is a checklist of points that you might want to consider.
If you import/export goods or services with the EU, you might need to do the following.
Apply for an EORI number
An EORI number is mandatory for any businesses moving goods between the UK and EU. If you’re a VAT-registered business that trades with the EU, you may already be enrolled with an EORI number by HMRC, so please check before applying.
There’s more information on the GOV.UK “Get an EORI number” page.
Consider hiring a customs intermediary
Because customs declarations are so complex, many businesses outside the EU use an intermediary (such as customs agents, freight forwarders or fast parcel operators) to help them with formalities and submit declarations. To find a customs intermediary, see the “Get someone to deal with customs for you” page on GOV.UK.
You can make customs declarations online without an agent via the Customs Handling of Import and Export Freight (CHIEF) system.
Apply for a duty deferment account (DDA)
If you import goods from the EU on a regular basis, a DDA will allow you to pay customs duties, excise duties and import VAT once a month through direct debit (rather than for individual consignments). To set up a DDA, you’d need to be registered by HMRC.
Identify the right commodity codes for your goods
If you’re importing goods from the EU, a commodity code will enable you to classify your goods, plus tell you how much duty and import VAT you’ll need to pay. It’ll also inform you of any possible reliefs. You can find the right commodity code for your products using the government’s Trade Tariff tool.
Prepare for any VAT changes
VAT-registered traders can include import VAT on their VAT returns by using postponed VAT accounting from 1 January 2021. However, non-VAT-registered traders will need to report and pay import VAT through customs.
If you sell products via your website, VAT collection will shift from the border to the vendor’s website. Usually, this VAT will be collected at your website’s online checkout. This means you may need to make alterations to your website (as well as updating any contracts).
Do you need to put in any claims for refunds on EU VAT? If so, this needs to be done via the EU VAT refunds system before 31 December 2020. It won’t be possible for UK businesses to use this system once the transition period ends.
If you provide digital services to EU customers, you’ll need to register in an EU member state in order to declare sales and pay VAT. There’s more information on the EU Your Europe website.
If you engage in distance selling to EU countries (selling goods or services through digital TV, mail order or phone or text message) you’ll also need to register for VAT in each country you trade with.
Do you have EU employees currently working for your company?
If so, you might want to want to encourage them to apply under the EU Settlement Scheme so they can continue living and working in the country.
Go to the Apply to the EU Settlement Scheme (settled and pre-settled status) page on GOV.UK for guidance.
If you wish to recruit EU talent after 1 January 2021 you may want to set up “right to work” processes. This will enable you to check the documents of any potential EU recruits are correct and they are legally allowed to work in the UK. See the GOV.UK page Right to work checks: an employer’s guide.
The government will also be introducing a points-based immigration system. If you want to continue recruiting from the EU, it’s worth reading the UK’s points-based immigration system policy statement.
Do you regularly travel to the EU for business?
If so, you need to:
- ensure your passport has at least six months left and is less than ten years old after 1 January 2021
- check with your mobile phone operator about data roaming in the EU, as it’ll no longer necessarily be free once the Brexit transition period ends
- review your travel insurance.
Other things to consider
- Do you employ drivers that travel to the EU? If so, you might need to ensure they have the correct international driving permits.
- The Brexit transition period may result in delays to payment and delivery of goods. Therefore, you may need to review the contracts you have with customers to inform them of any potential delays. If you have EU customers, now is a good time to contact them so that you can reassure them of your commitment in the months ahead.
- Invest in staff training. The Brexit transition period will affect many clients; your employees will need to be aware of the new requirements and changes.
- Does your business trade products of animal origin and/or plant products? If so, you’ll need to pre-notify border control posts and ensure you have all the relevant health documents before April 2021.
- Review your supply chains. There could be a sudden demand for particular goods once the transition period ends. Would you have enough access to stock if this happens?
- In the event of a no-deal Brexit, there could be customs disruptions and currency fluctuations. Ensure you have a healthy cash flow, and also look at changing pricing models and/or renegotiating terms with your supply chain.
- If your website and/or IT systems need to be updated to accommodate some of these changes, start factoring that in now.
Preparing well will be worth the time and effort, and will ensure you continue to trade profitably.
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