Contents
- Effects on Business
- Timeline
Import/Export - VAT
- Business Travel
Effects on Business
Following the referendum vote back in 2016, The UK has now officially left the EU
The majority of 2020 was spent in a transition period where we still continued to be governed under EU laws, so nothing was
different really for businesses. With the transition period ending on 31/12/2020 there are some new rules being implemented from 01/01/2021.
Businesses that import/export to EU, will now have to think about customs and boarders. A customs tariff may be due on imports and VAT is also changing by way of how it is accounted for.
To help businesses in to the new relationship with EU businesses, the government has created a post-brexit legislation. with the intention of creating the least amount of disruptions and smoothly continuing business as usual new laws and regulations have been put in place.
This guide should help you be able to speak more confidently with your clients, however as things are changing on a regular basis and new trade deals are being sought, i will try to keep you all as up to date as possible…. it would be good for everyone to follow Adroits LinkedIn page and follow the blogs that get posted on the website too though.
Timeline
The majority of 2020 was spent in a transition period where we still continued to be governed under EU laws, so nothing was
different really for businesses. With the transition period ending on 31/12/2020 there are some new rules being implemented from 01/01/2021.
Businesses that import/export to EU, will now have to think about customs and boarders. A customs tariff may be due on imports and VAT is also changing by way of how it is accounted for.
To help businesses in to the new relationship with EU businesses, the government has created a post-brexit legislation. with the intention of creating the least amount of disruptions and smoothly continuing business as usual new laws and regulations have been put in place.
This guide should help you be able to speak more confidently with your clients, however as things are changing on a regular basis and new trade deals are being sought, i will try to keep you all as up to date as possible…. it would be good for everyone to follow Adroits LinkedIn page and follow the blogs that get posted on the website too though.
- 23 June 2016 – The UK votes to leave the EU.
- 23 January 2020 – The EU Withdrawal Bill becomes law, outlining a transition period that will end on 31 December 2020.
- 31 January 2020 – Brexit occurs, and the transition period begins.
- 31 December 2020 – The transition period ends.
- 1 January 2021 – The UK operates independently of EU laws and requirements. The main changes for businesses are as follows:
Customs
- Full controls in place for exports from the UK to the UK Global Tariffs could be applied to any imports from EU countries unless there is a UK- EU trade deal in place following the end of the transition period. If so, the UK government will set out the rules when different (including zero) tariffs may apply.
- Full controls in place for staged imports of controlled goods, and excise goods such as alcohol and
- If you are importing non-controlled goods from the EU to the UK, you can decide to delay customs declarations for up to six months or complete the full customs declarations on import.
- If you chose to delay your customs declarations by six months, you will still need to prepare for basic customs requirements — keeping sufficient records of imported goods, for Traders will also need to consider how they account for and pay VAT on imported goods (including any VAT that changes if the full customs declaration later means that the value of tariffs paid changes).
- Any tariffs due will need to be paid, but these can be deferred until you have made your customs
VAT
- Import VAT will now be due on all goods including those arriving from the EU. Postponed VAT accounting for all imports comes into effect.
- Business aftfter Brexit 5
- Consignments not exceeding £135 in value have UK supply VAT applied at point of sale rather than UK import VAT.
- UK Low Value Consignment Relief (LVCR) is abolished. Exports to the EU are zero-rated for VAT.
Employment
- EU citizens moving to the UK (and UK citizens moving to the EU) for work after this date need a visa as
- part of new immigration rules. Those from the European Economic Area or Switzerland need a sponsor licence. However, businesses can continue to check EU, European Economic Area (EEA) or Swiss
- citizens’ rights to work in the UK based on their passport or National Identity card until 30 June 2021.
Conformity/standards
- The UKCA conformity mark must be acquired and used for relevant goods being placed on the market in Great Britain. However, CE marks can continue to be used until 1 January 2022.
Travel
Existing ‘burgundy’ UK passports must have at least six months left until expiry to travel to most EU countries (except Ireland). Five and 10-year passports have different expiry rules – see the ‘Business travel to the EU’ section later in this guide.
- Travel insurance including health coverage will be required for travel to EU countries because it might no longer be possible to use a European Health Insurance Card (EHIC) while visiting them.
- A visa might be required for your visit depending on country, length of stay and purpose of visit.
- 1 April 2021 Customs
- Additional checks on SPS (Sanitary and Phytosanitary) goods begin – see section 1 of the UK’s Borders Operating Model manual for more details.
- 1 July 2021 Customs
- From this date, traders importing any goods will have to make either full or supplementary simplified declarations immediately upon The delayed declarations for the first six months of 2021 will no longer be possible.
- Importers will need to pay VAT and excise duty where necessary. Postponed VAT accounting and duty deferment for duty deferment account holders will still be available after this
Employment
- From this date you can no longer determine an EU, EEA or Swiss citizens’ right to work in the UK using only their passport or ID You must instead use the new immigration visa system.
- 1 January 2022
Conformity/standards
- Businesses are no longer able to use CE conformity marks in Great Britain and must use the UKCA conformity mark.
Import/Export
As of 11pm on 31/12/2020 we will have customs boarders with the EU
We are going from a simple straightforward task to having to now declare import/exports, customs and excise may be payable on imports as well as VAT
To insure things run smoothly and businesses are not hit financially, the government has made some temporary allowances and also some permanant ones too.
EU import/export changes
Any form of import/export between UK and EU will now be considered as importing/exporting goods. As a business you will be required to provide customs declerations.
Overview
Import
Similar to how it works with non-EU countries the same will now apply in regards to customs and excise when importing goods.
From 1 January 2021, UKGT (UK Global Tariff) replaces the EU’s common exteral tariff. This will apply to all countries the UK does’nt have a trade deal with. To keep up to date on this you can check https://www.gov.uk/trade-tariff
There could be a requirement to apply for a licence when importing certain goods, along with some goods being subject to an inspection fee.
Export
A simplified declaration process will be introduced for certain goods when exporting out the UK – please see for more details:
https://www.gov.uk/guidance/using-simplified-declarations-for-exports.
This means that the client won’t need to provide a full declaration up front and can provide these details at a later stage but can just fill in a “pre- shipment advice” (https://www.gov.uk/guidance/making-a-declaration-using-a-pre-shipment-advice)
Goods that don’t require “pre-departure declarations, the admin work can also be simplified for this using EIDR (entry in declarants records):
https://www.gov.uk/guidance/making-an-export-declaration-in-your-records
However, both the above options require the client to apply to HMRC and get authorisation to use them beforehand.
To make declaration yourself the client will to register the NES (National Export System), once registered they will be able to submit declarations online themselves.
Some things will need an export licence such as alcohol, tobacco ad certain oils.
Customs Intermediary
The decision to leave the EU (Brexit) will naturally make import/export more challenging , be that import/export to EU or even through EU to another destination.
It’s widely expected that most businesses will use customs intermediaries, used already with import/export businesses.
Freight Forwarder
Almost like using a travel agent (just for freight!), Aimed at a door to door service but sometimes used as door to port/port to door or even port to port, essentially the customer (or your client) will need to handle the logistics.
The benefits of using a freight forwarder is that they will know all the doc’s required and have a better knowledge as you will with the process (export, customs, licencing, security) plus they will normally tend to make sure you pay the lowest price.
Customs Broker
Slightly different to a freight forwarder, these guys will take care of the customs paperwork and fee’s . They will check the important doc’s along with getting you the correct commodity code.
They will have the experience and knowledge of what’s required for specific goods, especially when it comes to hazardous goods or restricted goods.
To use a customs broker make the client aware they need to be sure the customs broker is registered with the Customs authorities.
Documentation can be submitted earlier to the date of the export.
EORI (Economic Operator Registration and Identification)
Anyone import/exporting goods to the EU will need to have a EORI number from 1st January 2021, depenmding on what the business does and the location the client may need as many as three EORI numbers.
- Businesses in Great Britain: To trade goods with – EU countries, you’ll need an EORI number that starts with However, if your business only moves goods between Northern Ireland and the Republic of Ireland – and nowhere else – it will not usually require an EORI number.
- Businesses moving goods to or from Northern
Ireland: If you move goods to or from Northern Ireland, you’ll need a second EORI number that starts with XI. This includes moving goods between Northern Ireland and the rest of the UK, and moving goods between Northern Ireland and non-EU countries.
- Businesses making declarations or getting customs decisions in EU countries:
If your business makes declarations or gets customs decisions in an EU country, you’ll need to get an EORI from the customs authority in the EU country where you submit your first declaration, or requestyour first decision.
In 2019 the gov started sending out businesses the they believed needed the EORI number in GB format.
Th gov will automatically send XI series EORI numbers to businesses they believe require them, and businesses that have registered with TSS (Trader Support Services). These will come out to client who already have GB numbers by December 2020. – Any clients that need to apply for this must do it as soon as possible!
Simplified declarations and deferred customs declaration
Customs declarations and payments can optionally be deferred from the period 01 Jan 21 – 30 Jun 21 to allow a period of adjustment for businesses, this is only for businesses in England, Scotland and Wales on most goods but not all. – to be eligible for this option businesses must be authorised to use the simplified customs declaration process (CFSP).
CFSP (Customs Freight Simplified Procedure) means a business can submit a simplified customs declaration or make their own entry in their commercial records before the import. You then have 6 months after the import date to supply HMRC with satisfactory documents and a supplementary declarations. At this point any customs and VAT becomes due.
If the business is already VAT registered then the client will need to use postponed VAT.
Duty Determent Account
For businesses that regularly import they can set up a duty determent account which allows the business to pay VAT and excise duty on a monthly basis rather than paying upon import every time, however the clients bank or insurance company may need to act as a guarantor.
The Duty Determent account is necessary for use of the above simplified declarations system too.
Transport Logistics
The services the client will use for importing (air freight, shipping, couriers), will now need to know much more info and it would be best for the clients to check this with the supplier to see what the requirements will be. There will most likely be additional issues the businesses will need to consider too when importing goods. pre-notification of the movement of goods and customs border inspection post are a couple things to bear in mind.
T’s & C’s
It’s always best for client to check the T7C’s of their contracts as that will determine where responsibility lies for customs duty, VAT, transport/insurance costs. It would also determine when the risk and liability shifts from seller to buyer.
Checklist: Import/Export
Eori Number – have you got the Eori number?
Customs Intermediary – Have you got a customs intermediary?
Customs Declaration – Registered for simplifieddeclarations?
Duty Determent Account – Have you applied?
CHIEF-Compatible Software – If you not using a customs intermediary do you have the right software?
Contracts – Have you reviewed your contracts?
Transport – Have you spoken with the transport supplier?
VAT
Changes in VAT when importing/exporting with EU
From 01/01/2021 VAT rules on import/export will be changing with the UK now no longer part of the EU Taxation and Customs Union, domestic rules remain the same.
The government has negotiated measures to remain mostly similar, but admin requirements side of VAT will change, there shouldnt be too much of a difference in the impact to businesses cash flow.
Imports: Postponed VAT
For businesses importing in to the UK from worldwide the Eu reverse charge system will be replaced by a new system called “postponed VAT accounting”, this is very similar to the last system but will be handled differently. (as explained below)
Bussinesses account for import VAT on their returns, rather than paying it straight away (port of entry) as follows:
Box 1 – VAT due on sales and other outputs – include the VAT due in this period on imports accountedfor through postponed VAT accounting
Box 4 – VAT reclaimed on purchases and other inputs – Include the VAT reclaimed in this period on imports accounted for through posponed VAT accountuing
Box 7 – Total value of purchases and all other inputs expluding ant VAT – Include the total value of all imports of goods included on you online
monthly statement, excluding any VAT
The “postpone VAT accounting”has been introduced to avoid any impact on businesses cash flow, if you client already import from outside UK they may even see a cash flow benefit as this removes the need to pay for the import VAT typically due.
You can still however pay the VAT upfront and not go in to the postpone VAT accounting scheme if your client wants once the good enter the UK. Your client will need to obtain monthly C79 reports from HMRC just like any client that already imports from outside the EU.
The postponed VAT accounting scheme is mandatory if your client is going to take the benefit of defering submissions
The scheme can be used by all UK bussiness that are VAT registered with the exception of Northern Ireland as they will still be considered in the EU.
This is only relevant to transactions that exceed the value of £135
Services
Everything is the same as it was before.
However, Businesses that use MOSS will need to register for a non-union MOSS now, they will not benefit from the threshold of 10,000 Euro’s.
Exports
Vat changes on exports to EU, this will now be treated like exports to outside EU countries. Meaning they will be Zero Rated for UK VAT.
This could mean businesses selling B2C to the EU need to register for EU VAT and appoint fiscal representatives depending on the requirements of the countries in which they sell.
Imports < £135
Additional measures for goods arriving in GB from outside UK
- LVCR (Low Value Consignment Relief) is being removed, this previously exempted imports with a value of < £15 from import VAT
- OMPs (Online Marketplaces) where the business is involved in facilitating the sale, will be reponsible for collecting and accounting for the VAT
- VAT on imports with a consignment value of < £135 will have VAT applied at the point of sale, rather than applied as import VAT at customs. For B2C UK VAT will be charged and collected by the seller but B2B the VAT will be reverse charged to the customer
So, what this essentially means is foreign sellers sending good to UK will need to charge UK VAT and apply to be part of the UK VAT systemwhen supplying goods with a value < £135 to end consumers (non-VAT reg individuals). Businesses who recieve goods with a value of < £135 will need to account for the VAT as part of a reverse charge procedure.
Business Travel
Travel for UK nationals is changing from 01/1/2021
Travel requiements will depend on each country. – Check this link https://www.gov.uk/government/collections/providing-services-to-eea-and-efta-countries-after-eu- exit
Passports
To travel to the EU as of 01/01/2021 you can still use the current burgundy passport so long as you have more than 6 months left to run on the passport before expiry.
Travel Insurance
The UK is currently in talks to try to come to some sort of an agreement on the healthcare insurance but it is recommended to purchase travel insurance before you travel
Visa
Traveling to the EU now could require needing a Visa, be sure to check before you fly anywhere.
From Late 2022, UK nationals traveling to EU may be required to present ETIAS (EU Travel Information and Authorisation System visa waiver, this will last for 3 years and will most likely cost around 7 Euros. It will be valid for 3 years (or when the passport expires if that falls before)
Driving
You may now need a International Driving Permit (link below) This can be obtained from the post office for a small cost, However it is only required for certain countries
https://www.postoffice.co.uk/identity/international-driving-permit
For a full list check the gov.uk site here: https://www.gov.uk/guidance/driving-in-the-eu
From an insurance prospective, you may need to ask your insurance company to provide you with a “Green Card” to prove that you are insured to drive in that country. You will need a GB sticker on your car when travelling as the number plate country identification is now no longer valid.
Mobile Phone’s
The usuage of your mobile phone in and around the EU may change from 01/01/2021, different network providers will have different rules.
