With the end of the transitional phase just around the corner and no deals in place, UK businesses should now be preparing themselves for a hard Brexit. Whilst we still don’t know exactly what to expect from the 1st January 2021, there are some things that can be done now to minimise disruption.
Prepare for Brexit: “Check, Change, Go”
The government has launched an awareness campaign with the tagline ‘Check, Change, Go’. The aim is to let businesses and individuals know the various things they will need to take into consideration ahead of the transition. This article will focus on the changes to trade.
EORI Number For Importing/Exporting Goods
If your business is involved in importing and/or exporting goods between Great Britain and the EU then the first step will be to get an Economic Operators Registration and Identification (EORI) number. At present, you will only be required to have an EORI number if you are trading with non-EU countries, however this will change to include the member states and Northern Ireland from the 1st January 2021. This is a relatively quick and simple change you can make ahead of the transition that can prevent you from having to deal with any delays or unexpected expenses.
Updated Terms of Trade
It would also be prudent to have conversations with your suppliers and EU-based clients surrounding the terms of trades. With a hard Brexit there is an increased administrative burden and the potential for additional duty and taxes to be due. It is important to establish who will be responsible for what charges ahead of January so that there are no nasty surprises.
Customs Requirements
Customs declarations will be required for all goods moving between Great Britain and the EU. In addition to this, the rules on certain goods will be changing so it is recommended that businesses check the requirements for their particular industry and make any necessary changes to their processes to ensure correct standards and licensing regulations are upheld.
Zero rate VAT opportunity
Whilst the retailers VAT export scheme is ending, meaning customers can no longer claim back the VAT paid for items that are taken out of the EU, there is the opportunity to apply for zero rating VAT on some exported goods. To qualify for 0% VAT you would need to arrange for the goods to be delivered directly to the non-EU customer’s usual place of residence. Zero rating would not be applicable if it was the customer that moved the goods out of the EU.
The new rules coming into effect 1st January will affect your business, family and personal circumstances. To clarify all the actions you will need to complete in all areas, visit the government’s transitions page.
Note that the steps discussed here refer to Great Britain, rather than the United Kingdom. This is because of the complex issues surrounding trade in Northern Ireland, on account of their shared border with the Republic of Ireland (which remains a member state). A separate document entitled ‘The UK’s approach to the Northern Ireland Protocol’ has been released, and you should familiarise yourself with the information within it if you are a business that trades with Northern Ireland.
Neil Smith Accountancy have provided professional accounting services for small businesses and individuals in and around Essex and London for over ten years. The friendly team have the necessary knowledge and experience to provide tax-efficient accounting, as well as business advice in these uncertain times. Get in touch via our contact form, call 01376 512637/ 01621 841233/ 07973 829161, or email enquiries@neilsmithaccountancy.co.uk.