As 1-Jan-21 draws ever nearer what changes should your SME business prepare to adopt ready for Brexit:
Exporting Goods to the EU
- Despatches are renamed exports.
- Apply for an EORI number (which will look something like: GB123456789123).
- Check whether what you sell is a restricted good that requires an export licence.
- Check whether there are new markings or approvals needed for the goods you manufacture.
- When you send a package to any country outside UK, you must complete and affix a customs declaration (CN22, CN23 or a Parcelforce Worldwide Despatch Pack incorporating the CN23) which you can obtain from the Post Office.
- When you transport goods to the EU, you, a courier, a freight forwarder or a customs agent will need to make a Customs declaration (no later than 24 hours before time of leaving the UK).
- Either the exporter or haulier must also make a safety and security declaration .
- Most direct exports of goods will be VAT-able in the UK at 0%. The current expectation is that goods will arrive in the EU from the UK and will be subject to local EU import VAT and potentially local EU import duty too, although the extent of any import duty will depend upon the detail of the deal (if any) agreed between the UK with the EU.
- Stop completing and submitting EC sales lists (and intrastat reports after 30 June 2021) to HMRC.
- Consideration should be given to whether starting an EU based subsidiary and/or stock holding facility gives a better supply chain and VAT/duty outcome.
Providing Services in the EU
- In order to access the EU market, UK service providers and professionals established in the UK will need to demonstrate compliance with any rules and procedures that cover the provision of services in the EU by foreign nationals and/or companies outside the EU (As an example, the provision of financial services from the UK to the EU will be possible subject to the relevant third country rules of the member state concerned).
- Check that your UK qualifications, required to practice or provide services abroad, are now recognised abroad.
- Do you need a permit or work visa to work broad.
- Check that your passport is less than 10 years old and has at least 6 months left on it before it expires.
- Check that you have the correct travel insurance and driving licence.
Importing Goods from the EU
- Acquisitions are renamed imports.
- Apply for an EORI number (which starts with GB).
- Decide who (you or a Customs agent) will make Customs declarations and transport the goods.
- Check whether you need an import licence.
- To receive imported goods through the post, a declaration (entry) on a Single Administrative Document (SAD or Form C88) is required (most traders with a good compliance record can defer submission 6 months until 1-Jul-21).
- Physically pay the Import VAT, rather than account for as a reverse charge book entry on VAT returns (this is reclaimable on a normal UK VAT Return, boxes 2 & 4). Instead of paying this at the time of entry into the UK:
- Postponed accounting rules can be used to pay it and reclaim it on the same VAT return (boxes 1 &4).
- You may wish to open a deferment account, to pay over import VAT once a month, rather than when individual consignments are released out of Customs (an approved guarantee or waiver will need to be put in place first). Once a deferment account is in place you will be eligible to apply to make simplified Customs declarations.
Reclaiming VAT Incurred in EU
VAT incurred in other EU Member States on or after 1 January 2021 must be reclaimed using the paper based system, rather than the current electronic system.
Employing Staff from the EU
- Anyone you want to recruit from outside the UK, excluding Irish citizens, will need to apply for permission (a visa) first (different criteria exist for different jobs).
- You will need to register as a Licensed Visa Sponsor.
- Check if existing employees from EU countries need to apply under the EU Settlement Scheme.
- The UK will no longer be covered by EU rules on the recognition of professional qualifications. UK nationals, irrespective of where they acquired their qualifications, and EU citizens with qualifications acquired in the UK will need to have them formally recognised in any member state where they may do business, based on that country’s rules for recognition of third-country qualifications. In many cases, this recognition process may be more complex than hitherto.
Exchanging Personal Data with the EU
- Your organisation may need to have Standard Contractual Clauses (SCCs) in place with EU counterparts in order to legally receive personal data from the EU.
There are further changes to adopt for many non mainstream aspects of interacting with the EU including providing digital services, importing chemicals, carbon pricing, wood packaging and moving endangered animals.
Blog entry by: Ian Piper