Brexit deal impact
The free trade deal announced on Christmas Eve will allow goods to move from the UK to the EU and vice-versa free of customs duties from 1 January 2021. It requires ratification by the UK and EU parliaments. The other consequences of Brexit, following the end of the EU transitional period on 31 December 2020 remain, as follows.
- Full import and export entries with associated supplementary documentation required for the movement of goods at the UK and EU border, although there is a 6 month deferral scheme available for UK importers of non-controlled goods.
- If you don’t already have a UK EORI number, you need to apply to allow you to import into the UK or export from the UK.
- Likely delays for incoming road freight at UK ports in the short term.
- If you currently make use of Triangulation, or call-off stocks within the EU, you will need to register for VAT in another EU member state.
- The introduction of Postponed Accounting for Import VAT by the UK; for businesses no import VAT is payable on goods arriving from the EU and the Rest of the World at the time of import, but rather it is accounted for on the next VAT return.
- If you sell goods b2c to private consumers, and benefit from the “distance selling” thresholds in each EU member state, you will either have to register for VAT in each member state or amend your business model so that the private consumer will pay the import VAT to secure the release of the goods from EU customs to “home use”.
- If you submit Union refund claims to HMRC for repayment of VAT incurred in the EU such as hotel or conference costs, you will have to submit non-union claims direct to the member state where the cost was incurred. Last claims to the UK will be for the final quarter of 2020.
- If you sell e-services digitally to private consumers (b2c sales) and submit a Mini-One-Stop-Shop (MOSS) return to HMRC, you will no longer be able to use this return to declare EU sales and will have to register for MOSS somewhere in the EU.
- If your UK business (the UK entity) has an overseas VAT registration number in the EU, in 19 of the 27 member states, you may have to appoint a VAT fiscal representative. Fiscal agents hold direct liability for any unpaid VAT, and often require cash deposits or bank guarantees.
Further detail is required to explain the origin rules for export of goods from the UK to the EU, important for UK manufacturers and processors. These rules will determine the minimum value of UK goods and processes within the finished product (expressed as a percentage) that must originate in the UK, for the nil rate of customs duty to apply.