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Brexit update on trade

15 July 2020

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The EU and the UK have provided further information this week about Brexit implementation and preparation starting on 1 January 2021, when the transitional period ends.

European Union advice

  • Barriers will be created on the movement of goods from the UK to the EU regardless of the outcome of the continuing negotiations. 
  • Customs controls on goods arriving in the EU from the UK will create an administrative burden and increase delivery times. 
  • A UK exporter to the EU can no longer use its EORI number issued by the UK, but will have to apply for an EU EORI number. 
  • One of the thousand UK exporters who have Authorised Economic Operator (AEO) approval issued by the UK, will need to apply to obtain an EU AEO number.
  • A UK importer will require evidence of the origin of the goods at the EU border.
  • There is the potential, albeit very unlikely of Anti-Dumping Duty (ADD) on specific UK exports to the EU.
  • UK exports will have to abide by EU regulatory standards and rules on health & safety including particularly;
    • Motor vehicle type approvals may be different in the UK to the EU;
    • Medical devices and medicines will require certificates/authorisation from EU bodies;
    • Labels on goods must refer to EU regulatory bodies.
  • Certain services will be particular impacted including;
    • Financial services, with the loss of the EU “passport”;
    • Transport, especially airline licences, subject to ongoing negotiations;
    • Media/tv providers;
    • Energy providers;
    • Professional qualifications for lawyers, architects, doctors, vets etc have to be recognised in the EU.

UK advice under the straplines of “Let’s get going” and “Check, change, go”.

  • If a UK business has historically only purchased goods from the EU and not from non-EU countries, it must apply for a UK EORI.
  • If a UK business has historically only purchased goods from the EU, it must appoint a UK freight agent to submit import entries to UK Customs.
  • There is a three stage implementation process for UK imports from the EU, explained in a previous Insider article on 19 June 2020, summarised below.  There has been some discussion whether the initial, six month, favourable treatment of EU imports is within the rules of the World Trade Organisation.
    • Phase 1 from 1 January to end March 2021 requires that full import entries from EU are only required for controlled goods such as alcohol, tobacco, toxic chemicals, live animals and plants. All other imports can be declared in traders records, using the EIDR simplification.  Importers of other standard goods will have up to six months to make their declaration and to pay tariffs, if any;
    • Phase 2 from 1 April to end of June 2021 extends the requirement for full import entries from EU to all Products Of Animal Origin (POAO) such as meat and milk;
    • Phase 3 from 1 July 2021 onwards extends the need for full import entries to all commercial arrivals of goods into the UK from the EU.
  • A programme of new border infrastructure is to commence, including a new facility for road traffic near to Ashford, Kent.
  • Previously the UK announced that import VAT for all imports from the EU and non-EU countries will be subject to “postponed accounting” from January 2021, so for a fully taxable UK business, import VAT is paid at the same time as it is claimed as input tax on a VAT return, thus providing a valuable cashflow benefit.
  • Previously in May, the UK published its own Tariff, which is implemented from 1 January 2021. Initially more than 60% of imported goods will have no customs duty, with the aim to increase this percentage with future individual trade agreements.  All existing import duty rates of 2% or less will become zero.

If you have any questions, please contact the VAT team.