Count down to Brexit
The prospect of a no-deal Brexit is becoming more likely as there are less than 75 days to the end of the transitional period. The UK government has increased its marketing campaign to explain the consequences of a no-deal, for trade and travel from 1 January 2021. The UK government has branded a no-deal as an “Australian-style arrangement”.
This arrangement is the introduction of the previously published UK tariff, in place of the existing EU tariff, applying the principles of World Trade Organisation (WTO) rules, but offers no other benefits. The UK tariff sets the rate of customs duty for all imported goods into the UK, most of which will be nil. In the absence of a trade deal, the rate of customs duties for EU imports must be the same as an import from any other country in the world where the UK does not yet have a trade deal in place.
Briefly the other impacts of a no-deal for trade is as follows;
- Increased administrative burden and cost of moving goods to and from the EU as a full import and export customs entry is needed for each shipment, with possible delays at each border;
- UK businesses who use the existing EU triangulation, consignment goods relief or distance selling scheme to private consumers will have to register for VAT inside the EU;
- If you trade only with the EU, you may not have an EORI number, and need to apply before the year end;
- If you sell goods to the EU, consider whether they meet EU regulatory requirements for the relevant products from 2021, including the labelling of goods and medical/medicine approvals.
- If you sell services to the EU, check that you have appropriate professional qualifications or approvals particularly for financial, energy and transport services and those delivered by architects, lawyers, doctors and vets.
- The UK has introduced two mitigation measures for a no-deal Brexit, one permanent, and one temporary. Postponed accounting for import VAT is to be introduced on 1 January for all imports, which is a cash-flow benefit. For the first 6 months of 2021, imports of non-controlled goods from the EU can defer submission of the full import entry.