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Brexit
What is the latest on Brexit?
As of the 31st January 2020 The UK is no longer a member of the EU, and we have entered an implementation period that lasts until 31st December 2020. During this time there will be NO CHANGES to the terms of trading with the EU or the rest of the world, unless the rules change for the whole of the EU. This means that the EU raules for customs, VAt and excise will continue to apply to the movement of goods and trade for this limited time. There will be no new customs proceedures at present.
What will happen after 31 January 2020?
From 1st February 2020 the UK will no longer be a member of the EU, and the UK will enter an implementation period that lasts until 31st December 2020. During this time there will not be any changes to the terms of trading with the EU or the rest of the world, unless the rules change for the whole of the EU. This means the EU rules for customs, VAT and excise will continue to apply to the movement of goods and trade for this limited time. There will be no new customs proceedures at present.
What will happen after 31 December 2020?.
From 1 January 2021, the way the UK trades with the EU will change, and the UK will need to prepare for life outside the EU, including new customs arrangements. For example, for trade between Great Britain (GB) and the EU, you will need to make customs declarations to import and export goods once the UK is outside of the EU's customs territory.
More information and guidence during the implamentation period and as negotiations progress. More HMRC information.
Exporting to and importing from the EU
In the recent Technical Notes issued by the government on 23 August 2018, businesses are advised to:
1. Put steps in place to renegotiate commercial terms to reflect any changes in customs excise procedures and any new tariffs that may apply to UK-EU terms.
We have already started to amend contracts to reflect this clause, and we recommend that our customers do the same with their contracts.
2. Businesses should consider acquiring customs software and/or engage a customs broker.
We already have measures in place to accommodate the customs clearance process, and our customers can also rest assured that we are very well placed to handle Eurozone imports and exports.
3. Businesses must use product classification codes and check whether any of their goods need an export licence.
We already have the correct codes essential to ensure our customers pay the right amount of duty, and we recommend that you start the process early by using the UK Government Commodity Code website for classification of goods (see 'Sources' section for a link to the government website). Most of our products are classified under the HS code 84818030.
You may need an EORI number (Economic Operator Registration and Identification) if not using a third part freight agent. It is easy to apply with HMRC get an EORI number here. Typically it will be your VAT registration number with 000 at the end. Our VAT number is 712906644, our EORI Number is GB712906644000.
You will also need an EORI number that starts with XI if you move goods into or out from Northern Ireland. Our EORI number for this is XI712906644000.
To apply you may need your:
VAT number and effective date of registration - these are on your VAT registration certificate
National Insurance number - if you’re an individual or a sole trader
Unique Taxpayer Reference (UTR) 10 digit number as found on tax returns - find your UTR number
business start date and Standard Industrial Classification (SIC) code - these are in the Companies House register
Government Gateway user ID and password
You can call HMRC EORI team, from experience very helpful, 0300 322 7067 Monday to Friday 8am to 6pm.
Brexit Jargon Explained.
No-deal
A scenario in which the UK leaves the EU with no formal agreement on the terms of the UK's withdrawal or new trade relations. At 12pm GMT on 31 January 2020, the UK would default to WTO rules.
Soft Brexit
Leaving the EU but staying as closely aligned to the EU as possible. It could keep the UK in the single market or the customs union or both. It could involve British compromises on free movement of people, allowing EU citizens rights to settle in the UK with access to public services and benefits.
Hard Brexit
Leaving the EU and leaving both the single market and customs union. It could mean ending the right of freedom of movement between EU countries, the UK needing to pay money to be a member of the EU, and EU law overriding UK law.
Norway Model
An arrangement in which the UK would have to allow freedom of movement of people, make a contribution to the EU budget - smaller than it currently makes - and abide by the rulings of the European Court of Justice, in exchange for remaining in the single market.
Canada Model
Refers to a free-trade agreement between the EU and Canada which removes lots of barriers to trade between the two, but not as many as the Norway model - and which involves signing up to more EU rules and contributing to the EU budget.
Customs Partnership
This proposal, also known as the hybrid model, would enable trade in goods between the UK and Europe without the need for customs checks. Some say it would help solve the Irish border question too, as the UK would collect the EU's tariffs on goods coming from other countries on the EU's behalf. If those goods stayed in the UK and UK tariffs were lower, companies could then claim back the difference.
In the end, either way; business will continue as usual as we implement the best solutions available.
25th September 2020 UPDATE.
There’s now less than four months to go until the Brexit transition period ends and a new era for UK/EU trade begins. Negotiations over a Free Trade Agreement (FTA) are still ongoing, but whatever the outcome it is likely that there will be changes on the way we ship.
Action has already been taken and we are ready for 2021, whatever the final outcome we will continue to supply into the EU with minimal delay and maximum reliability.
We will will trade on World Trade Organisation (WTO) terms and therefor we have made the essential steps to ensure our business is able to continue shipping successfully in 2021. In either scenario of an FTA or WTO, the UK will leave the EU Customs Union which means that shipments will require clearance.
• We will create and submit air waybills and customs paperwork to electronically.
The shipping application will be updated to reflect changes for shipping to and from the UK as of Jan 4, 2021 using new features available to us from our freight agents that support the creation and digital submission of customs documents ahead of any courier collection. This ensures your shipment is fit for travel and reduces risk of delay.
• We already have our EORI number, will will describe your goods accurately and know the correct HS codes for your goods
• We understand how to value each item in any shipment correctly and the country of origin details needed
• We will apply the right Incoterms agreed with our customers
• We understand how to provide a reason for export, and identify any export licences or supporting documentation that may be required
• We are prepared to include both your address and contact details, and to inform our customers of any import taxes and duties that may be required.
The information above is vital to complete a commercial invoice for deliveries into the EU as from January 2021.
At this point we do not know what changes an FTA may bring. However it is likely that some, if not all, of the above will be necessary when shipping between the UK and EU.
Ensure you have an EORI number
Get into the habbit of providing/requesting commercial invoices/packing lists for EU cargo
IDENTIFY VALUE, INCOTERMS, ORIGIN, GROSS, NETT WEIGHT AND COMMODITY CODES
Think about getting a deferment account
To allow more time to prepare for the changes to trading rules, HMRC have decided to delay the implementation of full border control processes by six months.
It is important to use this extra time to prepare fully.
There is now direct financial support to help small and medium-sized businesses (SMEs) adapt to changes in trading rules through the £20m Brexit Support Fund.
The fund is focused on practical support with grants of up to £2,000 for training or professional advice to adjust to new customs, rules of origin and VAT rules when trading with the EU. You can apply now.
We have developed a new toolkit that provides a quick summary of actions that businesses need to take, including access to relevant guidance and available support.
This is in addition to existing resources, such as the Brexit Checker Tool, the Trader Support Service and the Movement Assistance Scheme for agri-food goods
You can contact the government’s Business Support Helpline for free business advice.
England: 0800 998 1098
Scotland: 0300 303 0660
Wales: 0300 060 3000
Northern Ireland: 0800 181 4422
EU VAT rules are changing from July 1, 2021
The European Union is making some important changes to its VAT rules, which will come into force from July 1, 2021. All businesses could be affected by the changes, but they will mostly apply to those making business-to-consumer sales direct and viaonline marketplaces selling to customers in the EU.
Three key changes are:
1. Removal of the €22 import VAT exemption
2. Introduction of an optional Import One-Stop Shop (IOSS) and single EU VAT return
3. Certain online marketplaces becoming the deemed supplier and VAT collector
The new rules could allow your business to benefit from simpler procedures and reduced administration. They could also lead to changes in the way you do business in the EU.
1. Removal of the €22 import VAT exemption
What does it mean?
From July 1, 2021, VAT will be charged on all commercial goods imported into the EU, regardless of value. For consignments with a value of €150 or below, this can either be charged at the time of the sale by using the new Import One-Stop Shop (IOSS), or be collected from the end-customer by the customs declarant (by shipping agent).
How might it affect my business?
If your business is based outside the EU, it will no longer be able to export shipments valued under €22 to EU consumers free of VAT.
How might it work in practice?
Scenario
An online business in China sells one pair of socks worth €10 to an EU-based consumer.
Before July 1, 2021 The shipment can be imported into the EU free of VAT, since the total value of the goods is less than €22.
After July 1, 2021 All shipments will attract VAT regardless of value. VAT will apply at the rate set in the buyer’s country of residence.
2. Introduction of an Import One-Stop Shop (IOSS)
What does it mean?
For e-commerce consignments of €150 or below, the EU is introducing an optional Import One-Stop Shop (IOSS) to clear goods through customs. This will allow sellers or online marketplaces to charge VAT at the point of sale and remit it directly to the authorities. This can make the process simpler and more transparent for the consumer, and helps to ensure efficient customs procedures. If the IOSS is not used, FedEx will collect the VAT from the customer prior to delivery and pay it to the authorities.
How might it affect my business?
To sign up to the IOSS, sellers will have to register in an EU member state if they are already established in the EU, or, if not, appoint an intermediary to register and declare the VAT on their behalf. They will then need to provide their IOSS number to the customs declarant (FedEx). VAT for their EU sales will be submitted via a monthly tax return in the nominated EU member state, which will then forward the VAT declaration and payment to the appropriate countries. As a consequence, businesses will no longer have to register for VAT in every EU country they sell in.
How might it work in practice?
Scenario A
U.S. e-commerce business sells electronics with a value of less than €150 to customers in five EU countries.
Before July 1, 2021 The U.S. e-commerce business is obliged to register and account for VAT in each EU country.
After July 1, 2021 The U.S. e-commerce business can choose to close its foreign VAT registrations and register for IOSS in one EU country, charging VAT at the point of supply. Or the business can continue as they do today, with their customers paying VAT on importation.
To sign up for the Import One-Stop Shop (IOSS), businesses should register on the IOSS portal of an EU Member State from April 1, 2021. Businesses not already established in the EU will normally need to appoint an EU-established intermediary to fulfil the VAT obligations.
3. Certain online marketplaces becoming the VAT collector
What does it mean?
Marketplaces in scope of the new EU VAT rules can, for instance, be online platforms that facilitate the sales transaction. They enable sellers to sell their goods directly to customers. Certain marketplaces, rather than their sellers, will now be responsible for collecting, reporting and remitting the VAT due from the end-consumer if they register with the IOSS. The scheme would apply for sellers for transactions up to €150.
How might it affect my business?
If a marketplace has opted for the IOSS, businesses selling through it must use the marketplace’s IOSS number and provide it to the party responsible for making the customs declaration (by shipping agent). Businesses using several marketplaces to sell their goods should keep clear evidence of the sales carried out via each. They should also provide the corresponding IOSS number for each sale to the customs declarant.
Scenario
An e-commerce business based in China sells a €90 vase to an EU customer, via a qualifying online marketplace that opted for the IOSS.
Before July 1, 2021 The customer buying the vase from the seller is responsible for paying the VAT on their purchase at the time of importation.
After July 1, 2021 The marketplace the vase is being sold through uses the IOSS and becomes responsible for collecting the VAT from the customer at the time of sale, ensuring it is passed to the relevant authorities.
More details on using the IOSS and the other important changes to the EU’s VAT rules are available from the Publications Office of the European Union.
EU countries are:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
Please note that, under the terms of the EU-UK Joint Protocol, Northern Ireland will remain part of the EU VAT area for goods. This means that these new provisions will also apply to goods imported into Northern Ireland from the rest of the world.