While the deadline for Brexit has been postponed until 31 October 2019, a no-deal scenario is still a very real possibility, and an important one for businesses to consider.
Worryingly, an investigation by BBC’s Newsnight revealed that less than 10% of businesses have taken up an HMRC scheme to simplify their customs procedures in a no-deal.
The transitional simplified procedures (TSP) scheme allows firms to import goods from the EU without filling out new customs declarations at the border.
However, only 17,800 of an estimated 240,000 firms that need the status have applied so far.
If your firm is one of the thousands that have yet to apply, or if you’re unclear on what else you might need to do to prepare, here’s what you need to know.
How will trade change?
If the UK leaves the EU with a deal, a transition period which can be used to negotiate trade arrangements will apply until December 2020 at least and possibly until 2022.
If there’s no deal, it’s expected that we’ll immediately revert to World Trade Organisation rules.
In that scenario, you’ll need an Economic Operator Registration and Identification (EORI) number in order to trade goods into or out of the EU, submit customs declarations with software, and use simplified customs procedures.
This takes three days to process, so businesses are being advised not to leave it to the last minute.
Importing goods from the EU
Once you have an EORI number, you can register for simpler import procedures.
HMRC’s TSP scheme is aimed at making importing procedures easier for businesses, for an initial period of one year if we leave the EU without a deal.
It won’t guarantee any simpler procedures for your exports to other countries, but it should help to make the customs system within the UK more manageable.
You can register for this online once you have an EORI number.
Sending goods to the EU
You’ll need to consider whether to make customs declarations yourself, or to get help from a third party.
If you’re doing it yourself, this will be through the National Export System.
Research the destinations you want to export to, and find out whether your goods will incur import duty.
If you currently use special or simplified procedures, make sure you check whether they will still apply if the UK leaves the EU without a deal.
What to do after goods leave the UK
Once your goods have left the UK, make sure you keep records of commercial invoices and customs paperwork. You’ll also need to pay any tax you owe in the destination country.
You can zero-rate the VAT on most goods you export, but be aware there will be changes to the current electronic process for paying or reclaiming VAT.
VAT processes
Any business that wants to use the EU VAT refund electronic system to submit a refund claim for 2018 or 2019 will need to do so before 5pm on the day the UK leaves the EU.
This day is not necessarily going to be on Halloween as the UK can leave before this date.
After that point, you’ll need to use the process for the country you’re exporting to.
Processes between different EU member states will vary, so make sure you’re clear on information like the claim deadline, whether or not you need a certificate of taxable status, and whether you need to appoint a tax representative.
We handle all aspects of this complex tax as part of our VAT service, and can advise on the changes your business might see in the event of a no-deal.
Contact us
While the future of the UK’s relationship with the EU is still unclear, it’s hard to make plans for your business – but preparing for any eventuality now will make it easier to manage any future upheaval.
Detailed guidance is available on GOV.UK.