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Frequently Asked Questions About Brexit

What should I do to get ready for Customs?

From 1 January 2021 the UK is a separate custom territory from the EU. This means that all imports and exports of goods to and from the EU will be subject to customs procedures, both in respect of EU goods imported into the UK and UK goods exported to the EU.

The UK’s Free Trade Agreement with the EU will have no impact on the urgent need to review your importing and exporting arrangements and potentially take these actions:

  1. Apply for a GB EORI number
  2. Apply for a EU EORI number (if needed)
  3. Apply for a Customs Intermediary (if needed)
  4. Apply for a Duty Deferment Account
  5. Prepare to pay or account for VAT on imported goods (Postponed VAT accounting)

What is an EORI number?

To import or export goods into the UK you will need an GB Economic Operator Registration and Identification (EORI) number. This is required for all businesses (traders and hauliers) moving goods into or out of GB, including those delaying their import declarations. If you don’t have an GB EORI number, you will not be able to import and export goods into the UK. You will need to apply for a number from HMRC. The application process takes about five to ten minutes, but it can take up to a week to get the number.

Some GB traders or hauliers may also need to apply for an EU EORI number. Traders need an EU EORI number if their business will be making customs declarations or getting a customs decision in the EU.

What is a Customs Intermediary?

Customs declarations are complicated. Most businesses that currently trade outside the EU use an intermediary, such as customs agents, Fast Parcel Operators (FPOs), Freight Forwarders (FFs) or brokers, to help them meet the customs requirements.

Do we need a deferment account?

The basic rules of customs are that imported goods need to be declared, and any duties paid (which could include VAT, customs and excise duties), at the time of importation.  However, traders who import goods regularly may benefit from having a “duty deferment account” (DDA). This enables customs charges including customs duty, excise duty, and import VAT to be paid once a month through Direct Debit instead of being paid on individual consignments. With effect from 1 January 2021, VAT registered traders can account for import VAT on their VAT return using postponed VAT accounting.

What is Postponed VAT accounting?

Postponed VAT accounting was introduced on 1 January 2021 to help businesses avoid negative cash flow issues from having to pay VAT on imports worth over £135.

Under the system, a business can now account for import VAT and claim it back on the same VAT return, rather than having to physically pay VAT on imports immediately at port, and then reclaiming it back at a later date.

What if I am not VAT registered?

Non-VAT registered traders (and any VAT registered traders not using postponed VAT accounting) will need to report and pay import VAT through the customs processes. Within this context, VAT payments can be deferred using a duty deferment account DDA.

Can I still travel to EU countries for work purposes?

In the main, those travelling regularly to the EU for work will need to get a visa, especially if work-related travel involves selling goods or services. Short-term visitors however, can work in the EU for up to 90 days in any six-month period, provided work activities are restricted to meetings, conferences and consultations rather than selling.

What are incoterms?

Incoterms, or International Commercial Terms, are a series of pre-defined global standards which help facilitate trade between the seller and the buyer. Although there is no legal obligation to use Incoterms, their use ensures both parties fully understand their own requirements and responsibilities towards successful trade outcomes. It is important to review whether your contracts clarify who is responsible for export / import formalities, duties and VAT.

How can I check which rules apply to me?

You can use the online ‘Brexit Checker’ from here.