Brexit and EU Trade
Following the rejection of Theresa May’s Withdrawal Treaty, Alison Horner, indirect tax partner at Baker Tilly International's UK member firm MHA MacIntyre Hudson explains the proactive changes businesses buying and selling intra EU must make to succeed in a post-Brexit landscape.
“The main areas of concern for EU focused import and export businesses include new customs reporting requirements, the continuity of supply chains, additional administrative burdens and new statutory obligations. An estimate provided by HMG representing increased import and export declarations was £6.5 billion, and over half this figure relates to import declarations. Each individual declaration is estimated to cost business between £25- £55.
“A pro-active approach to mitigate these issues needs to begin with ensuring your business has the correct commodity codes and any export licences needed to trade. It’s also rucial to make sure you know the facts about all types of customs relief you may be eligible for to avoid paying duty unnecessarily. A firm that knows how to navigate the administrative maze and has a customs plan ready for 29 March will be able to take steps to secure the softest possible landing in the event of a no-deal.
“You need to make sure you’re registered with HMRC for an Economic Operator Registration and Identification (EORI) number, the unique identification number which allows you to trade with the EU. You must check whether your goods require an export license and whether they will be subject to any special rules in respect of their movement. The correct commodity code for your goods will help you identify the amount of UK import duty payable, whether that duty can be suspended, if you can apply for any preferential duty rates and whether you may need an import licence.
“The next step is to establish the correct customs procedure for your goods. Businesses need to consider how they will make their declarations to HMRC and whether this will be facilitated through a third party, such as a freight forwarder or a customs broker. If you employ a third party, you must provide clear instructions on the treatment of your goods.
“You must consider whether you’re eligible to apply for any customs procedures which may provide relief from duty, for example use of or approval to operate a Customs Warehouse facility, Temporary Admission, Inward or Outward Processing Relief. Another consideration are International Commercial Terms (INCOTERMS) or shipping terms agreed between contracted parties, i.e. the supplier and purchaser, as they may determine the risk and liability for the movement of goods, including liability for any UK import duty. If your supply chain is going to evolve and you will import direct into Europe, VAT registration in the country of importation may be necessary.
“Another proactive measure to consider is implementing a Customs Duty suspension regime. These schemes require care and attention but the payback is well worth the effort and can prevent you paying Double Customs Duty. Being part of this regime marks out your business as proactive, compliant and forward thinking, important to future success. Comprehensive knowledge of customs arrangements and careful planning will likely prove the key to making the best of a no-deal Brexit.”