The end of the year – and therefore the end of the transition period – are both fast approaching, and from 1 January 2021 there will be significant changes to the way we trade with the EU – deal or no deal!
We have outlined below the key points you should be thinking about to prepare your business but please be aware that HMRC are regularly releasing updated information so the content in this summary could still be subject to change.
EORI numbers
- Have you got a GB EORI? This is needed for imports and exports from Great Britain. If not, apply here.
- Do you need an XI EORI? This is needed for imports and exports from Northern Ireland and also moving goods from Great Britain to Northern Ireland. This will be issued automatically if you have registered with the Trader Support Service
- Do you need an EU EORI? This is needed if you are importing goods into the EU or exporting goods from the EU. We can assist with this if required.
Shipping terms
- The shipping terms (incoterms) will determine the responsibilities of each party and who is responsible for export and import. If the agreed terms are delivered duty paid (DDP), the seller will be responsible for the importation, import VAT and duty and the onward sale could result in an EU VAT registration requirement. At the other extreme, ex-works (EXW) means your customer undertakes the exportation and zero-rating of that export is only permitted in certain circumstances.
Import duty
- Unless a deal is agreed, import duty may be payable on goods entering the UK from the EU. Import duty is not reclaimable and is a cost to the business so you will need to consider your pricing/profit margins. The UK tariff can be found here.
- If you sell to customers in the EU, import duty may be due (unless a deal agreed) so the cost to your customers may also increase so there may be pressure to reduce pricing or take responsibility for the import.
Customs intermediary
Import and export declarations are complex so it is advisable to use an intermediary who can do this for you. They will also be able to support with any additional requirements your goods may have (e.g. health certificates).
Postponed VAT accounting
- From 1 January, import VAT can be accounted for on the VAT return. This is optional for VAT registered businesses (compulsory for those using delayed declarations). Although you do not need to apply to use this, your freight forwarder/intermediary will need to know you wish to use this so they can add the appropriate indicator on the documentation.
Deferment or suspension of import duty
- If you buy a lot of goods from outside the UK, a deferment account may be beneficial that will allow you to delay the payment of import duty
- If good enter the UK temporarily if may be possible to suspend the payment of import duty by the use of warehousing, processing reliefs, temporary admission etc. Your customs intermediary can help with this.
Northern Ireland
- Although remaining part of the UK, Northern Ireland will also be part of the EU for goods only. The sale of goods from Great Britain to Northern Ireland will be subject to VAT (under the current plans), but the movement will need to be supported by an electronic declaration. The Trader Support Service has been launched to facilitate this and businesses that trade with Northern Ireland should sign up. If this is done before 14 December, this will automatically generate an XI EORI number. Guidance can be found here.
- Movements of goods between Northern Ireland and the EU will continue to be treated as intra-EU transactions. Businesses moving goods from Northern Ireland to the EU will need to use the prefix XI before their VAT number. Businesses will need to notify HMRC if they will be involved in these movements. Guidance can be found here.
Services
- Businesses suppling digital services to EU consumers will no longer be able to file MOSS returns in the UK. These businesses will need to register for MOSS in the EU
- We can arrange for EU MOSS registration and submit returns if required.
Administration
- UK VAT returns will remain the same
- EC Sales List and dispatch intrastat will no longer need to be filed for sales from Great Britain to the EU. However, these will still be required for sales from Northern Ireland to the EU as this will remain an intra-EU supply
- Arrivals intrastat for arrivals from EU to Great Britain and Northern Ireland will still need to be filed
- EU VAT refunds can no longer be filed and the claim for 2020 must be filed by 31 March 2021. VAT incurred in the EU from 1 January 2021 can be claimed using a non-EU refund claim, but it is important to note that not all countries will permit these from the UK.
If you would like to discuss any of the points above in more detail, please do not hesitate to contact our VAT partner, Alison Birch:
