With the UK due to leave the EU on March 29th 2019 and as yet no exit deal agreed, BREXIT is inevitably the hot topic for discussion throughout the country. From a trade point of view, we have written this article to provide some guidance, tips and advice to importers and exporters. It contains the important elements and changes which should be put in place, to help in the worst-case scenario of the UK leaving the EU with no deal.
For companies that are already importing from and exporting to countries outside the EU then in simple terms after March 29th 2019, you will trade with EU countries in the same way as you currently trade with non-EU countries. In other words, goods moving to and from EU countries will be subject to a formal customs process at the border meaning the process will take longer. Imported goods will be subject to import duties and VAT which has significant cost and cash flow implications for importers.
For companies that are currently only trading with EU countries, then trading with the EU post BREXIT will be very different and more complicated. Traders will need to arrange customs clearance of goods, prepare additional documentation and provide instructions to facilitate import and export of goods.
So what things need to be put in place to help minimise the impact of the changes and make the import and export processes as smooth as possible post-BREXIT? The following is a brief summary of points that all exporters and/or importers should consider;
- Ensure you have an EORI (Economic Operator Registration & Identification) number so that you are recognised as an exporter by HMRC.
- Make sure you have identified the correct customs tariff codes for your goods.
- Enlist the services of a good Forwarding Agent (preferably with AEO status) who can deal with the customs process for you, as well as arranging the physical movement of your goods. Although you may use an agent, as the exporter, you will be responsible for ensuring the goods are correctly declared for export.
- Make sure you can generate the necessary export documentation such as Commercial Invoices, Packing Lists and Certificates of Origin before attempting to despatch your goods. These documents must contain all the appropriate details to enable the smooth export of your goods.
- Use the correct and appropriate trade terms (Incoterms ®) to avoid inadvertently being responsible for unforeseen costs and responsibilities.
- Ensure you hold and retain appropriate proof of export for VAT compliance.
- Ensure you have an EORI (Economic Operator Registration & Identification) number so that you are recognised as an importer by HMRC.
- Make sure you have identified the correct customs tariff codes for your goods. This is vitally important as the tariff code will determine the amount of import duties and taxes that will need to be paid when goods are imported.
- Enlist the services of a good Customs Agent (with AEO status) who can deal with the customs clearance process for you. Although you may use an agent, as the importer, you will be responsible for ensuring the goods are correctly imported. So you will need to provide your agent with appropriate clearance instructions.
- Familiarise yourself with the different import customs processes in order to take advantage of available duty relief schemes.
- Arrange a duty deferment account to reduce the impact of import duty and VAT. VAT paid on the import of goods can be reclaimed but has cash flow implications. This is due to the timing difference between paying VAT and reclaiming. Where import duty is payable, this for the most part cannot be reclaimed so has a cost implication. So, make sure this is correctly factored in to your pricing.
This brief article is intended to highlight the key aspects of import and export that need to be considered if the UK leaves the EU without a deal. The prospects of a no deal BREXIT sound daunting but with the appropriate planning and preparation, the impact can be mitigated. Here at Access to Export, we have a wealth of experience in international trade and with the export and import procedures that may become applicable to EU shipments, in the no deal scenario.
We can provide help and support to guide you through the transition and provide on-going support if required. Get in touch with us for an initial free exploratory discussion.
And most of all, good luck to all businesses across the U.K post BREXIT!