Preparing for Brexit
The 31st October 2019 is fast approaching and there remains a real possibility that the UK will leave the EU without a deal.
In preparation of the UK leaving the EU, businesses should now consider taking appropriate actions to manage the associated impacts of leaving the EU, whether in a deal or no deal scenario.
Businesses that trade with the EU are likely to be significantly impacted by the withdrawal from the EU, and the current trading arrangements based on free trade and the absence of customs barriers may no longer exist.
BHP has been working closely with clients across all sectors to manage the impact of Brexit and we would be keen to talk to you to support where we can. Some key considerations of a “No Deal” Brexit are set out below (where we understand there will be no transitional period).
Key Considerations – VAT & Duty
In the event of a deal scenario being agreed with the EU, we understand that this will lead to a transitional period (or standstill arrangement) where the majority of existing trading relationships will remain in place until December 2020. However, the exact nature of any deal is still not fully known and as a result, this could also have important VAT and Duty consequences depending on the details agreed with the EU.
Some key considerations of a “No Deal” Brexit are set out below.
- Register for an Economic Operator Registration and Identification (“EORI”) Number.
In the event of a no-deal Brexit, UK businesses who trade, or plan on trading with businesses in the EU will be required to obtain an Economic Operator Registration and Identification (“EORI”) number. We understand that HMRC have started to issue these numbers where appropriate.
It will also be necessary to determine with suppliers and customers those businesses that will act as Importer of Record for movements of goods, whether that be in the UK or within the EU.
- Prepare to make Customs Declarations.
UK businesses may need to make customs declarations for the majority of goods moving between the EU and the UK in the event of a no deal. Third parties such as Freight Forwarders, Customs Agents and Express Couriers may be able to help with customs processes and the movement of goods.
- Implications on your Supply Chain
Businesses will need to understand what the risk points and potential liabilities are in their supply chains, based on contractual agreements with suppliers and customers.
- Changes to VAT & Customs Duty.
When the UK leaves the EU, the UK may cease being part of the EU-wide VAT system. Furthermore, you may be required to pay VAT, excise or customs duty when importing goods from the EU.
- Overseas Rules and Regulations.
In a no deal scenario there may need to be a review off all UK business VAT registrations in the EU as well as the registration of EU businesses in the UK to determine if such registrations are still appropriate, or whether further liabilities arise. Linked to point 1 above, it will be necessary to consider whether such requires VAT registration requirements in any countries that you work with.
How can BHP Help?
We work with a number of businesses in the region who have dealings with the EU, both from a purchase and supply perspective.
We have extensive experience in relation to the VAT & Duty implications and we can provide support in the following areas:
- Support and Advice on Trading Structures and Procedures
Including EORI number, Customs declarations, Simplified Procedures and changes on supply chain management.
- VAT Advice and planning
Including Accounting for Import VAT, Distance selling implications, changes to VAT systems and existing VAT processes in place.
- Duty mitigations and simplifications
Excise and customs duty, together with any potential simplifications that may be available to businesses to mitigate the impact of the changes.
- Keeping you up to date on Brexit
We will keep you posted as developments occur in the next few weeks and months, but please let us know if we can help in the meantime in relation to your Brexit planning.
It’s now time for businesses to act and take immediate actions in order to prepare for Brexit. With the help of our specialist team, we can assist with managing this process as the EU issue progresses.