Are you ready for Brexit | Online Account Filing

Are you ready for Brexit or making a leap in the dark?

An endless debate which cost us 3 PMs, 2 mass protests, 4 years and countless articles, tweets and well-heated arguments even with the loved ones. As January 2020 is showing its head around the corner, now is the time for citizens and businesses of the UK to pull up their socks and brace up for the No Deal Brexit. This article is to help you to build a generic picture with some vital aspects in dealing with a potential no-deal Brexit.

Brexit seems to be shrouded with the clouds of uncertainties, yet the Government has put an intensive effort upon a No Deal scenario to ensure the businesses are to continue to operate as smooth as possible along with infrastructure and public services and to minimise any disruption to the economy.

So to speak, there isn’t any stone left unturned to make sure that even if the UK leaves Europe without a deal, the transition is to remain hassle-free and stabile for citizens, consumers and businesses.
Government has recently published several technical notices to provide some more insight for the citizens and businesses for Brexit.

Despite all the effort, long seminars, informative events, in reality, how prepared are we apart from constantly having panic attacks over the possibility of an instant food shortage on the 1st of February? Let’s begin by answering a few questions:

  • Do we know the implications of Brexit on our Business?
  • Is our business ready to cope with the effects of No Deal Brexit?
  • Are their sufficient funds in place to deal with extra costs, e.g. custom duty on goods imported from EU etc.?
  • Are there any new licences we might need to apply for before Brexit?
  • If the business uses border then is the supply chain ready to handle potential disruption?

Businesses that are in close engagement with the EU border are the first ones against the wall. Government has asked them to start getting ready for No Deal customs procedures.

EORI number

A passport number for trade goods, Brexit limits not only your movements but your goods` movements as well.

What is an EORI and who do use it? EORI (Economic Operators Registration and Identification number) is a ref number of which is required to move goods in and out of the EU (including the UK). It is essential in identifying the ‘importer’ or ‘exporter’ for custom clearance procedures, paying its duties, and import VAT. Currently, EORI numbers are issued by customs or other designated authorities in the country of establishment of the economic operator.

It is important to note that principal feature of a No Deal Brexit would be ending the free movement of goods resulting in applicable customs duties and import VAT becoming payable as well as amended/additional customs clearance procedures for goods moving between the UK and EU. As the UK is a member of the EU at present, goods move freely within the UK & the EU. Also, no EORI number is required for businesses and individuals buying from or selling goods between the UK and the EU only (known as acquisitions and dispatches). The need for an EORI number will, therefore, be a new requirement for a mass of the UK businesses trading only with the EU Member States in the event of a No Deal Brexit. Let`s make it simpler:

Situation 1: Goods imported into the UK from anywhere (except the EU):
UK EORI will be required.

Situation 2: Goods exported out of the UK to anywhere (except the EU):
UK EORI will be required.

Situation 3: Goods imported into the UK from the EU:
Since goods are imported into the UK, hence UK EORI will be required. Further, as goods are exported from the EU, so EU EORI will be required.

Situation 4: Goods exported from the UK to the EU
Since goods are exported from the UK, hence UK EORI will be required. Further, as goods are imported into the EU, so the EU EORI will be required.

Those businesses that fall in Situation 1 & 2 shall require UK EORI beginning with GB. Practically, an application for a UK EORI number takes about 5-10 minutes only to do online (with businesses or individuals being allocated an EORI number straight away or within 5 working days if HMRC needs to make checks).

Those businesses who fall in Situation 3 & 4 shall require both UK EORI & EU EORI. Businesses and individuals which currently have an EU EORI number will need to register for a UK EORI number post a No Deal Brexit. For the time being, it is not possible to have both a UK EORI and EU EORI number before a No Deal Brexit as the UK is still an EU Member State and multiple EORI numbers in the EU is prohibited. Therefore, taking multiple EORI after Brexit is likely to result in delays and additional cost.

Imports from the EU

The Government has listed a few additional steps beside the requirement of UK EORI number, as follows:

  1. To Decide who will make the customs declaration (It could be self-made or a customs agent can be hired to do so).
  2. To apply for ‘Transitional simplified procedures’ and other customs procedure that could be used.
  3. To find out what rate of import duty and excise duty (on alcohol, tobacco or biofuels) is applicable.
  4. If the business imports regularly then a duty deferment account could be set up to enable making one payment of customs duties a month instead of paying for individual shipments.
  5. To figure out if one might need to change the labelling on the packaging for your goods, or apply for licences or certificates etc.

Exports to the EU

The Government has listed a few additional steps beside the requirement of UK EORI number, as follows:

  1. To decide who will make the customs declaration. (It could be self-made or a customs agent can be hired for the same).
  2. To choose if you want to export your goods using the Common Transit Convention (CTC).
  3. To find out the rate of taxes and duties applicable to the goods required to be paid by the importer as import duty will be payable by EU member on goods imported by it from the UK.
  4. To check out if there’s a requirement for applying for export licence etc.
  5. Implications of changes in VAT. E.g. VAT refund claims, VAT payment for selling digital services to EU customers.
  6. To select who will transport goods outside the UK.

VAT refund claims

You wanted to see a real immediate effect of a no-deal Brexit, then this one is for you; After 5 pm on January 2020, it won’t be possible to use HMRC’s VAT online services to claim a VAT refund from an EU member state. In the wake of Brexit, to claim VAT refunds from EU members, businesses need to follow the refund process for the EU member state where they wish to claim a refund.

Before the Brexit finds its way, in reality, let`s prepare ourselves to tackle whatever it is supposed to bring along. Let us ensure that the transition is smooth and coping with it is easy. And this is only possible if we keep ourselves aware of the issues affected by Brexit and keep ourselves ready as per the guidelines provided by the government from time to time.

Note: Please note that the content of the above blog and the aforementioned information are solely for the purpose of awareness and are informative in nature. The content is designed with intent to ease the understanding while preserving the essence and importance of the compliance rules and shall not be considered as an ultimate replication of the rules. Online Account Filing does not own any responsibility whatsoever for any unpleasant event that may arise due to the misinterpretation of a specific part or whole of the information.

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