What should you be thinking about pre Brexit?
As an organisation there are a few things that you may want to consider before there is a deal or no deal Brexit come 1 January 2021. A caveat here is that we are not Brexit experts. From our finance experience of what business owners may need to think about, here are our six suggestions for you to look at.
Transition questionnaire with emailed updates about Brexit
Here is a GOV.UK link that talks about the transition. Included is a set of questions you can complete and if any of the guidance changes, you will get an email alert highlighting the changes that relate to your business. This can be a simple way to learn anything new that is relevant for your specific organisation or sector/industry.
Do you need a Customs Agent?
Customs and VAT values are known, but what isn’t are any new tariffs. We recommend you get help on the customs side of things. Engage with an approved customs agent to take care of the paperwork.
Don’t forget that any time you move goods across the UK border you will need to do customs declarations. Completing a customs declaration can be complicated and you’ll need compatible software to do it. You may want to get someone to deal with customs for you or find a customs training provider to help you.
At the time of writing, there are expected to be deferred payments of customs and tariffs for six months.
Who is the “Importer of record”?
You need to make sure you understand who is the “importer of record”. This is the legal entity that has the legal responsibility to ensure that any goods being imported comply with legal requirements established by the relevant local authorities, assuming full accountability for what is being imported. This must be established in your supply chain.
Do you have an EORI number?
We have mentioned this previously in an economic operator registration and identification number (EORI) blog. Hopefully if you import goods, you will have already organised your EORI number. This starts with “GB” and allows you to import goods from 1 January 2021. It takes up to a week to create/organise. You will not be able to move your goods into or out of the EU without an EORI number. For more info visit these GOV.UK sites re importing or exporting goods.
If there is a no trade deal, this will affect customers who import/export to the EU and/or provide services to the EU. This may result in a loss of freedom of establishment, or the ability to provide services across borders. Tariffs only apply to goods so no tariff implication but if there is no FTA they will not be able to visit the EU country to provide the service.
In addition, GDPR will be impacted as the UK won’t be recognised for exchange of data. So potentially you won’t be able to freely exchange data on customers in the EU after Brexit.
Impending accounting changes before Brexit
There are clearly still many question marks as to what will happen in January….. However, don’t use the lack of a confirmed Free Trade Agreement as an excuse not to address any impending or outstanding accounting issues.
As a business, it is now time to plan for accounting changes:
- Tax codes
- Tariff accounting
- Import/export reporting
- New returns
- ESL, Intrastat MOSS
Take a look here to see whether any accounting changes may impact your organisation. Please do get in touch with TVision sooner rather than later if you feel there is anything you will need extra help with or training on to ensure you are ready.
TVision will issue guidance to clients on how to change VAT setup and VAT statement, once final Brexit plans have been made.
Postponed Accounting VAT scheme
After 31 December 2020, anyone selling goods to consumers or businesses between the UK and EU will face import VAT, potential tariff charges and customs declarations for the first time. If you sell on DDP basis, you take over the customs, VAT obligations and liabilities. From a VAT perspective, whilst you are liable for the UK or EU import VAT, you can avoid any cash payment.
The UK’s Postponed Accounting VAT scheme starts from 1 January 2021. This will help you ensure you do not have to pay UK import VAT. Any traders using Postponed Accounting will receive a monthly statement of all their imports where they opted to postpone the import VAT through the customs clearance paperwork. Do report this in the subsequent monthly or quarterly UK VAT return as follows:
- Total VAT due in this period on imports accounted for through postponed VAT accounting (box 1).
- Total VAT reclaimed in this period on imports accounted for through postponed VAT accounting (box 4).
- Total value of all imports of goods included on your online monthly statement, excluding any VAT (box 7).
Next steps to think about before Brexit?
As we all wait with bated breath to see what changes will be thrust upon us in January, know that we are paying attention and finding ways to best support you. We have made the suggestions above as a starting point of what you can consider before Brexit. However, if there is anything else you would like to discuss prior to the start of 2021, do get in touch with your Account Manager or the Support desk.