After more than four years of fraught Brexit negotiations, the UK finally reached a free-trade agreement with the EU with just a week to spare.
In doing so it avoided the probable chaos of a no-deal and marked a new era for the UK after more than 40 years of EU membership.
The deal ensures the UK remains part of the single market and customs union, and that no taxes or caps on trade goods apply.
But it does not totally remove the need for businesses to make changes to their operations. Far from it.
Substantial new barriers and costs in the form of customs declarations and border or safety checks kicked in on 1 January 2021 – and failing to get the paperwork right can cause serious, potentially expensive delays.
Supply chains & cashflow
At Dunkley’s, helping businesses manage their cashflow is a core part of our growth and development service.
Having a free-trade deal in place should prevent some goods from costing more, but there will be extra costs for documenting exports and imports.
For businesses that import goods from the EU, there will be costs involved with certificates and inspections on both sides of the English Channel.
Our impact analysis can highlight any import duties, operational fees, documentation and certificates that could affect your business’s income.
Supply chains within the EU may well raise their prices to reflect these extra costs, something to consider when reviewing your cashflow forecast for Q1.
VAT changes after Brexit
Changes in VAT came into effect on 1 January 2021, with VAT now being collected at the point of sale rather than the point of importation.
This puts the onus on overseas retailers sending goods to the UK to register for UK VAT and account for it to HMRC if the sale value exceeds €150.
For UK firms that supply goods to the EU, it will be critical to accurately record data on any customs declarations for VAT purposes. On exports to the EU, most goods are now zero-rated for VAT.
Trading requirements for exporters
When exporting goods – not just to the EU, but to the rest of the world – exporters either need to make customs declarations or use a courier or customs agent to do this on their behalf.
A UK EORI number – which will always start with GB – is required to get goods in and out of the country, while a separate EU EORI number might be required if a business has a branch in the EU and it imports goods into that country.
Mail and freight companies are already beginning to impose surcharges on all shipments between the UK and the EU in this post-Brexit era.
At Dunkley’s, we can handle any aspect involving VAT and also offer cashflow projections to help to ride out any disruption. Call 01454 619900 or email advice@dunkleys.accountants for more information.