Business after Brexit – importing and exporting

by | Feb 3, 2021 | Blog, Running a business

As the UK has now left the European Union, a customs border with EU countries is in place alongside full customs controls. This means import and export declarations are required to bring goods into the UK from France and Germany, for example. Customs and excise duty might also be payable on imports, as well as VAT.

To allow for a period of adjustment, the UK Government is making allowances – some permanent, some temporary – that mean businesses are not faced with a sudden strain on their administrative resources, or overwhelming cash flow requirements.

Before we look at the allowances, it is important to understand the changes that the end of the transition period have brought to UK businesses.

EU IMPORT AND EXPORT CHANGES

With a customs border now existing between the EU and UK (except for Northern Ireland and Ireland), moving goods between the UK and EU is now considered as importing and exporting.

From an administrative point of view, this will involve customs declarations, and require an understanding of previously inscrutable knowledge such as commodity codes and customs procedure codes. The basics are as follows.

IMPORTING OVERVIEW

Customs and excise duties might be payable on imports into the UK from the EU,  as with non-EU countries. To help with this change, you can make use of existing simplified import measures to reduce the administrative requirements.

From 1 January 2021, the UK Global Tariff (UKGT) will replace the EU’s Common External Tariff. It will apply to all imports from countries for which the UK does not have a trade agreement. You can check the tariff for an import using the Government website’s lookup tool. You may need to apply for licenses to import certain goods into the UK, and some goods might require an inspection fee be paid.

EXPORTING OVERVIEW

 Many businesses exporting to the EU from 1 January 2021 will use the simplified declaration procedure, although this can only be used for certain kinds of exported goods. It means you do not need to provide as much information as a full declaration upfront and can instead use a pre-shipment advice declaration.

With this said, you will still need to provide the remaining customs export information later. You can also simplify export paperwork requirements using the entry in declarant’s records (EIDR) procedure, although this only applies to goods that do not need a pre-departure declaration.

Please, however, note that the simplified declarations and entry in declarant’s records both require an application to HMRC and it to be authorised before use.  If you are making an export declaration yourself, rather than through a customs intermediary, you will need to register for and use the National Export broker or their freight agent as they will often have a duty or VAT deferment account that you can make use of meaning you do not have to pay duty or VAT immediately. This can help with your cash flow, and ensure the goods are then able to get through the port quickly.

CUSTOMS REQUIREMENTS

 Customs declarations include several pieces of information including the EORI number, commodity code, customs procedure code (CPC), the value of goods for customs purposes, the weight or size and country of origin.

Import declarations can be complicated and require software that can integrate into the Government’s Customs Handling of Import and Export Freight (CHIEF) system. Eventually, this will be replaced with the Customs Declaration Service, or CDS, which must already be used for goods moving to or from Northern Ireland (including goods moving between Northern Ireland and England, Wales, or Scotland). But as of now, the CHIEF system remains in use, and should be used for most imports and exports.

EORI NUMBERS

 From 1 January 2021, all UK businesses located in Great Britain that import or export goods to or from the European Union (EU) will need an Economic Operator Registration and Identification (EORI). Businesses in Northern Ireland might need an EORI too.

In fact, businesses might need up to three different types of EORI, depending on the location of your business and what it does:

  • Businesses in Great Britain: To trade goods with EU countries, you will need an EORI number that starts with GB. However, if your business only moves goods between Northern Ireland and the Republic of Ireland – and nowhere else – it will not usually require an EORI number.
  • Businesses moving goods to or from Northern Ireland: If you move goods to or from Northern Ireland, you will need a second EORI number that starts with This includes moving goods between Northern Ireland and the rest of the UK and moving goods between Northern Ireland and non-EU countries.
  • Businesses making declarations or getting customs decisions in EU countries: If your business makes declarations or gets customs decisions in an EU country, you will need to get an EORI from the customs authority in the EU country where you submit your first declaration or request your first decision.

In 2019, the UK Government began sending out GB EORI numbers to businesses that it believed required them. These are likely to have been sent to your business’ registered address. If you have not received your EORI number, you can apply online.

Similarly, the UK Government will automatically issue XI EORI numbers to businesses it believes require them including all businesses that have registered with the Trader Support Service (TSS).

These numbers should have been applied for and received before the end of December 2020. If you have not received either of these and need them to trade, please apply as soon as possible.

DEFERRED CUSTOMS DECLARATIONS & SIMPLIFIED DECLARATIONS

To allow for a period of adjustment, between 1 January 2021 and 30 June 2021, importers in England, Wales and Scotland can, for most types of goods, optionally defer customs declarations and payments. The declaration and payment can be deferred for up to six months after the import date. This is known as Deferred Declarations.

To make use of it, businesses in England, Wales and Scotland must be authorised to use the Simplified Customs Declaration process. This is also known as the Customs Freight Simplified Procedure (CFSP).

Simplified Customs Declaration means you can either make an entry in your own commercial records or submit a simplified customs declaration before import. Then, up to six months after the import date, you will be required to send HMRC a supplementary customs declaration, at which point the customs and VAT (if any) becomes due.

You must be authorised by HMRC to use the Simplified Customs Declaration process. Depending on whether you are using a customs intermediary, you may need to register for a duty deferment account (see below) and get software compatible with the CHIEF system used by HMRC (including the process referred to as getting a CHIEF badge).

Additionally, if your business is VAT registered then you will need to use postponed VAT too. Please note, you can continue to use the Simplified Customs Declaration process following the end of the six-month deferment option (that is, from 1 July 2021).

DUTY DEFERMENT ACCOUNT

If you import regularly then paying duties, VAT and excise duty monthly might make more sense, rather than paying them immediately upon import. A duty deferment account lets you do this. Your bank or an insurance company may have to be willing to act as an approved guarantor on your behalf.

A duty deferment account is a necessity for the simplified frontier declaration system, as described above, and the six-month window in which you can make simplified declarations is from 1 January 2021 to 30 June 2021.

TRANSPORT LOGISTICS

The organisations you use to transport goods across borders, such as sea shipping, couriers, or air freight, will need to know many of the details above before shipping commences. You should consult with them to learn what they will require, and when.

Now the transition period has ended, and Britain has left the EU, there might also be additional issues you will need to consider when importing goods, such as using the correct border inspection post and pre-notification of the movement of goods.

INCOTERMS

Review the commercial terms of trade (Incoterms) in your contracts relating to importing goods. These will help you to understand who is responsible for customs duties, import VAT, and any additional transportation and insurance costs.

Additionally, Incoterms determine when risk and liability passes from the seller to the buyer – something that will not be as clear cut with customs borders, compared to the free travel of goods before Brexit and the end of the transition period.

HERE TO HELP 

If you need advice or support on any of the information outlined above, we are here to help. Feel free to contact a member of our team today on 01454 619900 or by emailing advice@dunkleys.accountants.

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