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UK preparations to leave the European Union (EU) are in full swing, with government departments running events around the country to ensure companies are ready for the exit date of the 31st October 2019 and advertisements on radio and television. International trade has never had such publicity in the UK!
The Department of International Trade (DIT) is running over 100 workshops across the UK to ensure businesses have an opportunity to review their Action Plan. The editorial staff of The Exporter did not want Brexit to be its key focus, as we aim is to encourage businesses to trade internationally, but we cannot ignore the importance of this seismic shift in the UK/EU trading relationship. Brexit will change the way 28 countries trade together as well as impacting on at least another 70 countries beside.
Many companies created a no-deal exit plan earlier in the year, and, when the UK remained in the EU after 31st March 2019, shelved it. But many more businesses decided to wait. And it appears they are still waiting to see what will happen, partly because the cost of upskilling and employing new staff, but also because for nearly 30 years trade between the UK and EU has been so enmeshed and integrated that it is hard to unravel.
The DIT’s Action Plan covers key issues that all businesses need to be aware of: contractual considerations, moving goods, supplying services and changes needed to ensure people can work in the UK/EU and carry on with their business activities.
Whether we leave the EU with a deal or not, the significant change to anyone supplying goods and services is that the UK will be a 3rd country. In other words, will not come under the EU service agreements and goods will be stopped at borders where a customs entry will be needed. If you trade with goods then you cannot have a customs entry completed in your name unless you are registered with the customs authorities in the UK or the EU, or in some cases, both. This registration is the Economic Operator Registered Identification number (EORI). This isn’t new, and if a company already trades in goods outside the EU, they will already have this number. Customs declarations generally require two EORIs – for export: the exporter and the freight forwarder carrying the goods – for import: the importer and the customs broker making the import declaration on the importers’ behalf. It’s simple to register, in the UK it’s via this webpage https://www.gov.uk/eori but, due to the low take up HM Revenue & Customs (HMRC) are auto-registering all businesses that have a VAT Registration number but no EORI. This leaves all the smaller businesses who don’t need to be VAT registered exposed if they want to continue to trade between the UK and the EU27.
Some of you will have glazed over now because you’ve got an EORI – great but what about the businesses that support your supply chain? Have you checked that your suppliers and customers have the correct registrations? The UK may be auto-enrolling, but the EU is not. Your customers and suppliers in the EU might not realise the consequences of Brexit for them. They may not know how to complete an export or import clearance. They may not realise that import duties might be charged that didn’t apply before.
If the UK leaves the EU with no deal, many of the changes will be immediate. Moving goods between the EU and the UK will mean more paperwork, export declarations and, for some goods, certification, proof of conformity, licences and other documents that are not currently required. On arrival of goods an import customs declaration is needed and import duties and taxes will become applicable. And remember, this process does not only apply to goods that are bought and sold, it is required for anything that moves across borders.
For goods arriving into the UK from the EU27, the UK government has taken action to minimise delays at the border on arrival. UK Companies should register for Transitional Simplified Procedures (TSP) in order to take advantage of the simplified procedures. This is straightforward. You can do it on the government’s website https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal. For goods arriving into an EU Member State there will be no simplified procedure, UK imports will be treated the same as all other non-EU imports and this is where the delays are expected.
You need to know the correct tariff classification numbers (also called commodity codes) for all of your products. If you already trade with other countries, you should already have this information. You will also be using commodity codes if you currently complete an Intrastat Report for your trade with the EU.
The UK, in a no-deal Brexit scenario, will be introducing a Temporary Tariff Schedule https://www.gov.uk/guidance/check-temporary-rates-of-customs-duty-on-imports-after-eu-exit with most goods having a zero duty but, again, the EU countries will not be simplifying the import procedures. To find out the tariff duties that EU customers will have to pay on their imports from you, you should refer to the EU TARIC pages https://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en.
Exporting some products to the EU may need additional paperwork. Dual-use goods (goods that could be used for military purposes) may be subject to export controls that didn’t apply before. It’s your responsibility as an exporter to know whether your goods are subject to such controls. To find out, refer to the government website https://www.gov.uk/guidance/beginners-guide-to-export-controls.
Brexit might also affect the right of non-UK EU citizens to work in the UK, although it is not the government’s intention to change this straight away. But if you employ non-UK EU citizens in this country, they may be worried about their future right to stay. There is advice for employers on the government website. https://www.gov.uk/government/publications/eu-settlement-scheme-employer-toolkit.
Use our Action Plan, which covers the fundamental points, and consider if your business also needs more specific action.
Even if you looked at this earlier in the year you must review it again. The government have issued almost four hundred communications for business about the Brexit impact, and the situation is subject to constant change. If you are not sure what you need to do, seek help now. Contact your local Chamber of Commerce or international trade advisor for specific guidance.
If you do not act, your exports may not be free to leave the country, and your imports may not be cleared by customs on arrival. Don’t ignore this message!
© The Exporter 2019-2020