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How Will A No Deal Brexit Will Effect VAT Procedure

Below is our quick guide on how a no-deal Brexit could effect VAT procedure. Make sure you understand how this will effect your imports and exports from the United Kingdom as you will have to understand these changes if you want a streamlined import export procedure:

 

No Deal Brexit and VAT Procedure

Imports:

  • Postponed accounting for EU imports
  • Importers will account for import VAT on their existing VAT returns

 

Exports:

  • Retain evidence that goods have been exported to EU member states
  • Remember tat the customs declaration system will be paperless
  • Exported goods to EU will be zero rated on commercial invoice
  • EC sales list will no longer be used to declare exports to EU
  • Make sure your company’s export software is adjusted to reflect changes
  • Register for AEO for imports and exports.

 

 

The Possible Impact of BREXIT on Trade

No one knows what the full impact of Brexit will be but without a deal, something that is looking increasingly likely, the below graphic are just some the unknowns that should be considered for your import-export business:

Impact of Brexit on Imports and Exports

The impact of Brexit on international customs and trade compliance is not yet clear but the following factors are something that must be considered at this stage.

By the end of March 2019, Britain will have exited from the  European union, with a massive impact on customs and trade processes.

What will happen without an agreement?

  • 48% of UK shipments go to EU countries
  • 54% of UK arrivals come from EU countries

…without customs clearance and duties to be paid.

Those movements will become third-country imports or exports, including the need for customs declarations and duties due to a missing agreement. Export control regulations will be affected as well.

For just two minutes more for customs inspections per truck results in approximately 27 extra kilometres of traffic jam with a huge impact on the supply chain.

Additional custom specialists will be required.

The administrative burden could increase from five minutes before Brexit to more than one hour of workload per export! 185,000 UK traders could be making their customs declarations for the first time.

Customs declarations in the UK are expected to increase from 55,000,000 to 255,000,000 per year. It could be very costly, with an estimated €50 or more per declaration.

The OECD estimates that inefficiencies relating simply to the process of customs clearance could result in additional costs of up to 10% of the value of the goods.

Beyond this, increased duty rates on imports to the UK, from non-EU countries due to the UK losing access to EU free trade agreements will apply. New free trade agreements need to be negotiated with all relevant countries which could take 5 to 7 years per free trade agreement.

Lastly, more questions still need to be answered that we just don’t know the answers to right now:

  • Will the new customs authority system CTS be ready?
  • Will support systems be ready?
  • Will there be enough capacity and customs brokers?
  • Will the companies export control management be ready?

There are many questions to be answered but it is important to understand what is at stake and how your business will be affected. Take the time now to understand how Brexit could directly effect you and research what changes you need to make, so you are not caught out and your business does not suffer Come March 2019.

Two Simple Actions to Begin Preparations for Brexit

Importing and exporting within the EU could be vastly different with either a Hard or Soft Brexit. With only 6 months left, now is the time to prepare. We address two simple action points to get you started.

Coral is offering even odds on a hard Brexit at the time of writing this blog post and The Guardian is reporting that two thirds of British businesses have made no preparations at all for Brexit.

Should this happen and the UK does leave the EU on the 29th March 2019 without a deal, the EU as far as trade goes, will become like any other “foreign country”, take for example Venezuela.  British companies will need the same documentation to trade with the EU as you would Venezuela.

Currently, trading with the EU is very easy, there’s no major documentation required, no customs, any import export documentation that is required is filed remotely after the import or export is completed. That same export to France will be much harder.

Be proactive, not reactive, have everything in place before the end of March. If you trade solely with the EU, you are running at this point, a very high risk of being completely caught out and your business potentially coming to a halt if you don’t know how to trade outside of the EU.

Prepare for Brexit – A Checklist

  1.  Do you have an EORI number?
    If not, go and get one. If you’re trading outside the European Union already, you’ll have an EORI number, so you don’t need to worry about this. If not, depending on whether you’re registered for VAT or not and whether you’re importing or exporting, here’s how to get your EORI number.
  2. Customs Clearance will be using the new CDS system, we’re told by the end of 2018. You will need an EORI number to access this system.
  3. Delivery Times: Without a deal, delivery times of goods coming in and out of the EU will be delayed with some estimating very severe delays.To begin to understand the extent of what the direct consequences could be see our quick guide on “The Possible Impact of Brexit on Trade”. Analyse how your business will cope if this is realised and goods you’re importing are held up for days before you receive them and equally, how this will effect your shipments outbound to your customers. If you’re offering guaranteed delivery times, you may well want to rethink this.
  4. Brexit Risk Assessment: Perform a risk assessment on your entire company, from the warehouse to the managing director . Where is your company vulnerable, what will need to change, where are your biggest risks and how can you minimise them?

ABTS Training can help should you need it.  For more information on our Brexit Breakdown membership, please feel free to contact us.

How To Prepare Your Business For Brexit

UK businesses  need to prepare for Brexit. At this stage no one quite knows where we will be on the 29th March but we do know that without a deal, trade with the EU will bring about major adverse changes.  UK traders will of course, want to continue trading with their established EU partners. Likewise, EU traders will want to strengthen trading ties with their UK partners.

Until now, inter EU trading has been a very easy process, with minimal customs involvement, open borders, unimpeded deliveries, largely paperless and declaration of VAT post delivery just to mention some of the advantages we had as a member of the EU.

Life After Brexit and International Trade

With a hard Brexit, this frictionless trading will come to an end and the UK will be thrown into the world of International Trade, with all its impositions, rules and regulations trading under WTO rules and tariffs. Our EU trading partners will have the same status as any of our other international trading partners outside the EU such as Russia and will have to follow the same Customs procedures such as declaration on the new CDS system, which is replacing the old CHIEF system. This means that consignments will need to be given specific statuses of Route 1, 2, 3, or 6, all of which are time consuming. This could cause severe delays at the UK border for EU member consignments, some predicting up to six hours.

A Brexit Checklist

However, UK traders can be prepared and grasp this as a great opportunity to become part of a global explosion in trade. UK businesses must identify how Post Brexit will affect their trading position within the EU and beyond and be prepared to meet the new challenges.

The following are a set of questions that is advisable to ask yourself and research, pre-Brexit. Be proactive, no reactive and prepare for a worst case scenario Hard Brexit now. Waiting for the 29th March 2019 may well be too late.

1. Understand how to export. How will the new Import/Import regulations impact upon my business?

2. Will I have to change my Terms of Delivery (Incoterms 2010)?

3. Will I now have to employ the services of a freight forwarder/ clearing agent and at what additional cost?

4. Does my company have the necessary import/export training to work alongside the new rules and regulations?

5. Am I registered for EORI status?

6. Do my goods attract an Import/Export licence?

7. Can I identify a Customs regime which may help me reduce my import costs?

8. How will VAT be collected on inter EU trade?

9. Do I understand the new Customs Declaration System CDS for Imports/Exports?

10. Can I provide the relevant information for inputs into CDS (i.e. new tariff changes as introduced in Volume 3 of the Tariff)?

11. Have I subscribed to the Government Gateway Account?

12. Will my existing supply chain timing be affected? What adjustments do I have to make to counter any extra delays?

13. Will I have to make changes my company Terms and conditions?

14. Will Post Brexit rules affect my competitive edge? If so how can I retain my competitive edge?

15. Will my existing EU customers impose a different method of payment other than the one currently in use?

16. Do I fully understand the methods of payment associated with International Trade (ie. Letters of Credit, CAD, Bills of Exchange)?

17. Have I arranged for an AWARENESS COURSE for ALL members of staff to attend pre-Brexit 29th March 2019?

Check out our top ten tips on on importing and exporting to get you started.

The Brexit Breakdown

A new subscription service where we do the research, contact relevant agencies and get to the bottom line on Brexit import and export.

We cut through the complicated web of information to give you need-to-know facts for your business, post Brexit, keeping you informed through webinars, videos, email alerts and printable fact sheets.

See The Brexit Breakdown for more information.

The Future of the EU

The EU and in fact whole globe, is now caught up in the  “Greek Tragedy”, will they, or won’t they stay?  Nearer home,  the UK Government is mumbling about staying in a ‘reformed’ EU, reformed of course in the interest of the UK.

As Brussels has declared ‘dream on UK’.

The basic precepts of the free movement of goods, services, people and money will NEVER change as these are not on the table for discussion.

If we have a referendum within two years  in the UK, it would place us in a very precarious position.  The EU could make minor concessions in order to keep the UK in the European Union.

The general opinion  seems to be that parts of the EU legislation is good for the UK and we would be happy to hold on to a few of the basic precepts, namely the free movement of  goods and services as well as money. The free movement of people is however, too contentious to discuss in this blog.

Just a thought, if we do eventually leave the EU, why not become a preferential trading partner with the EU? We would  still  maintain working  commercial relationships with our current trading partners in the EU  and also allow us  to seek new partners on a level playing field with  other EU members.

Take Turkey as an example of an Preferential Trading partner with the EU,

Turkish manufactures trade with EU  member states under advantageous conditions.  They can supply EU member states with DUTY FREE goods. This arrangement is reciprocal so it’s a win-win situation and Turkey is not burdened with other EU regulations.

On our own, we could still trade with the EU as a Preferential Trading partner and our goods would remain competitive.

There is a down side to all this, we would not be part of the legislative process of the EU but is that such a bad thing?

I’m old enough to remember when we were members of EFTA , and the duty-free movement of goods to fellow EFTA members . We survived!!!!

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