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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.

Be Proactive, Not Reactive.

At ABTS Taining we always teach our International Trade students the mantra “BE PROACTIVE, NOT REACTIVE”.  This is more important than it sounds. Let me give you an example:

Recently we received an email from someone in Shanghai, China. They visited our website contacted us asking if we can help.

This person had bought a set of four prints in London and had them sent to their home in Shanghai by air. The courier told them that their charge included delivery to their Shanghai home address. However, they received a email from Chinese customs demanding import duty of 10 per cent on the first print and 17 per cent import duty on the three other prints. They had wrongly assumed that if the courier was charging them to deliver the prints to my home it would include any import duty.

If they had known that they would have to pay extra import duty in Shanghai they would never have bought the prints in London.

We advised them to declare the four prints as a set (which they were) as Chinese customs will allow one item (a set) of personal effects into China at 10 per cent duty.

Now this is where being Proactive and not Reactive comes into play.

  • This person should have asked their courier if their charges included delivery to home address Shanghai DUTY INCLUDED OR DUTY EXCLUDED.
  • They should have looked up Import duty on prints and personal allowance BEFORE they bought the prints in order to get a accurate TOTAL price to be paid or to save time, ask the UK courier to undertake this exercise for them.
  • If they were Proactive and not Reactive they would not have encountered such hassle.

When you’re engaged in International Trade you must know the “nitty gritty” of the business such as importing – exporting documentation procedures and custom procedures to name just two.

When you join our on line International Trade course, among other subjects we show you how to look up import duty in ANY country.

We never shy away from helping anyone in distress but we do say if you are going into the business of International Trade, get training or better still go the a company with 25 years practical experience in International Trade and join our online course.

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