The 1st of January 2021 marks a historic day for the UK as an international trading nation. That is the date when the transition period ends, and the country cuts its remaining ties to the European Union (EU). Some of the implications are clear, others less so.
So that your business does not lose out and has the opportunity to make the most of the UK’s departure from the EU, here are some suggestions about how to prepare for importing and exporting after Brexit.
Get an EORI number
EORI stands for “Economic Operators Registration and Identification number” and businesses need to ensure they have one. This is currently required by any trader wanting to export goods to, or import goods from, countries outside the EU.
From 1st Jan 2021, UK businesses will also need an EORI number to trade with the EU. You can apply on the Government website for an EORI number.
EORI numbers are used to track goods into and out of the UK so that they can be easily and quickly identified by customs. So, without your EORI number, your shipments may suffer delay and you might incur expensive storage costs if HM Customs & Revenue are unable to clear your goods.
UK tariff codes
The Institute of Export and International Trade recommends that you find out, without delay, the UK tariff codes for all your products. These give you what you need not only to complete customs declarations and other paperwork but also to see whether there is a duty or VAT liability – and if your goods qualify for relief.
Trade tariff commodity codes, duty, and VAT rates can be found on the government website.
Establish the origin of the goods
After the UK leaves the EU’s Customs Union, UK exporters will need to declare the origin of their goods when trading with the EU.
You’ll need to determine the UK, EU and non-EU content of the goods you are importing from, or exporting to, the EU. Understanding the origin of the goods you are trading will enable you to determine if they qualify for preferential duties or not.
You should familiarise yourself with new rules on the origin of goods and components as these will feature in future trade agreements not only between the UK and the EU but also between the UK and other countries.
Check if you need a licence
Trading in certain goods, such as military equipment, require you to hold a licence. You can check if you need a licence here.
Understanding customs procedures
Ernst & Young stress the importance of your company building up sufficient knowledge about customs formalities, processes, and legislation as you prepare for importing and exporting after the formal completion of Brexit.
This will undoubtedly be a tall order for many smaller firms – especially those with little experience in importing and exporting goods. As such, many companies will be better served by instructing customs agents or brokers to conduct customs-related matters on their behalf.
Your contracts
Be prepared to review thoroughly your principal contracts with trading partners, advised the Institute of Chartered Accountants in England and Wales (ICAEW) in an article on the 20th of July 2020.
That means ensuring that any contract specifically addresses issues concerning trade across EU borders, including the handling and management of VAT.
The ICAEW urges its members to review the extent to which both contracts and your International Terms and Conditions of Service (INCOTERMS) give effect to your status as an international importer and exporter of goods.
Be prepared
There’s a raft of changes coming to how businesses trade with the rest of the world when the transition period ends on 31st December 2020. Many of these changes are becoming clearer and it is your responsibility to familiarise yourself with them.
