Trading With The EU if There is No Brexit Deal The government has set out guidance on what businesses trading with the EU need to know in the event of a no deal Brexit. This guidance is summarised below. Businesses importing from the EU in a 29 March 2019 ‘no deal’ scenario After the UK leaves the EU, in the event of a ‘no deal’ scenario, businesses importing goods from the EU will be required to follow customs procedures in the same way that they currently do when importing goods from a country outside the EU. This means that for goods entering the UK from the EU an import declaration will be required, customs checks may be carried out and any customs duties must be paid. Before importing goods from the EU, a business will need to: • register for a UK Economic Operator Registration and Identification (EORI) number • ensure their contracts and International Terms and Conditions of Service (INCOTERMS) reflect that they are now an importer • consider how they will submit import declarations, including whether to engage a customs broker, freight forwarder or logistics provider (businesses that want to do this themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC). Engaging a customs broker or acquiring the appropriate software and authorisations from HMRC will come at a cost • decide the correct classification and value of their goods and enter this on the customs declaration. • HMRC publishes tariff information and guidance alongside the list of commodity codes needed to classify goods together with all the tariff rates, and measures. When importing goods from the EU, a business will need to: • have a valid EORI number • make sure that their carrier has submitted an Entry Summary Declaration at the appropriate time • submit an import declaration to HMRC using their software, or get their customs broker, freight forwarder or logistics provider to do this for them • pay Value Added Tax (VAT) and import duties including excise duty on excise goods unless the goods are entered into duty suspension (for example a customs or excise warehouse – a financial security will be required to cover the duty liability of the goods whilst they are being moved to the warehouse). • once excise goods leave a customs suspensive arrangement, they may be immediately entered into an excise duty suspension regime. Businesses may also need to apply for an import licence or provide supporting documentation to import specific types of goods into the UK, or to meet the conditions of the relevant customs import procedure. Businesses exporting to the EU in a 29 March 2019 ‘no deal’ scenario After the UK leaves the EU, in the event of a ‘no deal’ scenario, businesses exporting goods to the EU will be required to follow customs procedures in the same way that they currently do when exporting goods to a non-EU country. Before exporting goods to the EU, a business will need to: • register for a UK EORI number • ensure their INCOTERMS reflect that they are now an exporter • consider how they will submit export declarations, including whether to engage a customs broker, freight forwarder or logistics provider (businesses that want to do this themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC). As with importing, engaging a customs broker or acquiring the appropriate software and authorisations from HMRC will come at a cost. When exporting goods to the EU, a business will need to: • have a valid UK EORI number• submit an export declaration to HMRC using their software or on-line, or get their customs broker, freight forwarder, or logistics provider to do this for them. The export declaration may need to be lodged in advance so that permission to export is granted before the goods leave the UK. • businesses may also need to apply for an export licence or provide supporting documentation to export specific types of goods from the UK, or to meet the conditions of the relevant customs export procedure. When exporting duty suspended excise goods to the EU, a business will need to continue to use the Excise Movement and Control System (EMCS) to record the duty suspended movement from a UK warehouse or premises to the port of export. Carriers moving goods between the UK and the EU – Safety and Security Declarations After the UK leaves the EU, in the event of a ‘no deal’ scenario carriers (for example hauliers, and train, vessel or aircraft operators) will need to make a Safety and Security Declaration for goods moving between the UK and EU. There are two types of Safety and Security Declarations: an Exit Summary Declaration (EXS) and an Entry Summary Declaration (ENS). Mitigations businesses may consider in a March 2019 ‘no deal’ scenario Businesses may want to consider whether using customs procedures would be beneficial. These allow businesses to delay or relieve the payment of customs duty for goods they import into the EU until goods are ready to be released into free circulation. Customs procedures include the following: • customs warehousing: this allows businesses to store goods with duty or import VAT payments suspended. Once goods leave the warehouse, duty must be paid unless the business is re-exporting, or moving goods to another customs procedure. The warehouse must be authorised by HMRC • inward processing: this allows businesses to import goods from non-EU countries for work or modification in the EU. Once this has been completed, any customs duty and VAT due must be paid, unless goods are re-exported or moved to another customs procedure, or released to free circulation • temporary admission: this allows business to temporarily import and or/export goods such as samples, professional equipment or items for auction, exhibition or demonstration into the UK or EU. As long as the goods are not modified or altered while they are within the EU, the business will not have to pay duty or import VAT. • authorised use: this allows a reduced or zero rate of customs duty on some goods when used for specific purposes and within a set time period. For excise duty purposes, goods are not regarded as imported if they are immediately placed under one of these customs procedures. Businesses need to pay excise duty when these goods are released for free circulation, unless they are immediately placed in excise duty suspension. More VAT issues Other VAT changes include: • the end of the need to produce EC sales lists • a new obligation to register for VAT MOSS in EU states you trade in • low value consignment relief for parcels arriving from outside the UK containing goods worth up to £135 will be abolished and replaced with a system to collect VAT from the exporter Also, if you’re in the holiday business keep a close eye on industry publications for changes to the tour operations margin scheme.   The S4B Team We are a team of Chartered Accountants and Profit Consultants who pride ourselves in keeping our clients informed and ready for all legislation and tax changes. Find out more by getting in touch. Send our team an email at [email protected] or call 01628 623444 to see how we can help you.