Brexit no deal? Sending goods from the UK to the EU

As the Brexit deadline approaches and the likelihood of a deal which can pass through the House of Commons still remote, businesses are left with no choice but to plan for a no deal situation from 29 March 2019.

No deal means that the UK will revert to being a "third country" under EU law, with no trade deal or other trading arrangements in place with the EU.

All UK businesses which trade in goods with the EU will need to take steps to address the compliance and logistics issues which a no deal will cause. There are also direct tax implications for UK businesses with subsidiaries or affiliates in the other EU27 states. (Export documentation and processes remain the same for all countries outside the EU.)

In addition, there are specific regulatory issues applying to certain industries and sectors (such as pharmaceuticals, fisheries and food) which may need detailed consideration and action.

Checklist - Sending goods from the UK to the EU

• Make sure you have an EORI number. This is an international version of your VAT number which is needed to complete import and export declarations
• How will you deal with export documentation? If you don’t have the capability to do this in house you may need to engage a customs or freight agent. (See details here...)
• In order to zero-rate exported goods for VAT the standard of evidence is higher than for EU dispatches – you will need to have access to the customs documentation for the export in order to zero-rate your supply for VAT.
• If you sell mail order goods to EU consumers, they will be responsible for paying import VAT and any duty on the goods. Your postal packages will need to show information about the goods and their value so that the charges can be calculated in advance of delivery.
• The Incoterms for the transaction with your customer are important – if your customer will be collecting the goods from your warehouse or factory then you’ll need to make sure that they will provide you with copies of their customs documentation for moving the goods into the EU to evidence your zero-rating, or if you don’t trade with them regularly you may need to charge UK VAT initially and then credit it when the evidence is produced.
• If you are moving your own goods into the EU or if you are responsible for the delivery of the goods to your customer’s premises in the EU, then you will need to consider the VAT and duty implications of this in the member state into which the goods will be imported. If you are the importer you will be responsible for the import VAT and any duty, and you may need a local VAT registration or fiscal representation in order to reclaim this VAT. Local VAT may then need to be charged to your customer.
• If the goods will be imported into the EU in a member state other than the member state where the customer belongs then the position is complex and will need further review.
• If you are involved in triangular transactions with EU suppliers and customers this will become more complex. At present if you buy goods from a supplier in member state A which are invoiced to the UK but delivered to a customer in member state B, then as long as all the parties are VAT registered in their member state, then no VAT needs to be charged. Once the UK is not an EU member state this will no longer be the case and the supplier of the goods will not be able to use a UK VAT number to zero-rate their supply if they are moving the goods to member state B. The UK company in the middle will need to register for VAT in either member state A or B in order to avoid an irrecoverable VAT cost.
• If you currently bring goods into the UK from outside the EU and then distribute them to EU member states you may need to consider importing the goods for EU customers into the EU directly rather than bringing them into the UK first.
• Customs duty will add to the cost of goods moved into the EU – the level of the duty charged on imports into the EU from third countries with no trade arrangements can be checked using the EU tariff.

Please contact us for advice if you feel you will be affected by a no-deal Brexit.