HM Revenue & Customs (HMRC) has sent a ‘no deal’ Brexit letter to the 140,000 businesses it has identified as trading internationally with the EU only.
The letter is intended to point these businesses towards the issues which they will need to consider if the UK leaves the EU without a deal on 29 March 2019.
However, there is very little actual guidance in the letter – rather it points the reader towards various other sources of information which they may need to consider.
For a UK business which currently sells goods to EU customers, there are a number of issues which they will need to consider:
- Full export documentation will need to be prepared and export declarations submitted – for which a customs agent or freight forwarder may be needed – this will need to include details of the origin of the goods and their commodity code.
- Customs verified export evidence will need to be retained to support VAT zero-rating
- The goods might be subject to customs duty on arrival in the EU. Although this will be the legal responsibility of the customer, it will increase the cost of the goods for them and may affect the price they are prepared to pay.
Similar issues arise for businesses purchasing goods from the EU:
- Full import declarations will be required before the goods can clear customs on arrival in the UK
- Customs duty and import VAT will be payable on importation, although HMRC has said that import VAT can be accounted for on VAT returns by VAT registered importers.
- It is not yet clear what the rates of customs duty will be – HMRC has said that UK rates will not necessarily be the same as those currently charged by the EU on imports from third countries
For both importers and exporters there will be a number of other issues to consider:
- The existence of customs borders between the EU and the UK is likely to lead to delays crossing the border, particularly at Dover/Calais
- The procedures referred to in the notice do not apply to the land border between Northern Ireland and the Irish Republic – HMRC has undertaken to provide more guidance on this in due course.
- There are specific regulatory issues regarding goods such as pharmaceuticals and food which affected businesses will also need to research.
We can help
There are many implications here for those trading with the EU, and if your business will be affected it is important that you start planning now. Our Brexit team are here to advise and can be contacted to discuss your concerns.