The UK’s exit from the EU single market and customs union on 31 December will have a number of important consequences for UK-based manufacturing businesses.
There are basic considerations which are similar to those faced by all businesses trading with the EU, but also some more complex issues more likely to face businesses involved in manufacturing supply chains.
Material and other goods purchased from EU suppliers will now need to cross a customs border before they can be delivered in the UK.
The responsibility for this will depend on the contractual relationship with the supplier, but it is most likely to be the customer who will be responsible for the customs documentation.
If there is no Free Trade Agreement (FTA) with the EU, there may also be customs duties to pay.
Customs documentation can be handled internally or via a freight forwarder or customs agent.
Finished products which are sold to EU customers will also need to pass through the customs barrier before delivery to the customer, and the responsibility for organising the importation will depend on the contractual relationship.
The cost to the customer may increase if there is no FTA with the EU.
There may be wider implications for a UK business which needs to be the importer of goods into the EU.
Some manufacturing supply chains involve the movement of parts and products between the EU and the UK at various stages in the manufacturing process.
The insertion of a customs barrier in these supply chains can result in issues including:
In all these cases further consideration of the impact will be needed and additional VAT registrations or changes to commercial relationships may be required in order to avoid VAT or duty costs arising in the supply chain.