August 27, 2020

Brexit – a temperature check for businesses

In our weather as in our politics, temperatures are rising. As the mercury tipped 30+ Celsius (although perhaps not here in Fife!), many may be pondering how much hotter things will get on Brexit between now and our final goodbye on the 31st Dec 2020.

From 31st January 2020 the UK was no longer part of the EU and we find ourselves currently in a Transition period – meaning that there have been no major changes to the trading arrangements with EU countries – yet. Negotiations are ongoing as to how the future trading relationship between the two jurisdictions will be conducted. It may be that a “dynamic alignment” may be agreed whereby changes in EU rules will be mirrored in the UK which would allow unrestricted trading to continue; however there is no guarantee that this will happen. If such alignment cannot be reached, then our next issue becomes what level of duties and/or quotas will be imposed on the movement of goods within the elusive Future Trading Agreement.

We do know that whatever the outcome of the Future Trading Agreement, business between EU member states and the UK will involve the implementation of customs controls and reporting – there may be regulatory checks on goods; customs duties; quotas on certain types of goods and possibly also regulatory requirements affecting services between both jurisdictions.

Given we are now less than 5 months away from 2021, there is really very little clarity or advice as to exactly what lies ahead. There will certainly be major changes required within UK internal control and reporting systems to provide the necessary framework to deal with new processes and controls. This is a huge exercise and to avoid a system meltdown with a possible surge in reporting post 1 January 2021, the government has indicated that there will be an initial six month period in which businesses can maintain their own records of imports and submit a supplementary declaration up to six months after date of importation and pay any related duties at that time.

Whilst larger businesses may have the expertise, resource and capacity to adapt fairly quickly to whatever Future Trading Agreement brings, thousands of smaller businesses may struggle to deal with changes in how goods move to and from Europe.

The government has recently launched a new campaign to help businesses and individuals prepare for the end of the transition period, under the strap-line “Check. Change. Go.” Another 3-word Westminster catchphrase which attempts to simply communicate a hugely complex set of requirements. It will cover a variety of areas, including travel stipulations, residence issues and import/export information as it becomes available. The current information can be accessed at

So, what can businesses do now to prepare for the changes and aim to thrive through the uncertainty?

The government has confirmed that there will be border controls and it is anticipated that these will be applied to goods moving between UK and EU in the same way as they currently apply to goods moving between UK and the rest of the world. Those businesses that already deal with customs reporting and regulatory checks will be well placed to simply apply those processes to EU trade. However a large number of businesses will need to implement processes and either train staff or engage professional customs agents or freight forwarders to deal with customs reporting. VAT treatment of supplies between UK and EU may also change. At this stage:-

· Businesses engaged in movement of goods to or from Europe should make sure they have an Economic Operator Registration and Identification (EORI) number.

· Decide whether you will deal with customs reporting inhouse or engage a customs agent. To do your own reporting you will need specialist software that works with CHIEF, the government system and have authorisations in place with HMRC to submit reports via CHIEF. Government funding is currently available for businesses to help with training, salary and recruitment costs and the purchase of new software/IT equipment to deal internally with customs reporting. This is allocated on a first come, first served basis, with a closing date of 30th June 2021. Details are available at There are also lists of customs agents on this website, which may be a better option for small businesses with a lower level of trade or lack the resource to deal with customs reporting.

· If you choose to use an agent, get in touch and find out what information they will need to act for you and any processes they may require.

· If you are doing your own reporting, find out how you will need to declare goods post 1 January 2021 –

(i) check the rules and standards for your type of goods

(ii) check the rates of customs duty/excise duty that will be payable – you will need to find out the commodity codes for these goods and check the UK Global Tariff.

(iii) Consider applying for simplified declarations for imports

(iv) Obtain a duty/VAT deferment account from HMRC

· Could your business benefit from customs special procedures that allow suspension of duties on importation such as Customs Warehousing or Inward Processing, for example? These procedures need specific authorisations from HMRC.

· Check how VAT will apply to imports/exports and assess what the cashflow impact of VAT on goods imported/services provided from the EU may mean for your business.

· Finally, continue to monitor the government advice as it is released!

Now is the time to Brexit-proof across the board with a quick, practical and proportionate plan in time for 2021. If you have any questions or would like to speak to someone about duties or VAT issues, please contact Barbara Acheson on 01334 654030.