Your Brexit checklist
Even in the last weeks and days of the transition period, businesses and officials were none the wiser about huge swathes of the practicalities of Brexit. Here’s what we know so far.
The long and tortuous path towards the UK’s final exit from the EU is one paved with speculation and many fears, some unfounded, and others not so far fetched. But what we can say for certain is that UK businesses will see some immediate changes. As a result, the government has spent millions on a TV and print campaign urging companies to ensure they had the basics in place in time for ‘exit day’.
WORKING IN EUROPE
While it’s undoubtedly true that curbing the free movement of people was a central appeal of Vote Leave, it’s worth pointing out that many of the current rules will remain in place for a while yet. Indeed, as Sean Nesbitt at law firm Taylor Wessing puts it: “It is doubtful that the UK government would want to increase the burden on employers and create more confusion in the short term by making significant changes to the basic structure of the current legislative framework.”
However, there are a few things to get straight. Firstly, you must make sure you are communicating clearly with any EU citizens that you currently employ. The main point of that will be to ensure they understand their rights and responsibilities under the EU Settlement Scheme. The government recently issued a template letter for employers to use, explaining what obligations the company has, and what the employee must do themselves.
Finally, consider your travel plans. Notwithstanding temporary COVID restrictions, the EU Commission recently published proposals for UK business travellers in the EU. As it stands, UK business visitors can spend 90 out of 180 days in the EU visa free, after which a visa or permit may be required from the individual host country. There will be other travel changes to consider e.g. to passports, carrying currency, healthcare and driving.
Are you and your employees aware of changes to UK passport rules for travel to Europe? Check the non-EEA visa requirements for the country you are visiting on the GOV.UK website. The UK government has issued information for UK nationals living in or travelling to and from the EU - including work, education, recognition of professional qualifications and so on.
So, your UK staff working in the EU may require a visa to undertake any work there. Information on the rights of UK nationals travelling in the European Union, European Economic Area (EEA) and European Free Trade Area (EFTA), and Switzerland here: bit.ly/34atvHp.
The rules on trade will undoubtedly cause some of the biggest headaches for businesses dealing with EU countries. And while there remain hopes that the two sides can thrash out at least a transitional trade deal, whatever the outcome, there will be substantial changes to how UK companies do business in Europe.
The first and most immediate impact will be the need for UK businesses trading with the EU to have a UK Economic Operator Registration and Identification number (EORI) number to continue trading; meanwhile customers and suppliers based in the EU will need an EU EORI number to import/export goods to/from the UK.
In practice, there are a number of steps to take that will make this process easier. Firstly, if your business is VAT-registered you will soon be automatically allocated an EORI number, if you have not received or applied for one already. Meanwhile, if you trade with the EU and your business is non-VAT registered, you must check if your business has registered for an EORI number in order to continue trading with the EU in the event of no-deal.
Looking from the other perspective, if you have a parent or subsidiary branch, or customers and suppliers within the EU, then it’s your responsibility to check they’re aware they need an EU EORI number to import/export goods from/to the UK on day one of no-deal.
For those non-VAT registered traders, the advice from HMRC is to apply for Transitional Simplified Procedures (TSP) to make it easier to import goods from the EU. HMRC has announced that they have automatically enrolled VAT-registered businesses who import from the EU into the TSP scheme.
Further down the line, the issue of tariffs is likely to raise its head once again. Every company engaged in trade should, as a matter of urgency, visit GOV.UK to find the info that is based on the no deal scenario, explaining how tariffs work. And if you’re exporting high volumes you may need to get a third party to help on that. The EU has no temporary measures to make it easier, so as of 1 January 2021, it is the full customs process.
No matter what outcome the Brexit talks throw up, there will inevitably be changes to the regime governing customs. Firstly, it will be important to make sure there is at least one member of staff who has reasonable knowledge of the customs and export rules. Beyond that, getting a good intermediary on board has to be a priority to help complete declarations on your behalf from 2021.
The most important thing to check is whether you need a physical presence in the EU – certainly if you import and export a lot, then you may need that. That’s not in all cases, but for instance, if you as an e-commerce seller hold stock in the EU then you may need a VAT representative in the EU – and there are companies that offer that service – maybe £800 or £1,000 a year. There are several levels of EU presence – you can have an office, or a director living there or a VAT representative.
The second important plank to this is the Duty Deferment Account, which will be important for managing VAT. The basic rules of customs are that imported goods need to be declared, and any duties paid (which could include VAT, customs and excise duties), at the time of importation. Traders who import goods regularly may will be able to use their Duty Deferment Account to pay customs charges including customs duty, excise duty, and import VAT once a month through Direct Debit instead of being paid on individual consignments. With effect from 1 January 2021, VAT registered traders can account for import VAT on their VAT return using postponed VAT accounting.
Finally, if your business currently uses the UK VAT Mini One Stop Shop (MOSS) Union scheme that governs the sale of digital services into Europe, in the event of no-deal you can continue to use the system, but you must register for the VAT MOSS non-union scheme in an EU member state.
Christian Doherty is a freelance journalist