There is a possibility that a no deal Brexit may occur, in which if this happens, traders need to be prepared for the changes that will be implemented.
HM Revenue and Customs (HMRC) has produced various items of collateral to assist and advice traders in this scenario, which we feel will be of interest to our Pegasus customers.
There are 5 key areas businesses must be made aware of.
- Applying for a UK Economic Operator and Registration Identification (EORI) number
- Transitional Simplified Procedures (TSP)
- Preparing to make customs declarations
- Entry summary declarations (also known as safety and security declarations)
- Paying the correct import and export duty & VAT.
Applying for a UK EORI number
A UK EORI number is vital for moving goods into or out of the UK. HM Revenue and Customs use this number in order to identify your business and collect duty on your goods. Without a UK EORI number, you may have increased costs and delays on your goods.
For example, if HMRC cannot clear your goods, you may have to pay for storage fees.
You will need to ensure that you have a UK EORI number that starts with GB to be able to trade goods into and out of the UK. If you do not already have a UK EORI number, then you will need to have one by 11 pm on 31st October 2019 if the UK leaves the EU with a no deal. This is so that you can:
- Trade goods into or out of the UK
- Submit declarations using software (or to give to your agent to make these declarations on your behalf)
- Apply to be authorised for customs simplifications and procedures.
To apply for a UK EORI number, follow the link here https://www.gov.uk/guidance/get-a-uk-eori-number-to-trade-within-the-eu
Transitional Simplified Procedures
Transitional Simplified Procedures, otherwise known as TSP, has been introduced to make importing from UK businesses from the EU to the UK easier in case of a no deal Brexit. However, it is important to note that TSP is NOT designed for goods imported directly from the rest of the world or goods covered by other special procedures.
HMRC has announced extending arrangements to make importing from the EU as easy as possible for the initial period after the UK leaves the EU with a no deal, such as:
- A six-month extension on certain supplementary customs declarations
- Making TSP available at all UK ports
- Importing businesses have until 30th September to get a guarantee.
Once a UK business is registered for TSP, you can transport goods from the EU into the UK without having to make full customs declarations at the border or pay import duties straight away.
To register for TSP, you will first need to register for a UK EORI number. Follow the link here to see how to register: https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal
Preparing to make Customs Declarations
If the UK leaves the EU, you will need to consider how to submit your customs declarations, in which you can do it yourself or through a third party. Third parties help with customs processes and movements of your goods. These include:
- Freight forwarders; help to move goods around the world for importers and exporters, will arrange customs clearance of goods crossing the frontier and have the right systems to communicate with HMRC systems.
- Customs agents or brokers; make sure that your goods clear customs on the way to final UK destination and act as direct or indirect representatives.
- Express couriers; operators specialising in time-critical transportation of documents, parcels, freight, offer worldwide integrated door-to-door shipments and track & control shipments throughout the journey.
If you are doing it yourself, you will need the right software and necessary authorisations from HMRC, in which all customs declarations need to be submitted electronically, either using Customs Handling of Import and Export Freight or Customs Declaration Service which HMRC are introducing.
You can find out more about making customs declarations here: https://www.gov.uk/guidance/declaring-your-goods-at-customs-if-the-uk-leaves-the-eu-with-no-deal
Entry Summary Declarations
New security legislation will require advanced information for goods arriving or leaving the EU, hence the introduction of pre-arrival forms known as Entry Summary Declarations, otherwise known as Safety and Security Declarations.
It is important to note that this declaration is currently not required when importing goods from the EU and that when the UK leaves the EU, there will be no need to submit an Entry Summary Declaration for 6 months. This allows UK businesses time to prepare for changes to the EU to UK trade. However, Entry Summary Declarations continue to apply for trade from the rest of the world.
It is important to note that:
- New rules apply to goods coming from the EU
- Rules for importers will NOT change
- You will still need to submit import declarations
- Import declarations will be made easier with TSP.
After the 6-month period, carriers will be legally responsible for submitting Entry Summary Declarations to HMRC before the imported goods arrive in the UK at the time specified by mode of transport. If you are an exporter from the UK, you can make export declarations using HMRC’s National Export System (NES), which you can find more about it here: https://www.gov.uk/guidance/export-declarations-and-the-national-export-system-export-procedures
It is important that you complete these in advance so that you can get permission to export before your goods leave the UK.
Paying the correct Import and Export Duty & VAT
In addition to making import declarations, you may also be required to pay VAT, Excise Duty or Customs Duty as the current rates when you are importing your goods. Whether you pay customs duty on imports depends on:
- The classification of your goods
- Where they’ve come from
If the EU leaves the UK with no deal, different rates of customs duty on imports may need to be paid, in which there will be temporary rates set which will apply from the date the UK leaves the EU and will be in place for up to 12 months from that date.
Most goods imported to the UK will have a zero-duty rate, with UK imports from the EU currently a hundred percent intact tariff free and will face no new customs charges. With the temporary tariff, 82% of EU exports to the UK will continue to be eligible for tariff-free access to the UK market.
For UK VAT-registered businesses, you will be able to account for import VAT on your VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. This will apply to both imports from the EU and non-EU countries.
A list of Excise Duty rates have been published by the government which you can find here: https://www.gov.uk/trade-tariff
At the time of importing goods, you must either pay the Excise Duty or place goods under a Customs or Excise Duty suspension. If your business exports goods subject to Excise Duty from the UK, then you must follow the correct procedure whether:
- Goods are in Excise Duty suspension arrangement
- Excise Duty needs to be paid.
However, you can claim back Excise Duty paid on exported goods out of the UK.
If you are a trader and require more advice and guidance for importing and exporting goods if the UK leaves the EU with a no-deal, then please head over to the GOV.UK website to find out everything you need for preparing for the EU exit: https://euexitbusiness.campaign.gov.uk/
Contact Synergy Technology today on 0345 456 0050 to find out more about our services and products that we offer.