Top questions businesses are asking about Brexit

1. What documents will I need after January 1st when trading with the EU?

From January 1st, customs rules under EU law will apply to all goods entering the EU from the UK, or on goods being imported from the EU to the UK. Businesses trading with the EU will need to complete customs declarations when importing or exporting. If you are unsure about how to complete them, we have an online training course available which you can watch in your own time and register for here. 

From January 1st, companies will need to demonstrate the originating status of goods traded. The rules of origin explain which goods are covered in preference agreements and how their ‘originating status’ is applied. Duties and restrictions might apply depending on the source of imports. More information can be found here, and you check the preference agreements for the country you’re trading with, which will determine any documentation required. 

2. How do I register on CHIEF?

To get started on CHIEF, you need to complete the following steps:

•Register for direct access to CHIEF by completing the form PA7 as published by HMRC.

•Email the document to HRMC’s CHIEF Operations (chief.operation@hmrc.gsi.gov.uk).

•HRMC CHIEF Operations will send you a “CHIEF Role and Location” by email.

•Create a Government Gateway account and link the CHIEF Role and Location to your Gateway account.

After completing the registration process, you can start submitting export declarations to HMRC’s CHIEF system.

 Completing customs declarations can be complicated so our training will equip you with the specialist knowledge required. Any mistakes on documents can lead to delays and additional costs so its important you know the correct procedure. 

3. How will VAT change after 1st January?

The big change after Brexit will be how VAT is charged on trade with the remaining 27 member states. The scale of change will be contingent on the final negotiated outcome.

VAT works in normal transactions by the seller charging the buyer VAT before then paying the money to the tax authority. Currently, for EU transactions, VAT is not usually charged on the supply of goods. Instead, buyers are generally required to charge the business VAT which is accounted for on the VAT return. 

When the UK leaves the EU VAT area, it will become a third country. Sellers won’t charge VAT, but buyers will have to pay VAT to HMRC when importing goods. 

The payment of VAT at the border runs the risk of causing cash flow problems and delays which the UK government proposes to mitigate for imports, through the introduction of postponed accounting. This allows you to defer paying VAT upon importation of goods. Instead, your import VAT will be paid on your usual VAT return. You can apply for this here. 

4. How is it going to work at the NI border?

The UK and EU have reached an agreement that checks won’t take place at the border between Northern Ireland and Republic of Ireland.

There will however be a new border between Northern Ireland and Great Britain. This will mean checks will take place on goods moving between Great Britain and Northern Ireland.

From 1st January food products arriving in Northern Ireland from England, Scotland or Wales will need to go through an inspection process to ensure they meet EU standards. A “grace-period” has been put in place for three months for supermarkets where the rules will not be enforced. 

The UK and EU are still negotiating a trade deal to try and eradicate tariffs from being introduced on other goods in the new year. However, if these talks are unsuccessful, a trusted trader scheme has been agreed which will mean most goods travelling to Northern Ireland from Great Britain will not face any tariffs. 

5. How do simplified procedures work and what do I need to do to implement them?

In a no-deal Brexit scenario, UK businesses importing goods will need to follow the same procedures when trading with the EU as they do when trading with third countries. HMRC has introduced a system called simplified procedures to support businesses importing goods from the EU.

Using transitional simplified procedures will allow you to delay submitting a declaration by allowing you to submit less information when the goods enter the UK. It also allows you to delay paying import duties and VAT. You can apply for it here. 

6. What are the best incoterm rules to use for trading with the EU after the transition?

International Commercial Terms, or ‘Incoterms’ determine whether the responsibility lies with the buyer or seller in terms of costs and completion of customs declarations. You should ensure that you negotiate the best terms for your company so that your company remains profitable and if required, are able to complete the declarations. 

There are currently 11 Incoterms but two of the most common are EX Works (EXW) which involves the buyer taking on most of the costs and risk through to Delivered Duty Paid which requires the seller to accept all responsibility and costs for delivering goods (including paying import duties overseas and all customs formalities). We would not advise you to use EXW or DDP, as there are implications when using these terms for both export and import. You can visit the International Chamber of Commerce website which offers a free Incoterms 2020 Introduction as well as an e-book. 

While a Brexit deal is still being negotiated, we will keep our Trading Through Brexit hub up to date with new information to help guide your business through the end of the transition period. You can also access our guides to importing from and exporting to the EU after the transition period.