Brexit is just over the Horizon - Are you ready?
Clearly, the most pressing, current issue for most businesses in the UK at the moment, is the impact of COVID-19; how to deal with lockdown and what will happen in the future. However, unless there is a radical change in Government policy, Britain will exit the Brexit transition period on 1 January 2021 and trade barriers will come into force. This means that businesses trading goods cross-border between the EU and UK will have to submit customs declarations and goods will be liable to checks at the border. As things stand, this will include transactions between GB and Northern Ireland.
Dated: 26 May 2020 Author: Terri Bruce, Director of Indirect Tax for SMEs and Not for Profits
This will constitute a significant change for businesses trading with other EU countries as controls across fiscal borders were abolished in 1993 and since then free movement of goods has been allowed.
The Road Haulage Association has estimated that this change could lead to an extra 200m customs declarations having to be completed annually and up to 50,000 people will have to be recruited purely to carry out additional customs paperwork.
In addition to the extra paperwork businesses will have to understand the impact of using the correct incoterms, tariff codes (using the new UK tariff published on the 20/5) and Customs procedure codes in order to facilitate cross border trade. Incorrect entries could mean that goods might be held up at the point of import or could be investigated by HMRC once either the import or export declaration has been completed and penalties could be issued
Businesses will also need to consider the impact of issues such as duty charges on imports and exports, Customs Freight Simplified Procedures, Customs relief and preferences and Customs guarantees and deferment accounts.
The cost and effect of Customs duty and border controls will have to be managed strategically in order to avoid delays in transactions and unforeseen costs.
The Food and Drink Federation, has said that ‘Any frictional trade on the EU/UK trading relationship will inevitably have a cost for businesses, consumers and shoppers.’
Customs duty issues can be complex and there is a recognised skills gap and HMRC has established a grant funding programme to fund training for people who will require new skills from the 1 January 2021.
Dains’ Customs specialists are able to provide grant funded bespoke training aimed at the needs of the individual company and the people who will be directly and indirectly involved with cross border transactions. As the training will be grant funded there will be no cost to the business but there should be significant benefits.