With Brexit looming, there is still time for companies who buy from or sell to the EU to get their houses in order and make sure there are no nasty surprises in the event of a no deal, as Sarah Hughes, Head of VAT for the West Midlands, explains.
Forewarned is forearmed
Although we don’t know what is going to happen post Brexit, for companies dealing with imports and exports there are certain measures surrounding VAT that can be put in place to put you in the best possible position to continue trading as usual should we leave the EU with no deal. Here are my five tips:
1. Know your customer
Firstly, you need consider where you are sending and buying goods from. Difficult to believe, I know, but there are still some misconceptions where people don’t make the connection between us leaving the EU and the fact that their main customer is in France, or they might sell on Amazon and have stock that goes abroad. People have to sit down and look at their supply chains so they are cognisant of the bigger picture.
2. Get your number
You should then look at whether you have an Economic Operator Registration and Identification (EORI) number.
One can get this by applying to HMRC through the online portal. It’s effectively your VAT number with a few zeros at the end, but should we leave without a deal, no goods would get in without one.
It’s basically a mechanism to ensure that when goods come to port, the EORI number enables the port authorities to know who is buying them. Without it, the goods will get stuck there. Although it’s a relatively quick process to automatically generate the number, as the 31st approaches and the mountain of requests build up, that brings with it the danger of systems crashing and delay, so the sooner the better.
Once you have it, you’ll need to give it to your shipping people and freight companies.
3. Be aware of the costs
Post Brexit, everything will become an import or an export and companies will have to make constant declarations through HMRC’s Customs Handling of Import and Export Freight (CHIEF) system, which records the movement of goods by land, air and sea.
It allows importers, exporters and freight forwarders to complete customs formalities electronically and automatically checks for entry errors. Large companies will have the software that enables this. Smaller companies will often use their freight forwarder or customs agent. If you want to do it yourself, it’ll cost to get a system up and running.
4. Keep things simple
By investing your time and energy into streamlining your operations as much as you can, you can mitigate at least some of the uncertainly around Brexit. Another good example of this is how much information you need to give to Customs.
You can apply for a Transitional Simplified Procedure, online, which means you can give a lot less information to HMRC. Without it, you must make full declarations, so it saves both time and pain.
Again, an expedient approach is better because the applications can take a couple of weeks to come back. HMRC has been issuing them for relevant companies but it’s a bit hit and miss, so, if in doubt, apply.
With that you also need a duty deferment account – another online application but one that requires a bank guarantee (who themselves may want an underwritten individual guarantee).
5. Get what you’re entitled to
Companies also need to make sure that they are getting any relief they are entitled to. For example, if you bring in goods temporarily, to modify, for parts, as a sample and so on, there is paperwork that needs to be put in place to make sure you get the relief available.
If you need help or advice on any of the issues I’ve raised then don’t hesitate to contact our specialist VAT team or get in touch with me directly: email@example.com
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