Outlook on Brexit
While politicians continue to wrestle with post-EU trade and customs options, only one thing is for sure. Whatever the picture after March 2019, change of some kind is on the way.
Depending on the ultimate agreement, UK businesses that trade with EU countries, or import goods from the EU to carry out their UK trade, may become subject to customs duties and VAT.
It’s not just costs, but bureaucracy. At present, 96% of goods arriving from EU countries are cleared through customs in 20 seconds. If consignments are held up in future because of bureaucracy (intended or otherwise), that will have a big impact on businesses who find they can’t get their goods to the factory or the supermarket shelf on time.
Scope out the impact now
While most big corporations made contingency plans soon after the Brexit vote, many smaller firms have been waiting (and waiting) for clarity. But every business owner should map out their own ‘Plan B for Brexit’ right now. Businesses must plan for a worst-case scenario.
For example, an SME that imports goods into the UK for EU sale may look to set up a subsidiary somewhere in the EU where it can drop-ship goods, missing out UK border controls and levies.
Who claims VAT?
Another positive action is to look at current contracts with EU partners. If trading does become subject to customs duties and import VAT, you might need to change your contractual terms and so move some of the ‘tax’ burden.
For example, if you trade with a German business, for example, but you’re not VAT-registered in Germany, then your contractual terms may need to specify that the customer is the importer.
There’s plenty to consider – but help is at hand. I head up a team of experts looking at post-Brexit indirect taxes as part of the Geneva Group International, the leading global alliance of independent professional firms. I promise, we’re tracking developments so we can help our clients navigate the changes.
by Kapil Davda
by Andrew Jones
Uncertainty still surrounds future UK-EU customs arrangements – but businesses must do more than just sit tight and hope for the best after Brexit.