Most businesses’ main focus at this time will be the economic impact of the COVID-19 pandemic, however, they must not lose sight of the UK’s departure from the EU later this year. 

It is still not known whether a trade deal between the UK and EU will be achieved by the end of the transition period on 31 December 2020.

In its latest guidance, the Government has laid out the principles for the ‘Core Model’, which relates to all goods imported and exported, regardless of which means of transport are used to move the goods.

The guidance covers the core process of:

  • customs declarations
  • customs duty
  • import VAT
  • safety and security declarations.

Under each of these headings, it sets out the actions that businesses should take now, as they will be required to follow these rules regardless of the outcome of the ongoing trade negotiations.

To help businesses adapt, HMRC will introduce the new border controls in the Core Model in three stages up until 1 July 2021.

To ensure that businesses are prepared for life outside the EU, we have prepared some points for consideration based on this guidance.

EORI

The UK has now formally withdrawn from the EU and now has until 31 December 2020 to agree a new trade deal. If it is unable to obtain a deal during this transition period, businesses will need to trade with EU customers and suppliers under new arrangements.

As part of their preparations, businesses that export or import goods must acquire an Economic Operator Registration and Identification (EORI).

An EORI number is a unique customs ID for businesses that are trading with the EU.

At present, it is not possible for non-EU businesses to move goods into or out of the EU single market without an EORI number and, once the post-Brexit transition period ends on 31 December 2020, an EORI number will be needed to move goods between the UK and the EU as well.

It will begin with different letters, depending on which country issued it (i.e. a number issued by the UK will start with ‘GB’), followed by 12 digits. It will include the business’s VAT registration number if they are registered for VAT.

HMRC was pressed to offer clarity on the provision of these numbers, in light of the confusion surrounding whether businesses would need one from both the UK and the EU.

If your business deals solely with import or export declarations in the UK, with a customer/client completing the corresponding declaration on the EU side of the border, then you will only require a UK EORI number.

However, if your business is responsible for completing the export declaration as goods leave the UK, as well as the import declaration when the goods enter the EU, you will need both a UK and an EU EORI number.

You may find that this is also the case where you are named as the importer on the EU record, and the exporter on the UK record; for example, if your UK-based business is exporting goods to one of your EU branches.

It may also apply where you as the ‘buyer’ or ‘seller’ are contractually obliged to complete both the export and import declarations.

Online applications can be completed on the GOV.UK website, relatively quickly and at no cost, by clicking here.

You will receive your EORI number straight away, or within five working days if HMRC needs to undertake further checks.

Customs Agents and Forwarders

Most businesses are advised to use either a customs agent or freight forwarder to deal with their exports and imports once the transition period ends.

Freight forwarders move goods around the world for importers and will arrange the clearing of goods through customs.

They should employ the correct software to communicate with HMRC’s systems to ensure that goods can move freely. You can find out how to use a freight forwarder on the British International Freight Association and Institute of Export website.

You can also use a customs agent or broker to make sure your goods clear through customs. They can act either as a direct representative or indirect representative of your company.

Some business may also be able to utilise fast parcel operator services in certain circumstances to transport documents, parcels and freight in a specific time frame.

These businesses can deal with Customs for a business, as part of their delivery. However, they cannot act on your behalf without written instructions from you. This instruction must show whether they’re acting for you directly or indirectly. HMRC will only ask for evidence of the authorisation if they require it.

Terms of Trade

If you intend to maintain an EU customer base once the transition period ends you must have the correct terms of trade and ensure the required administrative processes are in place.

Businesses must ensure they can continue to move goods in and/or out of the EU. This may mean obtaining certain special permissions, such as obtaining Authorised Economic Operator status with a supplier or customer.

Some existing contractual agreements may also be terminated if a trade deal cannot be negotiated between the EU and UK or other contracts may need to be carefully renegotiated.

New and existing contracts should clarify the terms for trade across EU borders, including how VAT is dealt with, and those contracts may need to include International Terms and Conditions of Service to reflect that you are now an international exporter or importer of goods or services.

Here to help

We understand that you are likely to have many queries about the arrangements for VAT and customs before the transition period ends on 31 December 2020.

Our team are standing by to support you and your business and will aim to keep you informed as and when things develop. To find out how we can support you, please contact us.