It is fair to say that Brexit has been sidelined by COVID-19 throughout much of 2020, but as 31 December approaches so too does the end of the UK’s transition period from the EU and businesses need to be ready.

Although an announcement on any trade agreement post 1 January must be imminent, these are my current thoughts:

VAT

Whilst VAT will be an obvious concern for businesses that import or export, it is not just those moving goods around who will be affected. For example, UK companies supplying certain digital services to EU countries will find that the Value Added Tax Mini One Stop Shop (VAT MOSS) will no longer apply and they may have to register in an EU country as well as the UK.

Importers and exporters will most certainly need to take specific action and there will likely be new registrations, customs documentation and tariffs for them to understand. Regardless of the negotiations around Brexit, these businesses should apply for a GB EORI number if they don’t already have one and appoint a customs intermediary or choose relevant software to ensure that customs declarations are dealt with accurately.

Depending on the outcome of Brexit negotiations, import of some goods from the EU may become subject to duty post 1 January 2021. Regular importers of goods on which customs duty, excise duty or import VAT cost liability applies might consider applying for a duty deferment account to enable monthly direct debit payments instead of paying for individual consignments. If you don’t need to bring goods into the UK (because they are going elsewhere) then you may need to look into using a bonded warehouse facility to mitigate UK import duties.

Do you sell into the EU?

Importers into the EU will also need an EU EORI number as well as the UK one and those without an EU establishment will also need to appoint a representative to act as a declarant of the EU import documentation. Business to business importers might be able to get their customers to do this but business to customer importers will certainly need to have this in place as customers are highly unlikely to want to be involved in the payment of duty. In addition, anyone trading with or from Northern Ireland will also have new rules to adhere to.

Make a start

Beyond the VAT implications, there are other areas to think about including employee matters, travel and data. UK businesses or organisations that receive personal data from the EU or EEA (those with group companies in Europe for instance) may need to take extra steps to ensure that the data can continue to flow legally from January 2021.

Some actions will apply whether or not a free trade agreement is reached, so if you haven’t started thinking about how your business might be affected by Brexit or you want to understand what you’ll need to do to prepare, visit the government’s transition website. You’ll need to answer some questions and you’ll get a personalised summary of the actions you need to take. You can also sign up to emails that will update you about what you need to do and when.

Once you’ve got your tailored summary from the website, you can always get in touch with your usual Sagars team contacts for help with next steps and information about how we may be able to support you, but of course, much of the detail is still being developed and forms designed (we don’t yet know what the new VAT returns will look like) because the final deal or no deal has still to be decided.

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Kate Naylor
Kate Naylor

Business Tax Partner

Kate spends a lot of time working with businesses and their owners on tax strategies and mitigation, which includes looking at the business and its structure, through to the owners personal tax situation and their longer term goals and plans.

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