Brexit Guide for Businesses

Simmons Gainsford Group

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Simmons Gainsford Group

Make sure you are ready for the changes which will apply from 1 January 2021The UK formally left the EU at 11pm on 31 January 2020, but in practice the implementation period means that the UK remains part of the customs union and single market until 11pm on 31 December 2020.

The implementation period has inevitably been disrupted by the coronavirus pandemic and in spite of calls to the contrary, it is not currently possible legally to extend it. With no deal looking increasingly likely, businesses which trade with the EU must act now to minimise the impact on their operations.

Deal or no deal, these new rules are already largely in place, so it is vital that you and your business are prepared for them.

Please note: We recommend that you take appropriate advice because there may be procedural issues to address which cannot all be accommodated in a paper of this length.

How can we help?

Please do not hesitate to get in touch if you need advice or further guidance specific to your business.

What Does Your Business Do?If your business moves goods to or from the EU, the situation will become significantly more complex. If this applies to you, there are a number of things you need to be aware of.

• Currently, there are no tariffs on trade within the EU customs union. However, in the likely event of a no deal Brexit, these will apply to UK-EU trade.

• As for the UK’s trade with the rest of the world, this will not be affected by Brexit but may be affected by trade agreements negotiated by the UK in the future.

• It is also worth noting that the rate of tariffs depends on the type of goods (commodity code), the country they are being imported into and where they are judged to have originated.

Useful information

Trade Tariff: look up commodity codes, duty and VAT rates / Import, export and customs for businesses: detailed information

www.sgllp.co.uk

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Simmons Gainsford Group

Importing GoodsGoods which previously moved in free circulation within the EU may become subject to licensing, and formal declarations at import and export will be required. Importers must obtain an Economic Operators Registration and Identification number (EORI) number and plan to make import declarations. Businesses and people wishing to trade must use the EORI number as an identification number in all customs procedures when exchanging information with Customs administrations.

They will require expertise and access to software which can communicate with HMRC’s Customs Handling of Import and Export Freight (CHIEF) system. Fortunately, HMRC will allow businesses to account for import VAT using postponed VAT accounting, and this will include all imports (even from non-EU countries).

There will be a transitional relief for the first 6 months of 2021 which will allow the payment of customs duties to be deferred. For the longer term, you may need to consider how the various options open to business – including in particular deferment accounts – may be used to help manage cash flow. For the great majority of UK businesses, the position in regard to import VAT will be improved from 1 January 2021 for all imports, not just those from the EU. The cash flow impact of import VAT will be eliminated for most businesses.

From 1 January 2021, the UK will apply a UK-specific tariff to imported goods. Check the tariffs that will apply to goods you import when the UK Global Tariff takes effect on the 1st January 2021.

Exporting GoodsFrom 1 January 2021, businesses which will export goods to the EU will need to make an export declaration to HMRC in relation to any exports to the EU. Generally speaking, a full export declaration must be made before the goods arrive at the port of export, and this is normally done using software which is compatible with HMRC’s National Export System.

Useful information

Obtaining an EORI number / Check when you can account for import VAT on your VAT Return from 1 January 2021 / HMRC’s CHIEF System / HMRC’s National Export System

Supply of Services to EU CustomersVAT is an EU tax which is designed to ensure that cross-border transactions are taxed once and once only. This principle has held up well and the UK will not rush to make any fundamental changes to the rules. Therefore, most businesses supplying services to EU customers are unlikely to be significantly affected. However, if your business supplies consumers with certain digital services which account for VAT under the Mini One Stop Shop (“MOSS”) scheme, you will need to make alternative arrangements. The most likely solution is to register under a non-Union MOSS scheme in an EU member state.

Useful information

Guidance on the VAT Mini One Stop Shop scheme

www.sgllp.co.uk

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Simmons Gainsford Group

Distance Selling to EU CountriesBusinesses will no longer be able to take advantage of the distance selling thresholds for goods sold to consumers, where the supplier is responsible for delivery, into EU countries. This means that alternative arrangements must be made. The options will generally comprise ceasing to make distance sales to EU consumers, registering for VAT in each country into which distance sales are made, or, most practically, registering for VAT in one EU country. This would allow the business to take advantage of the distance selling thresholds into other EU countries up to the point where compulsory registration is required.

The EU intends to introduce a simplified method of accounting for VAT due on B2C sales which attract EU VAT, but this is not scheduled to be rolled out until July 2021 and may be delayed by the effect of coronavirus.

Other Special SchemesUK businesses will lose the benefit of a number of special VAT schemes in cross-border trade. Particularly hard hit will be those wishing to sell works of art, used cars, yachts and aircraft to EU countries using a margin scheme. Also, travel businesses currently using the Tour Operators Margin Scheme will need detailed professional advice.

Internet TradersFrom 1 January 2021 onerous anti-avoidance rules will be introduced targeting imports in consignments valued at under £135. These rules will require the importer to account for VAT at the point of import. If the sale takes place on an online marketplace (“OMP”), the OMP will have to collect the VAT.

Northern IrelandWe strongly advise that any business trading moving goods into, or out of, Northern Ireland should take specific advice. The rules scheduled to take effect from1 January are extremely complex. Any business affected should be aware that HMRC intend to introduce anti-avoidance legislation during 2021 to catch businesses which route goods going to Norther Ireland through the Republic of Ireland, in order to avoid the application of the special rules which will apply to the movement of goods from Great Britain to Northern Ireland.

Useful information

Exporting and doing business abroad

Taxation and InsuranceHave you considered the impacts of Brexit on areas such as double taxation, insurance, import VAT and VAT registration in the EU? The British Chambers of Commerce has produced a helpful guide.

Appointing Tax RepresentativesMany businesses will find that they need EU VAT registrations after 1 January. Many EU members require non-established VAT registered persons to appoint local tax representatives. We have experience in this area and can provide a comprehensive service in conjunction with fellow PrimeGlobal member firms.

Useful information

Post-Transition Brexit Checklist

www.sgllp.co.uk

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Simmons Gainsford Group

The Importance of a Cash Flow ForecastWith Covid-19, cash flow for most businesses has been stretched. Brexit will bring further uncertainties. Covid-19 support measures, such as the furlough scheme and tax deferrals, will eventually cease. As such, businesses will need to fund the full cost of employees, pay taxes due, and commence repayments for any loans. While the economic consequences of Brexit are unclear, one thing is clear. Businesses need to plan ahead and think about how they could deal with further economic uncertainty which could affect a number of areas. As a result, businesses would be wise to look at scenarios, plan ahead and consider the potential impact on key performance measures such as sales, collection of debtors and stock levels.

Key cash flow considerations

What money do you need?

…make sure you are specific when approaching a lender, a detailed cash flow can assist.

Why is it needed?

…be clear on the triggers.

When do you need it?

…and when can you repay it?

Where will it be sourced?

…Bounce Back and CBILS applications close on 31 January 2021 but depending on your needs other sources may be more appropriate.

Useful information

As such, cash flow forecasting and scenario planning have never been more important for businesses. We are here for you and you can contact our Banking Advisory team for assistance.

www.sgllp.co.uk

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Simmons Gainsford Group

Staff and RecruitmentIf your staff have UK professional qualifications that they need in order to practice law for example - check what you need to do in order for regulators in the EU to recognise these.

If your firm is in a regulated industry (financial services, for instance) check what you need to do to stay authorised to operate in the EU.

• If your business employs EU nationals, they will need to apply to the EU Settlement Scheme before 30 June 2021 to ensure they can continue to work in the UK. Find out more

• With regards to British staff, check whether any visits to the EU they have to make will in future require visas or work permits. Find out more

• If you want to recruit from overseas from 1 January 2021, you will need to register as a licensed visa sponsor. Find out more

For small and medium-sized enterprises feeling anxious, there is plenty of help available. The Gov.uk site now offers extensive guidance and working with specialist customs agents may make sense for many businesses. Your logistics suppliers may also be able to offer support.

How can we help?

Please do not hesitate to get in touch if you need advice or further guidance specific to your business.

www.sgllp.co.uk

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