Doing business after Brexit: taking a look at the new rules

The end of the Brexit transition period ushered in a range of new trade rules and regulations applicable to businesses that trade with the EU. Firms need to follow new rules on exports, imports and tariffs. Here we outline the changes.

Dealing with VAT

Before Brexit, VAT on trade with the EU entailed minimal paperwork. There was also access to a range of VAT simplifications. This has changed. Broadly, rules on the supply of services have changed less than the rules on the supply of goods. One key change relates to business to consumer (B2C) supplies of digital services, such as apps and downloads, where registration for the UK VAT mini one-stop shop (MOSS) is no longer available. Registration for the MOSS non-union scheme in an EU member state is needed instead.

Goods sold to the EU

Business to business (B2B) supplies of goods, previously treated as dispatches for VAT purposes, are now reclassified: sales from the UK become exports. Exports can be zero-rated, provided goods are physically exported within three months of the time of supply, with export evidence obtained within the same period.

Before Brexit, the distance selling rules applied to B2C supplies of goods (also now treated as exports). But the EU distance selling regime/thresholds are no longer open to UK suppliers. Instead, you may need to register for VAT in EU countries where your customers are located. In some countries, VAT registration may also require the appointment of a local agent to deal with matters for you.

Goods bought from the EU

Previously treated as acquisitions for VAT purposes, these are reclassified as imports, and from 1 January 2021, two new VAT schemes apply to imports, not just to imports from the EU but from anywhere in the world:

  • the Low Value Imports scheme makes the relevant online marketplace or overseas vendor responsible for charging the VAT in the UK. Applies to postal imports below £135 in value
  • Postponed VAT Accounting (PVA).

Dealing with customs procedures 

Trade with the EU now means following the correct customs procedures. It’s a complex area involving being ready to make customs declarations, knowing how to classify goods correctly and understanding relevant safety and security requirements. The government recommends using a professional customs intermediary.

Imports: new timetable, ongoing change

The new rules for import controls (full import customs declarations, border checks and controls) don’t all take effect at once. The government’s Border Operating Model set out stricter controls in three stages: 1 January 2021, 1 April 2021 and 1 July 2021. This has changed to give traders more time to prepare with import pre-notifications for products of animal origin introduced from 1 October 2021 and from 1 January 2022 customs declarations for all goods at point of import.

Making a declaration

Customs declarations are made either to the Customs Handling of Import and Export Freight (CHIEF) or to HMRC’s new declaration platform, the Customs Declaration Service (CDS). Special software is needed.

To complete a customs declaration, you need:

  • a GB Economic Operators Registration and Identification (EORI) number
  • the commodity code of the goods 
  • the value of the goods
  • the origin of goods
  • access to HMRC systems, either directly or via an intermediary with such access
  • for anyone using CHIEF and not using an intermediary, a CHIEF badge.

We can help you

Brexit has brought significant change to trade with Europe and Northern Ireland, and we have only been able to highlight key issues here. Please contact us for in-depth advice tailored to your circumstances.

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