The transition period is coming to an end. So, from 1 January 2021, your business will be affected. How ready is your business? In this blog post, we’re going to cover the main things you need to know when it comes to the financial implications of Brexit.
In terms of the financial implications, you need to act now if your business:
Click here to read and/or bookmark our next blog in this series where we cover how the movement of goods will change.
We’re now going to move onto an overview of the 14 key things that will be changing. Not only might it be a little brief, new information is being released all the time.
So, while this blog post is correct at the time of publishing and we’ll be updating it periodically, for a more tailored, up-to-date breakdown, check out the UK Government’s Brexit Transition website. The website will walk you through several questions and give you a list of things your business needs to do to minimise any issues after 31 December 2020.
Used for VAT documentation and to exchange information with Customs Authorities, the Economic Operator’s Registration and Identification (EORI) number is required if you’re moving goods between GB (which includes England, Scotland and Wales) and the EU. In some cases, you may also need it if you’re moving goods to and from Northern Ireland and the EU.
You might need one or more of the three types of EORI numbers, depending on where you import and export.
From 1 January 2021, the UK will keep using the same commodity code system that’s currently used within the EU. This will be required on export documentation.
From 1 January 2021, goods imported into the UK will not only be considered as ‘imports’ rather than ‘arrivals’; they will also have a UK-specific tariff. This is detailed under the UK Global Tariff (UKGT) which you can read more about here.
In the event of a no-deal Brexit, exported goods will be subject to tariffs set in their destination countries. So, EU customers may have to pay EU tariffs. These tariffs are currently unknown, but they’re thought to follow World Trade Organisation (WTO) rules.
The UK is working on creating regulations to reflect those already enshrined within the EU. These may not all be completed by 1 January 2021 and all require EU acceptance.
There may be changes to the regulations surrounding data and GDPR. The EU will need to make an adequacy assessment decision.
The Northern Ireland Protocol exists to eliminate the need for a hard border on the island of Ireland. So, the movement of goods to and from Northern Ireland will be subject to this Protocol and, where appropriate (ie supplies of goods to and from the EU), the country will report under the ‘XI’ country code rather than ‘GB’.
Intrastat reporting will still be required for businesses in GB and Northern Ireland:
Goods movement direction | UK Intrastat required? |
Importing into GB from EU | Yes, until 31 December 2021 |
Importing into NI from EU | Yes, until the end of the NI Protocol |
Exporting from GB to NI | No |
Exporting from NI to EU | Yes, until the end of the NI Protocol |
Exporting from GB to EU | No |
This is a new government scheme that allows VAT-registered businesses to declare and recover VAT paid on imports through the VAT Return. It’s also available for imports from non-EU countries.
From 1 January 2021, a simplified procedure for triangulation will no longer be available. This may have implications for intermediary businesses so we’d advise you seek expert advice.
From 1 January 2021, the domestic VAT rules in the UK (includes Northern Ireland) will stay the same. But, the VAT rules relating to imports and exports to and from the EU will change. They will be treated in the same way as imports and exports to and from non-EU countries.
The rules for Northern Ireland will be defined from the Northern Ireland Protocol. As they will remain part of the EU customs and VAT regime:
As for goods moving between GB and NI, these will be treated the same as before:
From 1 January 2021, the general rule is that sales of cross-border services from one business to another will be subject to the tax of the customer’s country. So, the current ‘reverse charge’ principle for imported services will still apply.
There may be some changes to your business’ VAT reporting process:
We hope that you found this blog post useful. Though, while it might provide an overview of how a no-deal Brexit may impact your business, you should still seek advice on exactly how such a scenario can affect you. At Columbus, we’ve been helping our customers transition and prepare. Why not let us help you as well?
Get in touch with us today and get your business prepared for Brexit.