Check. Change. Go.’ It’s hard to miss Government adverts about the need to get ready to do business with the EU after the Brexit transition period ends on December 31. But across the UK, many small businesses are still in the dark about what is required.
Katrina McWhinnie from the McWhinnie Consultancy gives advice on trading in a post-Brexit world. She says: ‘A sense of panic is setting in. Many businesses are realising how much they have to get to grips with.’
Protracted talks over a possible trade deal, as well as the more immediate concern of how to deal with Covid-19 fallout, have led many companies to adopt a ‘wait and see’ approach.
Concern: Paola Dyboski-Bryant, inset, says her bubble toys will be more expensive to cover the new costs
Yet McWhinnie says this is wrong. ‘The longer that small businesses leave their planning and implementation, the fewer options will be available,’ she warns. ‘For those with little or no understanding of customs formalities, they haven’t much time to learn about the complexities, let alone implement the necessities.
‘Missing documentation, incorrect commodity codes to describe goods, and the lack of a licence are just some of the reasons goods may be held up at the border – leading to costly delays and unhappy customers.’
Even if a last-minute deal is struck this week with Brussels, there will be new rules and regulations.
Declaring both your imports and exports
From January 1, you’ll need to make customs declarations when you import or export goods from or to the EU – in the same way as currently applies to countries elsewhere in the world.
Firms can make the declarations themselves, but most businesses will use a courier, freight forwarder or customs agent as the rules are complicated. If you get it wrong, you could be fined or even imprisoned.
If you choose to go it alone, most declarations will have to be submitted electronically via the so-called ‘customs handling of import and export freight’ (CHIEF) system. You’ll need to apply for access and ensure you have the right software.
If you use a third party, you will still be liable for all the information sent to Revenue & Customs, so make sure you keep records of all transactions and money paid.
Revenue & Customs requires all businesses to keep records and accounts for at least four years for customs, unless there is a criminal investigation in which case it’s ten years. Excise records should be maintained for at least six years, as should VAT records.
You’ll need to get a licence or certificate to import or export certain goods – and you might also need to pay an inspection fee for some goods before they’re allowed into the country. In addition, there might be changes to labelling and marketing standards. So it’s vital to have the latest information. There will also be changes to how goods such as alcohol and tobacco are imported and exported, so check what you need to do.
Make sure you have the codes and numbers
Businesses trading with EU firms must have a UK EORI (economic operator registration & identification) number. This is a unique reference used on all customs declarations. If you haven’t got one, apply at Gov. uk. The process should take five minutes, but the number will take a week to arrive. Some businesses will also have to apply for an EU EORI number if they are also making customs declarations in the EU.
In addition, you’ll need to classify products using the correct commodity code which determines duty rates, quotas and licensing requirements. A customs procedure code (CPC) and safety and security declarations will be required to give the receiving country full details about the goods moving into their territory.
Paying duty on goods – and easing cash flow
If you are importing from the EU, you’ll need to ensure that any customs duties levied are paid. So you’ll need to establish the origin of your goods as well as classification and customs value, which is the value of the goods plus insurance, freight and delivery costs.
Goods imported from certain countries – for example if there is a trade agreement in place – may qualify for preferential treatment, attracting a reduced or zero rate duty, otherwise the UK global tariff applies.
VAT is levied on imports from the EU. If you want to ease cash flow by deferring payment of excise duty, customs duty and import VAT for up to 45 days and pay via direct debit, apply for a duty deferment account (DDA) from Revenue & Customs.
Travelling for work… and data protection
If you travel to the EU for work from next year, you may need a visa or work permit. If you receive personal data from the EU for business use, make sure it is used in compliance with the relevant legislation.
Are your suppliers up to speed with paperwork?
Ensure suppliers have the necessary paperwork to be able to continue to trade with you and with the EU, especially if they are also based in the UK and deal with the EU.
Financial help to keep firms running smoothly
It might seem like a minefield but there is help available to guarantee you have everything in place to keep your business running as smoothly as possible once the transition period has ended.
A customs intermediary grant is available for businesses to help deal with extra customs declarations.
This can be used to recruit personnel, train employees and deal with any IT issues.
The scheme closes at the end of June next year – or sooner if funding is exhausted. Applications can be made at www.customsintermediarygrant.co.uk.
Finally, mounds of information are available from local Chambers of Commerce, business trade associations and the Government’s website Gov.uk.
And don’t forget that some procedures will be simplified or deferred for the first six months of next year.
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