BREXIT FOCUS
Checklist for change
Make sure your business has got all the Brexit basics covered with our guide from the accountancy and tax experts BDO
I
By Pauline Davidson VAT Associate Director, BDO LLP
t’s been a long and drawn-out separation from the European Union but, following the 11-month transition period, the UK has fi nally left the EU’s Customs Union and Single Market.
A new free trade deal with the
EU was fi nally agreed and ratifi ed and businesses need to prepare themselves for life outside of the EU from 2021. Wait and see is no longer an option. Certain policy easements that were put in place for a potential no-deal Brexit will not be reintroduced because the UK Government’s view is that businesses have had time to prepare. So, what are the immediate actions businesses need to take? Whatever the size of your business, you should prepare your supply chains, workforce, VAT registrations, processes and cashfl ow. Below we outline a number of areas that businesses predominantly operating in the service sector should consider from an indirect tax point of view.
Customs procedures In February 2020, the UK Government confi rmed that, at the end of the Brexit transition period, UK sales and purchases with EU counterparts will become exports and imports, as with the rest of the world. EU and UK traders will therefore have to submit customs declarations and will be liable to checks
30 CABLEtalk FEBRUARY/MARCH 2021
on goods. Any business buying products from the EU will need to understand the changes; how these may impact timescales for deliveries or aff ect costs, for example, new customs duties payable or agent handling fees.
Adjust your contract terms Where your post-Brexit trade will incur additional duty, administrative costs for transport or other costs, you should review your terms of businesses with suppliers and customers. Will you or your supplier become liable for importation and VAT registration obligations when EU acquisitions become imports?
Know your customs duty rates Confi rm what duty tariff you will be paying on imported goods. Some tariff rates will go up, but others will go down under the new UK Global Tariff s. Despite a free trade agreement, customs tariff s may still be payable based on the origin of the goods, so additional information and an understanding of this may be required.
Safeguard your supply chain
Customs simplifi cations such as Customs Warehousing and Inward Processing
Relief can help protect your cashfl ow from customs duty and VAT charges. Consider applying for Authorised Economic Operator (AEO) status and review your country of origin position, commodity codes and customs values. Consider also the potential loss of call-off stock and consignment stock simplifi cations which may add to compliance costs and obligations. Are there UK-based suppliers that may off er a better solution?
Ensure your systems are ready Check that your systems are set up to handle the new VAT requirements and customs arrangements and make sure your teams have been trained on what they need to do. For instance, Postponed VAT Accounting will involve
accounting for import VAT on the VAT return (for both EU and rest of the world purchases) rather than paying it at the port or airport of entry to the UK. To take advantage
of this, the import
declaration must be appropriately completed, so
Pauline Davidson
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