Brexit is Looming....ARE YOU PREPARED???
Border rules are changing. With one month to go before the United Kingdom leaves the European Union on 31December, it is critical that all UK Traders have a strategy for managing the free movement of inventory between the UK and the EU. The below highlights some important considerations:
1) All goods will now have to go through Customs and be subject to UK Import VAT.
If an item is in EU free circulation, after 31 December, Import VAT will need be paid in the UK in order for it to be free of customs controls. This also applies to goods that are in UK free circulation; import VAT will need to be paid in an EU member state in order for the work to be in EU free circulation.
Any such movement will require careful planning and meticulous consideration of the taxation and licensing position to ensure everything can go as smoothly as possible. Traders should consider:
a) Customs Warehousing or Temporary Admission Accounts (T.A.). Both are possible options for businesses who may not sell their imports within the UK market as you are not immediately responsible for the import VAT. A customs warehouse is a physical location where the items must remain whilst the import VAT payment is outstanding, though keep in mind that a guarantee must be provided. A Temporary Admission Account can be held by a business and gives the holder 24 months to sell the imported good. There are different types of Temporary Admission Account so you must consider what would be right for your business.
b) Postponed VAT Accounting. Your business can apply to pay import VAT on your VAT return as opposed to when the items arrive at the border.
2) Factor in inevitable border delays and hidden costs
Shippers are likely to incur increased costs, which will no doubt be passed on to the end user. As customs queues will be longer, there will need to be more drivers on each truck in order to comply with regulations regarding worker’s hours. Vehicles will likely need to be further modified in terms of both security and climate control to account for standing idle for longer periods of time. Furthermore, insurance companies will likely increase their costs because more delays means the more time that the goods are not secured in a storage warehouse or with the consignor/consignee.
3) Ensure all paperwork is up to date and complete
As the Importer of Record, you are the business/person responsible for the products that are being brought into the country, but you also need to be sure that all of the paperwork (pro forma invoices, customs declarations, etc.) are all correct as an error could mean that you are fined. In addition, you need to file all relevant paperwork according to Her Majesty’s Revenue and Customs (HMRC)’s guidance and maintain those records for a minimum of six years.
As Customs specialists, Ossad Art Management can help traders prepare and navigate by:
1) Applying for and administration of Temporary Admission Accounts
2) Developing Brexit strategies for your business
3) Recommending systems to ensure that records are maintained according to HMRC regulations
4) Logistics planning for upcoming transports