Brexit has become rather overshadowed during 2020 by COVID-19. But, 1st January 2021 is looming and the countdown to the end of the transition period that the UK entered into at the end of January this year when it left the EU, is in sight. The point of this transition period was to enable the EU and the UK to agree on how they would move forward together, and to also allow businesses to prepare for 1 January 2021.
Obviously at the moment, a deal between the EU and the UK hasn't been reached, but it's important that businesses are prepared and that they arm themselves with the right tools and information to be able to continue to operate successfully. And this is particularly important when it comes to tax.
The Department for International Trade have a series of regulations that outline how trade needs to be conducted between the UK and the EU from 1st January. Prior to Brexit, UK businesses have not needed to declare goods arriving from suppliers who are also in the EU. From 1 January, the UK will have to declare all goods arriving from the EU.
Obviously businesses may already conduct trade from suppliers outside the EU, such as the USA. If this is the case, then these businesses will have an EORI number (Economic Operators Registration and Identification), if not, they need to apply for one. Going forward, businesses need to declare duty and VAT on all imports. The new tax scheme for imports into the UK is called the UK Global Tariff and will apply to all goods imported from 1st January 2021, unless an exception applies.
You can find out more about the UK Global Tariff here.
As well as import and export rules affected by Brexit, businesses should also be considering the implications of Brexit on other business aspects such as:
- Supply chain
- Customer lists
- The UK market
- Regulation
- Licensing and certificate requirements
- Cash flow and currency
- Contracts
- Personal data
- Intellectual property rights
As we are still unclear of what is to come, preparation is key for your business so that the transition to operating in a new era from 1st January 2021 can happen smoothly.
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