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Brexit: 5 things to consider if your business trades in goods

08 Mar 2019

With Brexit just around the corner, we’ve compiled a list of five things that businesses which trade in goods should consider when planning for EU exit. It is by no means exhaustive, but it can hopefully point you in the right direction as you undertake Brexit preparations for your business.

For more detailed guidance on this and wider Brexit planning, members can refer to our recently updated Business Planning for Brexit guide which covers sections including Goods, Services, People and Trade with the Rest of the World.

EORI number

All UK businesses that send goods to or receive goods from the EU will need an Economic Operator Registration and Identification (EORI) number in the event that Britain leaves without a deal. In practice, an EORI number allows your business to trade goods in and out of the UK, submit customs declarations using software and apply for customs simplifications and procedures. You can apply for an EORI number by filling in a form on the gov.uk website which is available here and it usually arrives within three working days. You need to do this regardless of whether you/your organisation are VAT-registered or not – HMRC recently announced that only 20% of firms who would need to get an EORI number under no-deal have done so.

Transitional Simplified Procedures

The Government recently announced that it will introduce Transitional Simplified Procedures (TSPs) in a no-deal scenario. The measures are intended to mitigate some of the disruption which importers might face on goods coming into the UK. They will reduce the amount of information traders must fill in on their customs declarations for goods coming into the UK, allowing them to defer providing full details until after the goods cross into the border. Businesses can also defer the payment of any duties until one month after the import. If you wish to benefit from TSPs you must register on gov.uk. The TSPs will be in place for an initial period of 12 months and will be subject to review 3-6 months after implementation.

Customs duties / tariffs

Although the Government has decided the UK will replicate the EU’s tariff ceilings (i.e. the maximum possible level of duty that can be charged), it has not revealed what tariffs would actually apply in day one of a no-deal Brexit. It is for this reason that it is important for company directors to understand the EU’s Most-Favoured Nation (MFN) tariff rates which are relevant to their business. HMRC has guidance on how to determine the commodity classification code of your product.

CE marking

The CE mark is an EU symbol used to prove a product has undergone testing and is compliant with EU legal requirements. It is a mandatory mark for many products but not all. The testing of products and issuance of CE marking is sometimes carried out by EU Notified Bodies, although some businesses can also do this by way of self-certification. If the UK leaves the EU without a deal, the EU would no longer recognise CE marking certificates issued by UK Notified Bodies. Manufacturers that wish to sell their products in the EU after a no-deal exit day will need to have an EU Notified Body (re)assess them. Alternatively, the business may choose to transfer their files to an EU Notified Body. The Government is introducing a UK mark equivalent to CE marking if there is no withdrawal agreement, although this will not automatically be recognised by the EU. Manufacturers who currently self-certify their products with CE marks should still be able to do so under a no-deal scenario, as long as they don’t interact with notified bodies.

VAT

The UK is currently part of the EU’s VAT area which means goods being traded are not liable for import VAT. However, in a no-deal event, import VAT would apply to goods imported from the EU. The Government has sought to mitigate adverse cash-flow impacts by introducing postponed accounting on goods imported into the UK (from both EU and non-EU countries), although there is no guarantee that EU customs authorities would reciprocate this for UK imports. The Government is also planning to abolish Low Value Consignment Relief on third country imports worth up to £15, meaning all goods coming into the UK would be liable for VAT. Our full guidance document provides further details about changes bring brought in to accommodate this.

For all the latest on the IoD’s Brexit work, please visit our Navigating Brexit hub for our latest press releases, reports, events and more!



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