Brexit two weeks on – what do you need to consider?


Susie Walker

Susie Walker

Partner and Head of Tax and Brexit Team


As we digest the details of the trade deal, we wanted to share with you some more detail on the common conversation topics we are having with our clients.

Import & export declarations

The fair-trade agreement doesn’t preserve the status quo – import and export declarations are still required. If you’re moving goods, you may need EORI numbers in the UK, EU and Northern Ireland, depending on direction of flows.

Action: Keep talking to your shippers or freight forwarders to make sure you have everything in place you need for importing or exporting. There are additional complexities for some sectors – for example, food and drink and chemicals.

Tariff free – when does this apply?

‘Tariff free’ is limited. This only applies to goods of UK or EU origin. Rules are very complicated, particularly for manufacturers sourcing wholly or partly from outside the EU. Certification rules need to be understood. ‘Origin’ has a very detailed and technical meaning in this context.

Action: This is such a complex area, make sure you’re talking to your accountant if you have any questions on this. Mistakes can be very costly and the rules are still evolving.

Union transit – moving goods between the EU and the UK

Goods transiting through the UK can create unexpected VAT and duty issues (for example, EU-UK-EU) and may not be ‘tariff free’.

Action: There are several reliefs that can be used, but these need to be applied carefully. Reliefs may not be available after the event and may need approval or specific claims at import. Review your supply chains and speak to an adviser if in doubt.

Food labelling rules

There is no further clarification on food labelling at the moment, it’s still open to interpretation for now.

Action: Familiarise yourself with the rules as they stand and with the detailed requirements for your products and markets. Read our recent blog for more information here

VAT / Duty deferments accounts for importing goods

A lot of our clients are asking questions around VAT and duty deferment accounts to delay paying customs or tax charges when importing goods. In the UK, we expect fewer businesses will need to set up a deferment account as the Postponed Import VAT accounting rules will reduce payments required at import.

However, we’ve heard of some instances where a client’s haulier has refused to move goods unless a deferment account is provided for the destination market. This is probably a commercial issue for hauliers rather than a customs requirement and some aren’t understanding the rules fully.

Action: If your haulier is insisting on a deferment account, there’s guidance on HMRC’s website on how to set this up. However, we would recommend taking advice as you may not need one.

EU VAT registrations and country deferment accounts for goods entering the EU

A popular question we’re receiving at the moment concerns EU VAT registrations and country deferment accounts needed for the deferred VAT payment.

Action: Rules on establishment, fiscal representation and security are very complex in this area and differ by Member State. We advise you contact your accountant to assist you with this area.

Who is responsible for import and export formalities – the buyer or seller?

Incoterms refer to the terms of the sale of the goods. There are 11 internationally recognised rules that define the responsibility of sellers and the buyers for example who is responsible for: paying, managing the shipment, insurance, documents, and other logistics. Using the correct Incoterm is critical in determining who is responsible for Customs formalities and costs.

Action: Incoterms need to be reviewed fully and understood. Many will need changing to avoid problems at the border for movements of goods in both directions - what worked prior to 1 January may not be the best solution now. Review contractual terms and raise with your customers or suppliers as early as possible.

Business to consumer (B2C) rules have changed for goods in both directions

Business to consumer rules have change for supplies of goods in both directions and we’re starting to see more businesses ask questions around this area. This area has received considerable coverage in the press – for example, the requirement for EU suppliers of low value goods to register for UK VAT has forced many to stop selling to the UK. The rules have also changed for UK businesses supplying goods to the EU.

The new rules are also creating problems for carriers, with some suspending delivery until they are able to meet the regulations.

Action: If you are involved in international supplies of goods B2C with the EU, we strongly recommend taking advice to understand the new VAT and Customs rules. If you’ve not already done so, speak to your carriers to determine how they are dealing with the changes. If you supply via online marketplaces, make sure you understand what they will and won’t be liable for on VAT and Customs Duty, as this will have changed at 1 January.

Northern Ireland specific rules

The Northern Ireland protocol rules are still evolving and are very complicated. There are VAT and Customs consequences in this area for specific trades - for example used cars moving from the mainland to NI. Anyone moving goods into or out of Northern Ireland need to consider these rules fully.

Action: Make sure you understand the new GB-NI rules. Visit HMRC’s Trader Support Service portal - this is a very good resource and allows you to register and obtain a NI EORI number, which you will need if you move goods between GB and NI. If you move goods through NI to the Republic, we strongly recommend taking advice to avoid possible duty costs.

Services and VAT

Whilst the focus is heavily on trade in goods, there have been some changes to the VAT treatment of cross-border services. If you supply cross-border services to private individuals or if you supply services digitally, the VAT treatment is likely to have changed from 1 January and you should review your charging and invoicing procedures urgently. If you were an EU MOSS (Mini One-Stop Shop) user, you will certainly need to take action to avoid interruptions in trade.

Action: If you sell services to consumers in the EU, particularly if you do so digitally, review the new VAT rules with your adviser and make sure you meet the new invoicing and reporting requirements.

Moving people – What is the 90-day rule and does it apply to social security?

It is important to remember that you will need to consider visas and social security separately. They are not covered by the same legislation.

People can move around the EU for a maximum of 90 days in any rolling 180-day period without the requirement for a visa. However, for social security purposes, you will need to seek advice domestically for each EU country that you are working in. Each EU country will have its own domestic legislation regarding social security for UK employees. Although there may be no local social security due in certain circumstances there may still be administration and filing requirements.  The agreement reached between the UK and the EU agrees that workers who move between the UK and the EU will only have to pay into one country’s social security scheme at a time.

Action: If you are a UK employee or national and planning on working in the EU you should speak to an immigration lawyer to ensure your visa requirements are met.  You should speak to us if you require local advice for another EU country’s social security legislation.

Moving people – are my A1s/E101s still valid?

Yes - HMRC have said that they will honour all signed A1/E101 forms up to their expiry date if they were signed prior to 31 December 2020.

Action: You should continue to apply the same forms on behalf of individuals working in the EU. If the individual does not qualify for a certificate, then you will need to contact the other EU country’s social security institution to allow you to pay social security in the other country.

Moving people – Working in the EU temporarily under the detached worker rules

EU countries have until 1 February 2021 to decide if they are going to sign up to the UK detached worker rules. If an EU country has agreed to sign up to apply these rules, then UK employees who are working temporarily in the country for up to two years will not have to pay social security contributions in the country they are working in but instead can continue to pay UK social security.

As at 12 January 2021: Austria, Hungary, Portugal and Sweden have signed up to the detached worker rules.

If the EU country does not sign up to the rules and a certificate cannot be granted by HMRC then you will need to pay social security in that other country.

Please note that Norway, Switzerland, Liechtenstein, and Iceland have different rules.

Action: If you are planning on moving staff for less than two years then you will need to continue to apply for certification but should contact us beforehand to consider the social security position.

Moving people with cash - in or out of Great Britain

If you or your employees are moving £10,000 or more in cash i.e. notes, bankers’ drafts, travellers’ cheques or cheques that are signed but not yet made out to a person or organisation then you will need to make a declaration to the UK government. If you are travelling in a group then you need to declare if the total amount of being carried is over £10,000.

You need to make a declaration if you’re carrying 10,000 euros or more of cash and travelling from Great Britain to Northern Ireland, but you do not need to make a declaration when you’re taking cash from Northern Ireland to Great Britain.

If you do not declare any cash over the limits or give incorrect information you can face a penalty up to £5,000 and your cash can be seized by customs officers.

Action: If you are moving cash in or out of Great Britain make sure you review who is travelling as a group and if a declaration is required, to fill out the online form prior to travelling. You can also make a declaration at ports where there is a Red Channel.

For more information on any of the points above, please get in touch with your usual Johnston Carmichael adviser or Susie Walker.