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Brexit Planning

The UK formally left the EU some time ago and the transition period comes to an end on 31st December.  From the 1st January 2021, a number of changes come into effect.  As it stands, the UK will leave the EU with no deal.

The below summarises the key changes that are anticipated at this point.

They represent the current understanding of the situation, but as always, businesses are advised to take bespoke advice where they are unclear regarding the requirements and impact.  The below does not represent legal advice.

The main changes fall under a number of headings as follows:

Importing goods from the EU

  • From 1 January 2021, businesses will need to make customs declarations if they import goods from the EU. Businesses will require an EORI number in order to import from the EU (please see below).
  • Most businesses use a courier, freight forwarder or customs agent that handles custom declarations for them. However, if you want to make these declarations yourself you must follow the guidance available here: https://www.gov.uk/guidance/customs-declarations-for-goods-brought-into-the-eu?step-by-step-nav=1ddb4c89-1fe9-4ad0-b561-c1b0158e6bc5
  • The rules have changed regarding the import of certain types of goods, for example excise goods like tobacco, alcohol and certain oils. These goods will be treated as though they are an import from the rest of the world. Similarly, product marking standards will change come 1st January 2021. More details can be found here https://www.gov.uk/guidance/labelling-and-marketing-standards-from-1-january-2021?step-by-step-nav=1ddb4c89-1fe9-4ad0-b561-c1b0158e6bc5
  • Custom Duty rates on imports will also change from 1st January 2021. Please see the following link for a comprehensive list of all changes https://www.check-future-uk-trade-tariffs.service.gov.uk/tariff
  • A separate arrangement will apply to consignments of imported goods with a value of £135 or less.
  • For the import of goods from outside the UK not exceeding £135, VAT collection will be moving to the point of sale, rather than importation.
  • Online marketplaces will be responsible for collecting and accounting for VAT, if they facilitate the sale.
  • For goods sent by an overseas supplier directly to the UK customer, the overseas seller will be required to register for VAT in the UK.
  • B2B sales fall under this rule, but where the customer is a VAT registered business, the reverse charge will apply.
  • Where these rules do not apply, businesses can still use postpone VAT accounting to account for import VAT on their VAT return.
  • More details are available here: https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021
  • In contrast with exported goods, the Government has announced that Intrastat declarations for arriving goods will continue to be required in 2021.
  • Come 1st January 2021 if your business is registered for VAT in the UK, you will be able to account for import VAT on your VAT Return for goods you import rather than pay the import VAT to HM Revenue & Customs (HMRC) at the time of importation. HMRC will be issuing a new document called a Monthly Postponed Import VAT Statement to replace the current C79 form.

EORI Number

  • From 1st January 2021 you will need an EORI number to move goods between Great Britain (England, Scotland and Wales) or the Isle of Man, and the EU. You may also need a separate EORI number if you move goods to or from Northern Ireland.
  • If you already have an EORI number starting with GB and you sign up for the Trader Support Service by the 14th December 2020, HMRC will automatically send you an EORI number starting with XI. Please see the following link for more information https://www.gov.uk/guidance/trader-support-service

Exporting goods to the EU

Digital Services to EU

  • From the 1st January 2021 you will no longer be able to declare your digital services on a UK VAT MOSS return. The final period will be ending on the 31st December 2020 to be submitted to HMRC by the 20th January 2021.
  • For digital sales made to the EU thereafter, businesses will need to be registered for MOSS in another EU member state. Our recommendation is to be registered in Ireland as there is no language barrier. Alternatively, you can register for VAT in each EU member state that you operate in and submit local VAT returns.
  • If you are a business not established in the EU without any branches based in the EU, you will need to register for the non-union MOSS scheme. This will need to be completed by the 10th day of the month following your first sale to an EU customer. For most this will be the 10th of February.

Northern Irish Trading

  • After the Brexit transition period, ending on the 31st December 2020, Northern Ireland will have a dual position in the EU Customs Union, Single Market and VAT regime as well as in the UK’s equivalents for goods only.
  • Any trade between GB and Northern Ireland will be subject to domestic rules.
  • From an EU perspective, Northern Ireland will be treated as a member state: current EU VAT and customs rules will continue to apply to EU/Northern Ireland transactions in goods.
  • Northern Irish Protocol could be amended in the near future.

Selling Services to the EU (Excluding Digitally Supplied Services)

  • For VAT purposes, the supply of services to customers in the EU will be treated the same as those to any other customer outside the EU.
  • B2B sales are currently dealt with in the country of the purchaser under the reverse charge procedure. Going forward, the UK supplier will not charge VAT.
  • B2C sales where the customer is in the EU are currently charged at 20% VAT where applicable. Going forward, the supplier will not charge VAT.
  • UK firms may now face additional legal, regulatory and administrative barriers when providing services to EU customers.
  • Most countries will require some form of registration when the service is physically performed in that country.
  • Each country will have different rules and more details can be found here: https://www.gov.uk/government/collections/providing-services-to-eea-and-efta-countries-after-eu-exit.
  • Special rules apply in a number of sectors including financial services, healthcare, private security, gambling, legal and notarial, temporary work agencies, auditing and electronically supplied services.
  • Administrative procedures such as EC sales lists will no longer be required.

Trade Regulations, Professional Qualifications & Business Structure

Employing EU Nationals

  • The UK will introduce an immigration system so that recruitment of any individual from outside the UK or Ireland will require employers to apply for permission first. Should you wish to do so, you will need a sponsor license.
  • The requirements are different depending on the visa obtained.
  • The change does not affect EEA citizens you already employ.
  • If you are already a sponsor, you will be granted a new skilled worker license automatically.
  • More details can be found here: https://www.gov.uk/guidance/recruiting-people-from-outside-the-uk-from-1-january-2021

Copyright & IP Rights

  • Copyright laws are a national UK right. Some of the legislation refers to EU copyright law, however the UK government has introduced laws to remove or correct these references.  As far as possible, copyright law has remained unchanged as a result.
  • The UK is party to several international treaties on copyrights and as such copyright will still be protected in the EU and UK as a result.
  • Some rules in relation to the registration of intellectual property rights in the UK and EU will be changing.

GDPR / Data Protection

  • UK Businesses do not need to take action to allow them to keep sending personal data to the EEA, although standard contractual clauses are likely to be needed to allow data sharing outside the UK.
  • Businesses are advised to review the guidance and consider whether any additional safeguards should be put in place.
  • The EU is yet to confirm that they accept that the UK’s data protection regime is adequate.
  • The UK intends to convert EU data protection law into UK domestic law.
  • Businesses without an EEA branch may need to appoint a representative in the EEA for the purposes of controlling data, where they trade with individuals in the EEA and where there is regular high risk processing of data. More guidance is available here: https://ico.org.uk/for-organisations/data-protection-at-the-end-of-the-transition-period/data-protection-at-the-end-of-the-transition-period/the-gdpr/european-representatives/.

For more information on the above please contact Wisteria’s tax team on 020 8429 9245 or via email: info@wisteria.co.uk