By Michelle Accounticorn Morris on 10/02/2021 12:00:00

Brexit & Your Business

What you need to know ...

On the 1st January 2021 the UK moved into the Trade and Cooperation Agreement, which resulted in changes for companies who trade between the UK and EU, travel between the UK and EU and/or employ EU Nationals. The new agreement has also caused some complex changes to many VAT processes.

 

As a business it is vital that you understand your responsibilities when it comes to any new trading obligations that are now applicable.

 

Trading Goods

 

While this agreement is positive for goods importers and exporters because it should guarantee tariff free trade (providing goods have originated due to being produced in the UK or EU), it does stipulate hard borders, which will require additional consideration and administration.

 

If you are trading goods to and from the UK, your business must apply for an EORI (Economic Operators Registration Identification) number. This number will be used in all customs procedures and failure to have one could result in unnecessary costs and delays to your shipments. If you haven’t already obtained your unique number, it’s quick and easy to do via the Gov.uk website at www.gov.uk

 

In a bid to help businesses understand their new export obligations, HMRC have compiled a helpful step by step guide available at - https://www.gov.uk/export-goods

 

It is vital that your workforce understand the new processes and procedures too and it is your responsibility as an employer to train your staff accordingly. Again, HMRC have offered a helping hand with this list of training providers who can help educate your employees - https://www.gov.uk/guidance/list-of-customs-training-providers

 

Business Travel

 

There are also additional regulations in place if you or your employees are travelling to the EU on business. Depending on your length of stay and reason for travel, a work visa may be required. You can find out more about these permits here - https://www.gov.uk/foreign-travel-advice

 

Employing EU Nationals

 

Under the terms of the new agreement, it may be more costly to employ EU Nationals and businesses are recommended to apply for ‘sponsorship licenses’ to legally hire people from outside the UK.

 

VAT

 

It is essential to understand that imported goods now incur both import VAT and duty. These will need to be paid or goods will remain uncleared at the border. Please note that there are no longer any differences regarding the VAT treatment of goods being imported from the EU and the rest of the world.

 

Previous VAT schemes including Triangulation and MOSS (Mini One Stop Shop) are no longer applicable. Instead, a new scheme called PVA (Postponed VAT Accounting) has been introduced by HMRC. This scheme enables registered businesses to account and recover VAT on imported goods in their VAT returns. The scheme can be applied to both imports from the EU and non-EU countries. This new system is good news when it comes to managing your cash flow!

 

Even more good news for Ellacott Morris clients is that Xero already supports the new PVA scheme and they have published some handy information on their blog at - A faster way to recover VAT on goods imported to the UK | Xero Blog

Please also be aware that up until 31St March 2021, UK businesses that have incurred VAT in EU countries can claim early VAT amounts back through the HMRC portal. If this applies to your business, we recommend you act on this asap.

It is important to research the specific VAT rules in the countries that you trade with as individual rules, rates and thresholds can vary. If you plan to import goods to a particular country, you will need to register and pay VAT in that specific country.

 

As with all things accountancy and VAT related, we’re here to help guide you through any changes and ensure pitfalls are avoided. If you require any additional clarification regarding how Brexit will impact your accounts, don’t hesitate to contact a member of our team.

www.ellacottmorris.co.uk

Image credit to Rocco Dipoppa on Unsplash!

By Michelle Accounticorn Morris on 10/02/2021 12:00:00