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Brexit Update

7 December 2020
Mark Friend
Brexit, Accounting & Compliance

The deadline is fast approaching and the big question remains – will there be a free trade deal or not?

The simple answer is that there is so much to lose on both sides that it seems inconceivable that some kind of deal or an arrangement will not be reached. Unfortunately with only a few days to go until the 31st December deadline there remains great uncertainty.

Brexit puzzle missing one piece

Travel

If you are travelling to the EU from the UK after the 1 January 2021 then check out the Government website “Visit Europe from 1 January 2021”. This page tells you how to prepare if you’re planning on travelling to Europe from 1 January 2021. It will be updated if anything changes.

See: https://www.gov.uk/visit-europe-1-january-2021

Trading

Last month we prepared a blog about how to prepare for Brexit where we enclosed a 20 point plan.

If you haven’t made your business preparations you can also check out the Brexit transition website:

Brexit transition

 

See: https://www.gov.uk/transition

If you trade with the EU and have not yet made preparations then here is a summary of actions to take:

  • If you move goods to or from the EU you need to register for an Economic Operator Registration and Identification (EORI) number – https://www.gov.uk/eori
  • Consider an agent to help with completing import/export forms – export.org.uk
  • If you export goods see the step by step guide here
  • Export rules are specific per sector so review “The transition period ends in December” Government website. There you can get a personalised list of actions and can subscribe for email updates: https://www.gov.uk/transition
  • The VAT reporting rules for EU sales can be found here
  • If you import goods then see the guidance “Starting to import” here
  • There is a step by step guide on importing here
  • Guidance on paying VAT on imports can be found here
  • Review HMRC YouTube videos on international trade here

WHAT ACTIONS HAS THE GOVERNMENT TAKEN TO DATE?

New Legislation

Post-Brexit legislation preparing the UK for life outside EU institutions next year has been drafted or is being reviewed by Parliament. The Immigration Bill received Royal Assent in November. This ends freedom of movement on 31 December and replaces it with a new points-based system.

If your business relies on EU or other non-UK workers then check out the transitional arrangements to 30 June 2021 and the new rules here.

In November the Agricultural Bill was debated and eventually passed through Parliament. This removes the Common Agricultural Policy and replaces it with new UK supports for farmers. The Government agreed that farmers will receive the same level of support as they currently do through the Common Agricultural Policy until 2024, while the current system of subsidies is gradually phased out.

See: https://services.parliament.uk/Bills/2019-21/agriculture.html

We can expect to see further progress to bring existing EU laws and rules into UK legislation before the end of the transition period. For example, the Financial Services Bill was introduced on 21 October to maintain the UK’s regulatory standards and openness to international markets.

This Bill is the first step in shaping a regulatory framework for the UK’s financial services sector outside of the EU.

See: https://www.gov.uk/government/news/financial-services-bill-introduced-today

New Trade deals

New trade deals are being agreed all the time.

As an EU member state the UK was part of 40 trade deals which the EU had agreed with more than 70 countries.  More than 20 of these existing deals, covering 50 countries or territories, have been rolled over and will start on 1 January 2021.

Currently fifty-two countries have free trade deals in place with the UK for the end of the Brexit transition period. This includes an important new trade agreement with Japan, which means that 99% of UK exports there will be free of tariffs.

There are further trade talks with Australia, the US and New Zealand. Whether these talks come to a trade deal only time will tell.

EU-UK trade accounts for half of overall UK trade and seven of the UK’s top ten trading partners are EU members. That is the main reason why a trade deal with the EU is so important.

In Summary

We must all be prepared for changes in the way we travel and trade with Europe. Even if there is a free trade deal the key thing to remember is that there will be a UK border which will mean paperwork and border checks.

Businesses that trade with the EU must get familiar with customs declarations as these will be essential for accounting for VAT.

Depending on what contracts a business has with its customers in Europe, it may have to factor in that goods could take longer to get there, meaning extra costs and administration.

In the short term there will probably be delays at the border, so it is important businesses map out supply chains and think about how to do things as efficiently as practicable post transition.

Please talk to us about your plans post transition, we can assist in a number of ways including helping you account for VAT, looking at your accounting systems and pointing you in the direction of specialists to assist with the Trading administration.

The content in this blog is correct as at 07/12/2020. See terms and conditions.

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