For many organisations trading in goods, the run-up to 31 December 2020 involved hasty preparations for the end of the Brexit transitional period and the start, from 1 January 2021, of the UK's new international trading relationships. This article highlights some areas that can be focused on in 2021 to improve import taxes positions.
Given the uncertainty caused by the protracted UK/EU trade negotiations, it was no surprise that many organisations only focused on the 'must-do' actions to give the best chances of minimising any disruptions to their operations.
Organisations trading in goods felt this most acutely. It's worth remembering that as a member of the EU Customs Union, organisations could move goods between the UK and the other EU Member States, and vice versa, without worrying about import formalities. From 1 January 2021, the UK is outside of the EU Customs Union. Goods leaving the UK destined for the EU become exports from the UK and imports into the EU.
The same will apply to goods moving from the EU to the UK; they will be imported into the UK. Every time goods cross the Customs border, import formalities need to be completed as part of the process of bringing the goods into the destination country. A piece of positive news for businesses is that the UK/EU trade deal means that there are no tariffs on the importation of goods that originate in those locations. The requirement to complete import formalities, even if there are no tariffs, is a significant change and creates risks for organisations to deal with in ensuring their ability to continue to trade with their customers and suppliers.
The amount of change arising from the UK's exit from the EU differs from business to business. Generally, organisations believed they would do no more than take the minimum necessary steps to ensure their products could reach their customers come 1 January 2021.
Now that organisations have more time, they may wish to start reviewing whether they can structure their arrangements more efficiently. This could include:
From 1 January 2021, the UK has a new international trading relationship. For many organisations, the lack of certainty caused by the protracted UK/EU trade negotiations meant that their preparations only focused on ensuring their products could move come January. In the new year, organisations are encouraged to consider whether their arrangements can be made more efficient from a VAT or Customs Duty position. While Brexit is nearing completion, its effect will continue for some time still.
This article was first published on Forbes’ in January 2021.