Brexit VAT & Customs checklist
- Feb 17, 2021 | Richard Asquith
The UK is out of the EU’s Customs Union and VAT regime. For any business selling or moving goods between the EU and UK, this creates new customs issues and import VAT and registration obligations. Below is a list of basic actions to tick off to ensure your shipments are not stopped at customs, taxes are kept to a minimum and you stay off the tax authorities' radar.
A Brexit Trade and Cooperation Agreement with no goods customs tariffs or quotas was announced 24 December 2020. Contact Avalara if you want to discuss your business issues, and our Brexit Team will be happy to give free guidance. Check Northern Ireland VAT rules separately.
Brexit Customs & VAT checklist
Customs Issue | Action |
Who will be the Importer of Record? | Who will be responsible for import declarations and taxes? You can leave it to your customer, but they are unlikely to buy or re-buy since it is a bad experience (customs; import VAT). Check the process for exporting goods from UK to EU; or importing goods from the EU into the UK |
Got a UK and an EU EORI number? | You will need a GB and EU EORI number for:
UK importers and exporters into the EU will need a customs representative and use their EORI number. This is because they are now non-resident within the EU Customs Union. The UK is also restricting the Customs activities of non-resident importers (e.g. on simplified declarations), so again, may require a local representative for customs.
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How will you do Customs declarations? | Needed for freight forwarder and customs clearance. Your freight forwarder/customs agent can complete. UK Customs declarations delayed until Jan 2022 |
Which commodity code? | Standard product code (8-digits for EU; 6-digits for UK). Needed for customs declaration and any tariff calculation. |
Tariffs - know your rules of origin | The EU-UK Trade and Cooperation Agreement secured preferential tariff and quota-free trade. However, traders must follow the 'rules of origin', this prevent tariff evasion by redirecting delivery through non-tariff countries. |
Get a Duty Deferment Account | UK’s HMRC will allow up to 1 month duty and import VAT deferment account. Traders will not need a guarantee anymore. Only UK resident businesses |
VAT issue | Action |
How are you going to pay import VAT - Postponed Accounting? | Deferred import VAT payments via your next return. UK has introduced this from 1 January for UK and foreign businesses. Many EU countries have same for imports from UK. Beware, countries like Germany don’t! |
Need a Fiscal Representative? | UK businesses with an EU VAT registration will need a Fiscal Rep in up to 19 of the EU 27 countries. |
B2C goods = extra VAT registrations | If you are selling from UK stocks to EU consumers, or vice versa, you may need extra VAT registrations if you are using the distance selling thresholds. |
B2C digital services extra VAT registrations? | If you are using the single Mini One-Stop-Shop EU VAT return, you will need a new MOSS registrations in the EU. If you are using it from the EU for UK sales, you will need a new UK registration. |
B2C selling on marketplaces customs clearance and extra VAT registrations | Most major marketplaces will block sellers to the UK or EU if their goods aren’t first cleared through customs and VAT checks. |
| Manage VAT and duties on returns | E-commerce sellers face potential double charges on goods returned by EU or UK customers. You can avoid this with Returned Goods Relief. |
| Don't forget UK ecommerce VAT reforms | In addition to Brexit VAT changes, HMRC VAT rules on ecommerce imports and marketplace liabilities changed on 1 Jan 2021. You must charge UK VAT on imports ≤£135. Marketplaces also become 'deemed supplier' for their sellers. |
| B2B: Triangulation VAT rules end! | You will no longer be able to use the UK in a supply chain VAT triangulation simplification. This could mean rethinking your supply chain. As a UK business, you can still use an EU VAT number in a triangulation that does not involve the UK. |
B2B: UK Consignment Stock VAT rules end! | If you are holding stocks in the UK at a customer’s warehouse and are not UK VAT registered under the Consignment Stock rules, this will change. Goods arriving into the UK will have to be treated as an import. |
Northern Ireland VAT issues | The VAT rules for Northern Ireland are complex. Check our NI-GB-EU VAT table. |
VAT on services | There will be no immediate change to Brexit VAT on services. The UK will initially follow its existing ‘use and enjoyment’ rules. But there are modifications on certain UK B2C services to EU consumers and vice-a-versa. |
Need help with your UK VAT compliance?
Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.
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