Brexit and your Business
The Trade & Cooperation Agreement (TCA) came into provisional effect at 11 pm GMT on 31 December 2020. It’s changing the commercial and regulatory agreements between the EU and the UK. The provisional agreement is expected to be ratified by the end of February / beginning of March.
The below rules refer to Great Britain (England, Scotland, Wales) but exclude Northern Ireland.
To support our partners, we’ll be constantly updating this page in light of new trade deals & regulations agreed.
After Brexit, the UK is treated as a third country for goods and services by the EU for VAT purposes (and vice versa). All simplifications (Call off Stock or Triangulation) are no longer available. Additional VAT registration is required to trade goods on EU and UK soil.
Custom duties apply to all goods sent to the UK from the EU and vice versa.
The goods that follow the rules of origin are applicable for a 0% tariff and are not restricted by quotas.
Meeting the rules of origin when moving the goods between the UK and EU means you are eligible for the preferential rate duty = imports are free of customs duty and quotas in this case.
To be eligible, the goods (or materials used to make them) must originate in either the UK or the EU. This should be approved by obtaining a supplier’s declaration or any equivalent documentation – the stated ‘importers knowledge’.
For exports above €6,000 (or £5,700), the EU exporter must obtain a Registered Export Number and include it in the statement of origin.
For many goods that follow the rule of origin, the rate of duty is very low or even zero.
1. Make your customer the importer of the record
In this case, your customer needs to pay the import VAT to the delivery company.
This is the most convenient option for a seller but an awful experience for the customer as it involves unexpected extra costs.
2. Clear the goods into the sale
The seller needs to register in the country where the customer is based. Then the import VAT is paid by a seller to clear the goods into the country. The goods are sold to the customer at a local VAT rate. The import VAT and sales VAT are offset in the foreign VAT return.
This option is more difficult for a seller as it requires dealing with customs, VAT compliance costs, and payment of all the tariffs but creates a seamless shopping experience for the customer.
3. The customer clears the goods, but the seller pays import VAT and all the tariffs
The customer is made the importer of records. In this case, there is a need to obtain a Power of Attorney from the seller that could lengthen the checkout process time.
The customer needs to be charged VAT during the checkout.
4. Hold cleared goods in the country of the customer
The goods are shipped and cleared into the country of a customer and held in rented warehouse space.
This involves high costs that need to be paid immediately for clearance and holding them in the warehouse. In this case, there is no need to complete a customs declaration each time the sale is made.
VAT registration is essential in the country where the goods are in storage.
- You need to apply and have an EORI number that starts with GB. If you need to make customs declarations or receive customs decisions in the EU, the seller needs to apply for EORI as well.
- There is a need to know the origin, classification, and customs value of the goods. To do this, you must receive an accurate statement of origin.
- Some of the goods are controlled, and there is no possibility of applying for delayed declarations for them. Here you can find the goods that are controlled when imported into Great Britain.
- The goods must be declared by the seller or by an agent working on their behalf when entering Great Britain. Here you can find how to hire someone who can declare the goods on your behalf.
- Apply and receive EORI number that starts with GB.
- Make custom declarations. The seller could select to use a UK-based freight forwarder, customs agency, or fast parcel according to the administrative requirement.
- Some goods may need licenses or certificates
Sellers can apply for simplified declarations by being authorised by HMRC and registered to use the National Export System. Check Simplified declaration procedure and Entry in the declarant’s records (the last is limited to goods that don’t need a pre-departure declaration).
The UK government incorporated GDPR into the Data Protection Act 2018 – so the same protections and requirements apply for the UK business as before.
Right now, UK based businesses operating in the EU don’t need to make changes. The personal data continues to flow from the EU & EEA to the UK for the initial period of 4-6 months as the UK’s data protection regime (the adequacy assessment) is still in discussion.
There is a chance that adequacy status won’t be granted; therefore, companies should ensure data flow into and out of their organisation.
For the UK's flow of data to the EU, the UK treats all EEA jurisdiction as adequate, and no changes are needed.
Guidance from the Information Commissioner’s Office (ICO) starts investigating the Standard Contractual Clause (SCC). The adequacy decision will not be reached for the data flow from the EU to the UK. ICO provides a tool that helps businesses understand the type of SSC needed and create one. SCC is relevant only for UK businesses that have customers in the EU / EEA zone.
Northern Ireland remains within the EU Single Market, providing that Northern Ireland's border with Ireland is open. The provisions of the TCA do not impact the trade of goods between Northern Ireland and the EU.
However, there are some changes in moving goods from GB to Northern Ireland.
- Businesses established in the UK need an additional EORI number that starts with XI. This number is used in customs and VAT documentation. Here you could find guidance on how to apply for an EORI number.
- If the goods are processed in Northern Ireland, they need to follow additional criteria under the UK Trusted Trader scheme.
Ensure the goods are not "at risk" of moving from Northern Ireland to the EU:
The goods need to be authorised under the UK Trusted Trader scheme. The seller needs to ensure that the goods are for the end consumer's sole use in Northern Ireland. To ensure this, a seller needs to make a declaration for each export and must be able to provide evidence.
The EU tariff is zero, or the goods are eligible to claim the zero-rate. This route will also require additional paperwork.
From a VAT perspective, the movement of goods between Northern Ireland and Great Britain continue to be treated as domestic sales and purchases.
Products that require a CE mark need to be replaced with the UKCA mark to be sold in Great Britain. Until 1st of January 2022, goods can still be certified with a CE Mark if they meet EU requirements.
Following Brexit, the UK does not receive the benefit of reduced and negated customs duties and quotas as a part of trade agreements between the EU and certain non-EU countries.
The UK government is working to place their own trade agreements with other countries. As agreements with major trading partners including the UK haven’t yet occurred, the UK is using the World Trade Organisation (WTO) Most Favoured Nation (MFN) rules.
For product testing, certification and conformity, the agreements are already in place.
Here you can find UK trade agreements with different countries.
- 28 February 2021 – Initial date by which the EU Parliament have to consent TO the UK-EU TCA. This date can be extended by the EU-UK Partnership Council.
- 31 March 2021 – UK & EU aim to agree on a Memorandum of Understanding establishing a framework for regulatory cooperation on financial services.
- 1 April 2021 – End of grace period for UK supermarkets and trusted suppliers in relation to food safety paperwork when moving agri-food goods between Great Britain and Northern Ireland.
- 30 June 2021 – End of temporary bridging period for the free flow of data from the UK to the EU.
- 1 July 2021 – End of six-month grace period for Great Britain-Northern Ireland trade on chilled meat products.
- 31 December 2021 – End of 12-month adaptation period for businesses in Great Britain to implement new EU regulation in relation to the flow of medicines to Northern Ireland.