We asked accountants to tell us what FAQs they were getting from clients around the Brexit deal.
Two weeks into Brexit and businesses are voicing concerns around how their business model and workforce are likely to be affected by the new rules and tariffs. Accountants are hearing a lot of questions from clients around VAT, the movements of goods, taxation treaties and working with EU countries.
Frequently asked questions have included:
VAT, Brexit and the Northern Ireland Protocol
AAT’s technical guide will walk you through the hybrid arrangements operating in Northern Ireland and explain the special position that Northern Irish VAT registered businesses now find themselves in.
- Can I still travel to EU countries for work purposes?
- Can I still accept work from EU countries as a PSC?
- Do I need to make the import and export declaration?
- What is postponed VAT accounting?
- Do we need a deferment account?
- Can I still accept work from EU countries as a PSC?
- What are incoterms?
“Uncertainty is still rife and collectively, we’re hearing a lot of ‘do I need to do anything differently now we have a deal?” says Sarah Hughes, head of VAT at Haines Watts, West Midlands. “For businesses that have only had experience trading with the EU, this is completely new territory and to this extent, areas such as declarations, export evidence and incoterms are completely new concepts.”
Movement of goods
Fresh product exporters in particular, are struggling with additional paperwork and certification papers required to accompany products. Alistair Main, director and head of assurance at Duuncan & Toplis says clients are telling him these are taking hours to prepare and any goods reaching the border are then delayed further when checks are carried out as officers are unsure what to look for. “As a result, delays are being caused which is bad news for fresh produce exports,” he says. “Haulage and transport costs for exports are also being driven up, which could make UK produce more expensive in the EU.”
Nick Paterno, managing director at McBrides Chartered Accountants who have received a lot of queries around tariffs and VAT, says they’ve heard stories from clients who have also experienced delays and paperwork issues around the movement of goods. One client even had goods stuck in Germany which they couldn’t release, even though they had followed the right protocols.
Northern Ireland specific rules
Joanne Harris, technical commercial manager at SJD Accountancy told AAT that some of their Northern Ireland-based clients are unclear about the specific VAT rules for their region. These clients, she says, have been particularly concerned about changes to double taxation treaties and whether they can still continue relationships with EU clients and travel to their offices under the terms of the Brexit deal.
There have been questions raised about access to funding, too. As Eunice Onyema, founder at ENO Accountants points out, the pandemic has led to large numbers of businesses needing access to funding as a reserve but there have been fears that Brexit will reduce these opportunities. “A lot of business owners are still jittery about the financial crisis in 2007 and change plays heavily on their mind,” she explains. “But the timing of the pandemic has meant there is a lot of government support available, so this has helped soothe fears somewhat.”
What are accountants advising clients?
“Companies should look at their supply chain for both purchases and sales and see who their importers and exporters are,” says Hughes. “Once they’ve mapped out the current position, see if it could be structured differently to make things simpler.”
Harris, meanwhile, advises companies to take visas and social security into consideration, as well as any tax implications which might arise. ”With VAT, the usual supply rules will apply,” she explains. “If supplying services to the EU, then generally this will fall outside of the scope of UK VAT. However, sales of digital services to non-business customers such as UK businesses supplying insurance and financial services and movement of goods will have different rules.”
Frequently asked questions from clients – what accountants should know
Can I still travel to EU countries for work purposes?
In the main, those travelling regularly to the EU for work will need to get a visa, especially if work-related travel involves selling goods or services. Short-term visitors however, can work in the EU for up to 90 days in any six-month period, provided work activities are restricted to meetings, conferences and consultations rather than selling.
Can I still accept work from EU countries as a PSC?
SJD’s Harris says: “In most cases it is possible to continue providing your services to clients based in the EU. However, you need to be mindful of legislation in the country you are supplying to, particularly if you will be physically located in this country for any length of time.”
What are incoterms?
Incoterms, or International Commercial Terms, are a series of pre-defined global standards which help facilitate trade between the seller and the buyer. Although there is no legal obligation to use incoterms, their use ensures both parties fully understand their own requirements and responsibilities towards successful trade outcomes.
Do I need to make import and export declarations?
Yes. For UK businesses who export goods to the EU, it will be their responsibility to ensure they make export declarations with customs and obtain any necessary export licenses for controlled goods such as alcohol or tobacco. In addition, the exporter may have additional responsibilities and requirements depending on specific Incoterms in place.
UK-based importers too, will need to make import declarations on goods they are importing to the EU. An Economic Operator Registration and Identification Number (EORI) is required for all businesses responsible for the movement of goods in or out of the UK.
Do we need a deferment account?
UK importers can choose to delay customs or tax charges on imports by setting up a deferment account where monthly direct payments are made in place of customs and tax charges in individual items.
What is postponed VAT accounting?
Postponed VAT accounting was introduced this year to help businesses avoid negative cash flow issues from having to pay VAT on imports worth over £135. Under the system, a business can now account for import VAT and claim it back on the same form, rather than having to physically pay VAT on imports and then reclaiming it back at a later date.
Brexit – webinar resources
HMRC customs and borders help webinars
Annie Makoff is AAT Comment’s news writer.