Looking at the ways accountants can help their clients to respond to customs changes

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With a month to go until the Brexit transition period ends, accountants are looking to use every option to ease the burden on businesses.

With new customs duty rules coming into force on 1 January 2021, there are a series of temporary measures brought in by the government to help reduce disruption at borders, including implementing ‘Operation Brock’ in Kent, the planned traffic management system to help reduce disruption for hauliers, and encouraging hauliers to apply for a European Conference of Ministers of Transport (ECMT) permit. Time-sensitive exports such as fresh or live seafood will also be prioritised for a small number of HGVs.

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Customs duty changes include:

  • A UK-specific tariff (UKGT) will replace the EU’s Common External Tariff on all imported goods (with exceptions)
  • Customs declarations on all EU imports and exports, with additional checks on high-risk live animals and plants
  • High-risk goods will require pre-notification
  • Customs duties and VAT payable on EU imports, putting the onus on the importer to ascertain origin, classification and customs value of goods
  • Safety and security declarations required on all EU exports from 1 January 2021 and for EU imports from 1 July 2021.

Builders are sourcing materials from the UK

Ben Harwood, chartered accountant and director of the construction consultancy Naismiths.

We work with a lot of construction companies who import a lot of materials and there’s a lot of wariness around how things will work after the transition period. We’re advising clients that for jobs which are already in progress, they need to accept there will be additional charges and just pay what’s required to reduce delays.

For jobs which are just beginning, companies need to look at their supply chain and considering alternative ways of accessing these materials. Often, they might be able to source from a UK supplier instead. We’re seeing a lot of construction companies starting to do this now anyway in preparation for the end of the transition period.

Other companies are thinking ahead and importing materials long in advance, so they have them ready before the changes come in. However, this poses an extra security risk for additional materials left on site as well as the risk of ‘wear and tear’ which may mean they’d have to purchase the materials again anyway if they have become damaged in the interim.

Next steps: Construction companies need to think ahead and ensure they can access materials from the UK or pay additional charges for EU imports.

Verdict: Commit to sourcing UK-based materials to avoid EU import charges.

Brexit – webinar resources

Brexit Webinar: VAT for imports and exports The EU VAT e-commerce package (Sponsored by SAGE 11/12)

Brexit Webinar: VAT for imports and exports

HMRC customs and borders help webinars

An Exporters Guide to Brexit

Customs and VAT post the transitional period

Businesses should defer payment via Duty Deferment Scheme if possible

Dan Stopp, UK Accounting Manager, Bokio

When businesses import goods from the EU after the transition periods ends, they will be treated as imports from the rest of the world, meaning import VAT and customs duty will need to be applied. The majority of accountants will be well aware that these imported goods will need to be accounted for on their client’s VAT returns.

Import duty will now be applicable between the UK and EU, cutting into profit margins for those who are importing goods. Consequently, those who are exporting goods may find that their customers start to look towards suppliers based in the EU rather than the UK.

On a positive note, PVA (Postponed VAT Accounting) will be applied to both imports from the EU and rest of the world, resulting in a positive cash flow impact on those who already currently import from the rest of the world.

Next steps: Accountants need to ensure their clients are informed of and mindful of these changes to custom duties rules, especially those who aren’t using Duty Deferment Scheme.

Verdict: Clients need to be made aware of changes to customs duty and use Duty Deferment Scheme where possible.

Businesses need to conduct checks and balances

Mark Taylor, head of international at Duncan & Toplis

Sectors such as healthcare, haulage and logistics and construction have already faced enormous pressure over the past few months in the run-up to Brexit. New rules and regulations are likely to pose a number of challenges for them.

In the healthcare sector, health practices need to consider:

  • Requirements for new import and export licenses
  • Requirements for customs declarations
  • Which tariffs will need to be paid on imports
  • Commodity codes, VAT and duty rates
  • Which members of staff need a visa or work permit
  • Applying for an EORI number
  • Registration on the new UK REACH system for chemical regulations. 

Haulage companies need to assess whether their fleet can react effectively and make changes if not. Hauliers should contact clients to ensure they are aware of the import and export rules which might impact them, ensure drivers are aware of the new rules and are able to adapt to new working practices.

For the construction sector, plan ahead by sourcing materials now to ensure construction projects can continue without interruption.

Next steps: It’s important companies aren’t complacent. The landscape will change – and quickly.

Verdict: Awareness of new custom duty rules is key to ensure businesses are as prepared and ready as possible.

Annie Makoff is a freelance journalist and editor.

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