VAT-registered businesses - prepare for trading changes

HMRC has written to all VAT-registered businesses in Great Britain trading with the EU and/or the rest of the world, highlighting what they need to do to prepare for the UK’s exit from the EU at the end of this year.

The letters point out that the actions required to ensure they can continue trading from 1 January 2021 will not change regardless of the outcome of the government’s current negotiations with the EU.

From 1 January 2021, the UK will operate a full, external border with the EU. This means that there will be controls placed on the movement of goods between Great Britain and the EU.

This means that from that date, businesses need to submit declarations when importing and exporting goods that are categorised as ‘controlled’.

Import processes for non-controlled goods will be introduced in 3 stages: January, April and July.

The letters explain what businesses need to do to prepare for the new processes for moving goods between Great Britain and the EU. This includes making sure they have a UK economic operator registration and identification (EORI) number, deciding how they will make customs declarations, and checking if their imported goods are eligible for staged import controls.

Most traders with a good compliance record will be able to defer import declarations on most goods for up to six months after 1 January 2021.

From 1 January 2021, businesses will be able to use postponed VAT accounting to account for import VAT on their VAT return for goods imported from anywhere in the world. Import VAT will not be due at the border if goods in a consignment do not exceed £135 in value. The only exceptions will be excise goods and gifts.

There will be new rates of customs duty for imports - called the UK global tariff. The free Trader Support Service (TSS) will handle the new processes arising under the Northern Ireland Protocol for from 1 January 2021.

The letter states HMRC will provide more guidance on changes to trade with the EU over the coming months, as the negotiations progress.

If any of these changes will impact your business, please do get in touch to discuss how to plan for January 1st 2021.