With the end of the transition period in sight, retailers need to prepare for Brexit now. Here’s how to get started…
If you’re feeling baffled by Brexit you certainly aren’t alone. Currently, negotiations are still underway about the finer details of what happens after the transition period ends on 1 January. But whatever is agreed, one thing is certain: retailers importing goods directly from the EU or sending out e-commerce orders to shoppers overseas will face crucial changes to the way they run their business.
So, what can retailers do to prepare now (if you haven’t started the process already)? Of course, all boutique set-ups are different and the effects Brexit will have on your individual business will largely depend on how you operate. As a first port of call, retailers can visit Gov.uk/transition and use the online checker tool to find out what you need to do to prepare. After answering a series of questions you will be given a personalised list of actions for your business, which will provide clearer guidance on what you need to do to prepare for the new year.
Ringing in the changes
The end of the transition period will result in changes to the way retailers operate in five key areas. These include trade, importing and exporting; placing goods on the Great Britain and EU market; e-commerce regulations; transferring personal data between the UK and other countries; and hiring staff outside and inside the UK.
Retailers will need to check changes in import and export declarations, customs taxes, global tariffs and the classification of goods. Retailers selling to customers in the EU online should also carry out a review of their e-commerce activity, check all regulations relating to online shopping, advertising and contractive. You should review any regulations around the use of personal data between the UK and other countries. For hiring staff outside and inside the UK, you will need to consider immigration and employment regulations.
According to government guidance, retailers will need to understand how these changes will affect their business and prepare accordingly to ensure they can continue trading from 1 January 2021.
Imports and exports
Importing and exporting goods is changing from the start of 2021. These changes will be rolled out in three stages. From 1 January, there will be full controls in place for exports within the EU, export declarations and UK exit, safety and security declarations will be required for all goods. Retailers importing goods will need to prepare for customs requirements such as customs declarations. Previously UK retailers didn’t have to declare goods arriving from suppliers also within the EU. However, they will now be required to declare goods arriving (like retailers would for importing from non-EU countries such as the USA, Switzerland, Norway and Iceland). You can make the declarations yourself but some businesses prefer to use a courier or customs agent. Retailers can find more advice on this by visiting, Gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf
Businesses will also need to consider how they account for and pay VAT on imported goods. Unless you are importing goods that are controlled (such as alcohol and tobacco), you can opt to delay customs declarations for up to six months. You must ensure that you keep sufficient records of imported goods. While tariffs may be payable on relevant goods, duty payments can be deferred until the customs declaration has been made.
The second stage of the process will take place from 1 April, when all products of animal origin such as meat and honey will also require pre-notification and the relevant health documentation. Physical checks will continue to be conducted at the point of destination.
The third stage takes place on the 1 July 2021 when there will be full controls in place for all goods. For any goods you are moving, you will have to make full customs declarations at the point of importation and pay relevant tariffs. Full safety and security declarations will be required and will have to be presented to border control and there will be an increase in physical checks and sample taking.
Before you can start taking any of the above actions, you should make sure you have an Economic Operations Registration and Identification (EORI) number starting with GB. This is required for all businesses moving goods into or out of Great Britain and many brands and agents will need it to transport your goods. If you don’t already have one, it takes five minutes to apply and you should receive your EORI number in one week (see our checklist below to find out what you need to get started). For more information, visit Gov.uk/EORI
You should consider using a customs intermediary to make declarations for you. They can help you find the information needed to complete formalities and submit the required declarations. You should make sure that you understand your VAT responsibilities and what you might have to pay. Check with your accountant to see if it’s a good idea to make VAT returns monthly to try and avoid any issues that can occur with a three month build up. Finally, you should consider if you want to make use of deferred declarations if you import goods. If you import goods regularly, you might benefit from an account that enables custom charges, including customs duty and import VAT, to be paid once a month by direct debit. Retailers can ask their accountant about postponing VAT accounting to account for import VAT on VAT returns.
For more information, visit Gov.uk and search for ‘how to import and export goods.’
UK global tariff
From 1 January 2021, the UK will apply a UK-specific tariff to imported goods, the UK Global Tariff. This means that the amount businesses pay on imports may change. Almost 50 per cent of products are now rated zero compared with 27 per cent in the EU’s Common External Tariff, otherwise known as CET. The government says the new regime “has been designed to meet the needs of the UK economy, making it easier and cheaper for UK companies to import goods from overseas with less administrative burden for businesses.”
From 1 January, the UK Global Tariff will apply to goods entering the UK from countries which the UK doesn’t have a free trade agreement in place and are not covered by any specific extensions.
The introduction of the UK Global Tariff will: drop tariffs to zero across a wide range of products used in UK production; be in pounds and not euros; cut administrative costs for businesses by streamlining measures.
Use the new UK Global Tariff tool to check tariffs that will apply to goods that you import via: Gov.uk/guidance/uk-tariffs-from-1-january-2021. You can also check the difference between what you pay now and what you will pay from January.
This is by no means an exhaustive list of what retailers need to do to prepare for the end of the transition period, but we hope you find it useful. For more detailed information, the government has recorded a series of sector-specific webinars that can be watched on demand by visiting bit.ly/UKTwebinar.