How Brexit will have an effect on your organization – Import No. 1
Originally written by Timothy Adler about small business
You have to declare all imports after Brexit
As an EU company, British retailers have not yet had to declare goods that arrive from suppliers within the EU. After Brexit, all companies have to declare all imports from the EU. This already applies to imports from non-EU countries such as the USA, China and other non-EU countries such as Switzerland, Liechtenstein, Norway and Iceland.
You can make the declarations yourself, but most companies use a courier, freight forwarder, or customs broker.
If you'd like to declare customs yourself, find out what to do here.
If, on the other hand, you would like to use a customs broker or freight forwarder, here is a list.
New rules for certain types of goods
There will be different rules for importing goods in categories such as food, seeds, alcohol and tobacco. You may need to update the licenses and certifications for any products that you import that fall under these categories.
- More information on licenses and certifications can be found here
- Learn more about rules for food, seeds and industrial goods here
- More information on rules for alcohol, tobacco, and certain oils can be found here
You need an EORI number
If you are already importing from non-EU countries, you already have an EORI number. EORI stands for Economic Operators Registration and Identification and is a registration and identification number of the European Union for companies that import or export goods to or from the EU. If you don't have an EORI, costs and delays can increase.
> See also: EORI number: what it is and how to get or check one
You have to pay VAT for goods imported from the EU
At present (before Brexit), when purchasing goods as a company from the EU, purchasing from the supplier is rated “zero”. Tax is handled by applying UK domestic VAT to your UK VAT return at the same rate as if you bought from a UK supplier and then reclaiming it on the same VAT return. There are no additional duties or import taxes for purchases within the EU.
This will no longer be the case after Brexit on January 1st
For goods over £ 135, you will likely have to pay 20 percent import sales tax when the goods arrive in the UK. Import sales tax is usually levied on the import value of the goods, including any shipping costs and duties, so the total amount of sales tax may be slightly higher than the corresponding domestic sales tax.
The HMRC sends a certificate (C79) for the reported import sales tax to the person registered with EORI, whose sales tax identification number is specified in field 8 of the import declaration. Without the C79 it is not possible to reclaim the import sales tax via your sales tax return.
For shipments under £ 135, the EU seller must register UK VAT and charge you UK VAT.
Since sales tax is reclaimed, these new rules will have a bigger impact on your cash flow as you will have to pay import sales tax up front and reclaim it later.
Regardless of whether the UK government and the EU reach a free trade agreement, the above VAT changes are likely to remain in place.
You may also have to pay customs duties on EU goods
Additionally, and depending on whether a Brexit trade deal is reached, you may face additional tariffs if the value of imports is over £ 135. The amount depends on the type of product and is typically in the range of 0 to 10 percent. No trade agreement has currently been negotiated, which means that standard tariffs for third countries have to be paid. You can find it here. When a trade deal is concluded, these tariffs can be lowered or eliminated.
Many shipping services charge an additional fee for handling additional taxes and tariffs.
5 questions to ask yourself before importing
The first thing you need to understand is how these changes will affect the total cost of the goods you are importing.
To do this, you need to be able to answer these six questions – and if you are not sure, this should be discussed with your suppliers.
- If I buy these goods, will I buy them in the UK, EU or outside of the EU?
- If I am going to shop in the EU, is there a UK retailer I could buy from instead? Does your EU plan to use a UK dealer and will the prices I am currently paying change?
- If there is no UK distributor, check that your supplier is using your EORI number and adding it to their declarations so you can get import sales tax back
- What does the price i pay include? Does it include import sales tax and customs duties or am I responsible for the payment myself?
- Do I have to pay additional fees?
If you are liable for the duties and import sales tax and want to know what they will be, you need to ask your supplier for the HS6 code for each product. That way you can see what the tariffs will be. You can find HS codes here.
That way, you can understand the "landed cost". The total price you have to pay is so you can make sure your prices and margins keep working.
You can postpone customs declarations for up to 6 months
To reduce the administrative burden after Brexit, you may be able to postpone customs declarations for imports for up to six months. You can find more information on delaying customs declarations here.
Preparing for Brexit – 6 steps you need to take to prepare
How Brexit will affect your company – Import No. 1