HMRC has begun writing to all VAT registered businesses currently trading with the EU, to explain the steps they need to take to prepare for the new trade arrangements from 1 January 2021.

The changes are complex and detailed. We urge all affected businesses to read the government guidance and to get in touch with us, if they need help to clarify their position. We have VAT experts on hand who will be able to help you.

Below is a summary of the content of the letter.

From 1 January 2021 the UK will operate a full, external border with the EU, there will be controls placed on the movement of goods between Great Britain and the EU and declarations will need to be submitted when importing and exporting “controlled” goods.

For non-controlled goods, import processes will be introduced in three stages; January, April and July.

Action required if you are a VAT registered business trading with the EU:

  • Make sure you have a GB EORI (Economic Operator Registration and Identification) number so that you can complete customs declarations
  • Decide how you are going to make customs declarations – will you do it yourself, or hire a person or business to deal with customs for you?
  • Check whether your imported goods are eligible for staged controls. HMRC advises that most traders will be able to defer import declarations on most goods for up to 6 months after 1 January 2020. More information here.
  • Decide how you will account for import VAT when you make a customs declaration
  • Check if Import VAT is due at the border – it usually is due unless the consignment value is less than £135
  • Check the controlled goods list to see if you need to complete declarations from January
  • Check the government’s tariff tables and consider how your trade will be affected. The UK Global Tariff will apply to imported goods form 1 January 2021
  • Sign up for Trader Support Service, if you move goods between Great Britain and Northern Ireland or bring goods into Northern Ireland from outside the UK. The Trader Support Service will administer the processes arising under the Northern Ireland Protocol from 1 January 2021

Read the letter in full here.

Wayne Thomas, Partner at Bates Weston comments:

“VAT can be a highly complex area. It is vital that businesses are fully informed of the changes coming into effect from 1 January and make the necessary preparations. If you need our help in clarifying your own position, please do get in touch.”