A opinion poll published by the UK Chamber of Commerce (BCC) in January, which surveyed SMEs, found that almost half (49 percent) of companies exporting to Europe reported difficulties adapting to the new rules after Brexit.
Eight months later, the feeling of insecurity is still widespread; a current survey in Great Britain showed that 65 percent of small business owners were discouraged from taking orders from EU customers due to changes in VAT in cross-border trade. 56 percent say this is because they don’t understand the rule changes.
In addition, the confusion was further exacerbated by Covid, which saw a pandemic spike in internet shopping and forcing companies to reassess their supply chain management.
So that companies have more time to adjust to the new regulations, according to current government guidelines Customs regulations for imports have been “simplified”. Dealers may a delayed supplementary import declaration, the submission of complete EU import declarations is mandatory from January 1, 2022. Since then, there have been further delays due to reports of changes to the law planned for October 1 Food shortages.
The delayed start of changes in October this year was both expected and welcome, allowing companies to focus on the recovery while ensuring that supply chains are in order. Until official start of full customs declarations from January 1, 2022SMEs can start improving themselves by keeping track of the administration to avoid a backlog or increase the risk of accidental non-compliance. To help you with this, customs brokers are available to guide you through these troubled waters.
Here’s what you need to know if you’re looking to import from the EU.
Don’t be afraid to seek help
After Brexit, the UK-EU trade and cooperation agreement noted that UK companies continue to have access to the EU market in a wide variety of service sectors, including cross-border service providers. Although the agreement contains clear expectations regarding treatment and access to each party’s home market, there will still be changes for businesses and service providers as the UK no longer operates in the European Economic Area (EEA).
Importing and exporting goods can be confusing at best. Therefore, it is important that SMBs develop an effective strategy that enables businesses to cut costs and avoid non-compliance while having a clear view of shipping activity.
How to import from the EU
The main options for importing goods include:
# 1 – About late declarations
Aside from controlled goods, for most imports, this allows companies to document the goods and defer filing a full declaration and paying customs duties for up to six months after the date of import. This option, commonly known as the Registrant’s Records Entry (EIDR), will no longer be available as of January 1, 2022.
# 2 – Through standard import procedures
This includes all goods.
# 3 – Use simplified registration procedures
Authorized companies can use this procedure for both uncontrolled and controlled goods (chemicals, foodstuffs, goods subject to excise duty and animals).
# 4 – through transit
This is a viable option for moving goods across multiple territories or completing customs formalities outside of the border. Please see for more details here.
Whichever route SMBs take, the good news is that companies don’t have to spend valuable time and resources doing an internal digital break to oversee these processes. Instead, SMBs can work with customs brokers who are already equipped with the software and tools to track the onslaught of customs papers, track shipments while adapting to evolving VAT requirements.
Check the supplier’s VAT regulations
To avoid surprising, cumulative fees when working with suppliers, it is important for SMEs to understand how VAT rules work in a non-EU Member State like the UK.
Before Brexit, a supplier selling goods in an EU country (e.g. France) could sell goods to a UK business customer and ship the goods directly, while the delivery is tax-free for VAT purposes.
Currently, after leaving the EU, UK companies do not have an EU VAT number. This means that the supplier in the EU country cannot obtain the EU VAT identification number from his UK customer, which means that the delivery is no longer tax-free.
In future, the goods must either be exported (leave the EU) or an intra-EU delivery, in which the goods must leave the supplier’s EU country (in this case France) and the supplier must pay the EU VAT Identification number of his customer must receive. If the UK company is not liable for VAT somewhere in the EU, the requirement is not met and the supplier in the EU country (the French company) would Need to charge VAT in their EU country when invoicing UK business.
To overcome this turmoil, UK companies can register for VAT in the same country as the supplier.
The secured delivery from the EU would then be a delivery to the UK company that calculates VAT in the EU country and enables UK companies to reclaim the foreign VAT in their VAT return in the respective country. This would issue an invoice from the UK customer to the EU customer, resulting in a tax-free intra-EU delivery.
Alternatively, your organization can register for VAT in each EU member state in which the customer is located. The delivery from your selected supplier could then import EU goods under a tax-free intra-EU delivery to the UK company based on the EU VAT number once registered in the customer’s member state.
In this way, non-EU business participants ensure domestic supply within the customer’s member state with the option of charging the customer in the EU with the applicable VAT of the country in which the customer is based.
Of course every company is unique, but what is crucial when importing is that UK importers need to make sure that the terms of sale or Inco terms work for you.
Remember that once the process is complete, you will need to keep all customs papers (including your C79 Import Tax Certificate) and commercial invoices. The good news is that there are many cloud-based tools out there that you can use to safely store these data sets.
We have yet to see how the upcoming changes will evolve, so it is imperative that SMEs seek advice and stay abreast of regulatory changes in order to be best prepared when the official start of full declarations comes into play January 1, 2022.
We recommend checking the HMRC website regularly. While this can be a lot of information, there are plenty of helpful resources out there that can provide advice. In the meantime, SMEs can also work with professional customs clearance staff to simplify the process and guide them through the regulatory hurdles. Knowing about these processes will then allow SMEs to look inward and focus on recovering the economy from the pandemic.
Tom Sommer is development manager at Channel ports