The agreement of the UK-EU Trade and Cooperation Agreement (TCA) was greeted with relief by business everywhere. No deal was avoided and the UK and EU managed to agree a free trade agreement after months of tense negotiations.
We’re now a month into trading under the TCA, and businesses are getting to grips with what it means in practice. Our policy experts answer the top ten questions small businesses have been asking.
1. Where do I start?
UK businesses are getting to grips with the biggest change to trading rules in nearly half a century and dealing with complex and at times expensive new processes for the first time.
2. What duties do I need to pay when importing and exporting?
Customs declarations now need to be made for all UK-EU imports and exports.
3. Where can I find the right commodity code?
Knowing the commodity codes for goods you want to import or export will help you determine the duties owed. If you don’t already know the right code, you can use the Government’s Trade Tariff tool and look at the guidance for hard-to-classify goods here.
For goods brought into Northern Ireland that are at risk of onward movement to the EU, you can check commodity codes, duty and VAT rates here.
If you are still unsure which code to use you can contact the HMRC Tariff Classification Service for non-legally binding advice.
4. How do I prove the origin of my products?
The TCA is a ‘zero tariff’ deal, but you need to be able to prove the origin of your products to qualify.
In many cases, this evidence can be provided via a supplier’s declaration or using ‘importers’ knowledge’. The Government’s guidance calculating and proving rules of origin can be found here.
There are temporary easements for business under the TCA – for example, until 31 December 2021 you do not need a supplier’s declaration in place when goods are exported, but you may be asked retrospectively to provide one after this date, so should ensure now that your product meets the rules of origin. You can find out more here.
5. Can I delay or defer duty payments?
In some cases, you may be able to pay a reduced rate of customs duty on goods imported from the EU.
6. Do I have to pay tariffs when re-exporting to the EU?
If you are importing components and products and re-exporting them to the EU without carrying out any further processing or manufacturing activity on them, your goods may face tariffs again when they are exported outside the UK. In this situation, you could consider using a customs warehouse or using a separate warehouse in EU territory to fulfil EU sales.
7. What if my goods were in transit at the end of the transition period?
As long as goods have Union status, customs movements that began before the end of the transition period will continue under the rules in place when the movement started.
8. Where can I find help to handle customs declarations?
The Government has compiled guidance on how to make export declarations and import declarations, as well as a list of customs training providers, if you decide to deal with customs declarations yourself.
Alternatively, you may choose to hire a person or business to handle them for you. If you decide to do this, the Government has compiled a list of customs agents and fast parcel operators.
9. Do I need to register for VAT in the EU?
Depending on your business model and contracts, you may need to consider whether you need to register for VAT in each country you export to. Some countries may also require you to appoint an EU fiscal representative.
UK businesses no longer benefit from the distance-selling thresholds available to EU-based businesses. While you may be able to zero rate the goods you export for VAT – see Government guidance here – depending on the Incoterms used in your contracts, you may still be responsible for import VAT payments in the destination country. You can find out more about Incoterms here.
For UK businesses supplying digital services to the EU, Government guidance can be found here.
If bringing goods or services into GB or Northern Ireland you may have to pay import VAT. Government guidance on import VAT can be found here.
10. How are the rules different for Northern Ireland?
If you are bringing goods into Northern Ireland from Great Britain you will need to make customs declarations and may need to pay tariffs, depending on whether your goods will then move into the EU single market. More information on how to move goods between Northern Ireland and Great Britain can be found in detailed guidance here.
The Government has created a Trader Support Service for businesses moving goods between Great Britain and Northern Ireland.