Brexit – Imports from EU Countries
Who will be affected?
All businesses that import goods into the UK from 1 January 2021 onwards.
New rules for importing goods
EORI Number – Economic Originator Registration Identification
You are required to have an EORI number to move goods between the UK and non-EU countries. From 1 January 2021, you will require an EORI number to move goods between Great Britain and the EU. This number must start GB, be followed by your businesses VAT number (if registered) and usually 3 zeros.
If you have not done so already apply for an EORI number as soon as possible. It can take up to a week to get one.
To apply you will need your:
- VAT number and effective date of registration -found on your VAT registration certificate
- National Insurance number – if you’re an individual or a sole trader
- Unique Taxpayer Reference (UTR) – found on correspondence form HMRC
- business start date and Standard Industrial Classification (SIC) code -found at Companies House
- Government Gateway user ID and password
From 1 January 2021 you will need to make a customs declaration when importing goods from the EU, as you would currently when importing from outside the EU. It is possible to make these declarations yourself but most businesses use a third party or specialist agent to do this. This is because you will need compatible software and certain detailed knowledge of the system including correctly identifying the commodity code. Any errors in the declaration can lead to significant delays on imports. If you hire someone to deal with customs for you, they’ll need to be established in the UK.
For more detailed guidance on the types of businesses you could use to assist you with importing please see HMRC guidance https://www.gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf
It is also worth noting that from 1 January 2021 the rules for importing certain types of goods are changing. You may need further import licences or labelling for example. To check the rules, visit the gov website for further information.
Customs Duties and VAT
You need to pay customs duties (tariffs) and VAT on all imports. VAT will be applied on most goods at 20% on the duty inclusive price. Further detail on UK trade tariffs can be found here https://www.gov.uk/check-tariffs-1-january-2021
Import VAT and Postponed accounting
This may be the biggest change for some businesses registered for VAT as it is likely to lead to cash flow advantages for some currently importing from non-EU countries. From 1 January 2021 all Import VAT will be dealt with via postponed accounting for all goods brought into the country. The importer based in Great Britain will treat itself as both the supplier and recipient of the relevant goods on the same return, meaning there is no physical cash outflow.
An online monthly statement from HMRC will be available for businesses to download and retain. It will show the total import VAT postponed for the previous month. The figure from the relevant monthly statements should be included on the next monthly or quarterly VAT return.
Box 1 – Total VAT due in this period on imports accounted for through postponed VAT accounting.
Box 4 – Total VAT reclaimed in this period on imports accounted for through postponed VAT accounting.
Box 7 – Total value of all imports of goods included on your online monthly statement, excluding any VAT.
Note the normal rules on what VAT can be reclaimed as input tax will still apply, so if you are partially exempt for VAT purposes there will be a net cash outflow.
A business does not need to be authorised to account for import VAT on its VAT Return and can start doing so from 1 January 2021. It can account for import VAT as described above if:
- the goods are for use in its business;
- the business includes its EORI number, which starts ‘GB’ on its customs declaration; and
- the business includes its VAT registration number on its customs declaration, where needed.
If goods are initially entered into a Customs special procedure, the business can account for import VAT on its VAT Return for the period when the declaration that releases those goods into free circulation is submitted.
Different rules may apply to goods in consignment not exceeding £135.
The guidance confirms that business-to-business sales not exceeding £135 in value will also be subject to the new rules. However, where the business customer is VAT registered and provides its registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge.
The above information is based on information currently available and on a no deal Brexit situation.
Further guidance can also be found by visiting:
If you have any questions or concerns in relation to the rules on importing after 1 January 2021 please contact Jayne Tressler or Yvonne Collings as soon as possible to discuss. Time is running out.
You can call us on 01243 782 423 or head to our contact form. You can also head to our Brexit Help Centre for our latest updates.