Brexit Transitioning Period: Get Brexit Ready as Deadline Looms
The UK government has confirmed that there will be no extension to the Brexit transitioning period and that the deadline for the new rules is coming closer by the day. Regardless of what the governments of the United Kingdom and the European Union agree on, there will be guaranteed changes after 31st December 2020.
Previously, The EU and the UK had time until 1st of July 2020, to decide on an extension of the transition period; the UK did not demand such extension and continued with the arrangements of the withdrawal agreement.
The withdrawal agreement included arrangements regarding the rights of the EU citizens in the UK as described by the European Commission. Other arrangements included the contributions of the UK in the European Budget and the borders between Ireland and Northern Ireland.
Brexit: Who is Being Affected?
Brexit will affect individuals, entrepreneurs, SMEs, contractors, and other various stakeholders in the business community. The UK must comply with the EU rules and regulations within the transitioning period till 1 January 2021.
The transitioning period has left both sides to reach an agreement for trade policies. However, this agreement might not be possible considering the political situation. Moreover, if the UK and the EU fail to reach an agreement, both will revert to carry trade under The World Trade Organisation rules after the completion of the Brexit transitioning period. This change will have a strong impact on businesses especially the ones that perform import and export activities. Contractors who work in both destinations will also be impacted.
It is a challenging time for businesses in the UK as Brexit will change the way businesses manage their imports and exports along with the process of hiring from the EU, and the course of providing their services in the EU markets. With new changes, businesses in the UK will have to make a Customs declaration through declaration form or SAD, of any imports from the EU. Moreover, there will be a visible change in the shape of obligation to register VAT in the EU for businesses benefitting from triangulation.
What is the Brexit Transitioning Period?
The UK left the EU on 31 January 2020 simultaneously entering into the Brexit transitioning period for a total of eleven months. During the transitioning period, the UK and the EU are continuously negotiating their future relationship. Moreover, the UK remains a member of the single market and continues to be subject to the EU laws during this time.
The UK government usually refers to this period as an implementation period. The officials take it as a phase to negotiate existing arrangements for the future of UK business market.
Clear House Accountants are helping businesses with their expert Business Advisory Services to prepare for these changes. We recommend you speak to your accountants to mitigate risk to your VAT planning, hiring strategy and business growth plans.
Is Your Business Brexit Ready Yet?
With the approaching deadline for Brexit transitioning period, many businesses are struggling while making their business ready for new rules. You must prepare for changes that may vary depending on your citizenship, business structure, business industry, travelling schedule, employees, stakeholders, data sharing and other such factors. It is better to analyse whether you are Brexit ready or not through the UK Government official transition check.
Actions to Take
Businesses should start following the checklist to be ready weeks before the end of Brexit transitioning period. Furthermore, take actions to create a smooth transition, so as to keep moving with the usual business operations. There is a looming risk of interruption regarding smooth business operations unless you, your suppliers, stakeholders and customers are also taking actions.
Furthermore, if your business depends on the imports of goods, you may have to follow the following steps to get Brexit ready. Besides, you may consult a professional business accountant to help you understand the changes.
Imports of goods from the EU
If your business depends on goods that may be imported from the EU, you must act on the following steps to continue importing from 1 January 2021.
- You must declare imported goods to Customs through SAD.
- Learn about the new rules for the goods your business import.
- Find out if you need specific licenses or certificates to import any goods.
- You will need an EORI number to import goods from 1 January 2021. Therefore, make sure to have an EORI number that starts with GB.
- Check the VAT rate and Customs duties that you will need to pay on all imports.
- Find out if you can make the importing process faster. As in some cases, you can delay the declaration for at least six months.
Imports of goods from outside the EU
What if your business is importing goods from outside the EU or other countries? You may have to follow the following steps to avoid disruptions in business operations after the Brexit transitioning period.
- Register your business as an importing business
- Select the person or customs agent to deal with importing of goods and the declaration process.
- Get the right commodity code for goods you want to import
- You may get to delay or reduce the Customs duty depending on the source country and the goods type.
- Get your license or certificate if required.
- You can reclaim VAT if you have paid any VAT on any business imports. You may need your C79 and other invoices to apply for additional refunds. See a list of the most common VAT problems.
Clear House Accountants are the competent Accountants in London guiding freelancers contractors and businesses across the UK through this difficult transitioning period of Brexit. Our expert accountants and tax accountants understand the tax, VAT, accounting and various declaration implications that will arise from Brexit and the end of this transition period.