News Hub
Brexit Review: Customs, Fish and Delays
Customs Post-Brexit
Undoubtedly, the biggest issue many have had with Brexit so far is the new customs regulations. As the UK is now considered a third-country, suppliers have had to acquire an additional EORI number (since they now need one for both the UK and the EU) as well as additional licenses in some circumstances. Further, since the UK and EU can no longer approve items for importing/exporting on behalf of each other, this has meant that goods have to be verified twice. This is obviously quite problematic for some products, especially agricultural ones as they need to be moved quickly in order to maintain freshness. Even now, one month on, those who export agricultural products such as fish and meat are reporting delays of up to several days and up to 71 pages of paperwork for one shipment. Whilst some of the delay time can be put down to the fact that businesses simply aren’t familiar with the paperwork as of yet, it would seem that some form of simplification will need to be implemented in the near future. At least in the mainland of the UK there hasn’t been empty shelves at that supermarkets like some expected following Brexit. Unfortunately, the same cannot be said for Northern Ireland…Northern Ireland Post-Brexit
Northern Ireland and its dual status of being simultaneously in the UK and the EU bloc was always going to cause some confusion; however, not many could have predicted that it would be this problematic. Some food supplies and online shopping deliveries from Great Britain to Northern Ireland have been subject to delays, which has caused supermarkets being severely under-stocked and some of the food perishing. The staff carrying out inspections at the border have reported threats from aggrieved lorry drivers and extremely high tensions following Brexit. Matters were not helped when the EU threatened emergency controls of Covid vaccine exports on the Irish border – a move the bloc later withdrew. Part of the problem is that suppliers who wish to export to Northern Ireland are required to get yet another EORI number. This has caused a number of customs forms to be incorrectly filled in. Still, it is becoming clear that this cannot continue and the UK and the EU have already begun talks to fix the problems at the border.Affect Of Brexit On Consumers
Consumers are also feeling the stress of Brexit, as shown by the amount of reports of people being told they owe more money upon the delivery of their goods – some such circumstances have seen consumers be told they need to pay over £80 to receive the item they have already paid for. This is mainly down to EU and UK companies attempting to shift the customs duties and VAT obligations on to their consumers as they struggle to maintain profits with all the new costs to import across the border. To avoid these costs, many businesses have opted to maintain an inventory in both the EU and the UK following Brexit, but of course this is not an option for all businesses, especially smaller ones.Review: All Doom & Gloom?
Whilst the first month has not gone smoothly, it certainly could’ve been a lot worse. To change the regulations of importing between two factions that enjoy such an immense amount of trade was always going to be difficult. Moreover, once the EU introduce their VAT package later in the year the rules for the EU and UK will become more aligned and should make it slightly easier for businesses who are involved in cross-border trade. In addition, aside from the trade the UK government have announced in the last couple of days that they are going to be implementing their new subsidy system, which they claim will give businesses across the nation a huge boost. So whilst the first month has not necessarily been a success, there is hope yet. At J&P we specialise in helping cross-border traders comply with VAT obligations and we are vastly experienced at working with ecommerce sellers. Should you need to register for UK or EU VAT or trademarks, or need any help with customs procedures we would be more than happy to help you. Contacts us today at enquiries@jpaccountant.com, or give us a call on 0161 637 1080.
Amazon After Brexit: Everything You Need To Know
Following on from our last article, which outlined the new VAT obligations that have now been placed on Online Marketplaces, it seemed prudent to delve a bit deeper into the ways in which Brexit will affect Amazon sellers; especially those in the UK. The new regulations at customs, along with the aforementioned tax obligations Amazon now face, have meant that Amazon have changed how they require their sellers to conduct their business. This article will outline these changes and advise you on how to best adapt your business.
Background Of Amazon Changes After Brexit
The last few articles on this blog have covered the background of this topic extensively, so I will keep this introduction brief; as of December 31st 2020 the UK left the European Union meaning that now, as far as the EU is concerned, the UK is a ‘third country’.
By leaving the EU, the UK has been able to implement its own laws. With regards to cross-border trade, this has meant the abolishment of the £15 low consignment relief and the new obligation for Online Marketplaces (OMPs) such as Amazon to collect VAT on cross-border transactions that have a value of up to £135.
What Have Amazon Done In Reaction?
The first big change that Amazon implemented was putting an end to Cross-Border Fulfilment. Now, Amazon are requiring their sellers to send their products to fulfilment centres in the UK and EU, depending on where they are being delivered to.
In addition, Amazon UK now adds 20% to the price of items sold by non-UK sellers and charges them with hefty import fee deposits. Whilst this is not necessarily bad news for UK sellers, it has meant a reshuffle in the search rankings which sellers should be aware of and may mean that sellers from abroad may focus more on domestic targets which may cause some UK sellers see a drop in cross-border sales.
What You Should Do To Ensure You Are Compliant With Amazon After Brexit
To begin with, sellers should have a UK and EU EORI number; whilst this is mentioned in almost all of our Brexit articles, it is worth mentioning because it is vital to making sure customs checks and VAT compliance goes as smoothly as possible and will also allow you to store goods both in the UK and the EU. Whilst Amazon will be responsible for accounting for a lot of your VAT, you will still need to provide them with the relevant information.
Secondly, keep in mind the VAT threshold and try to keep consignments below £135. If you don’t you will be responsible for accounting for the VAT and you will also have to pay custom import VAT as well as sales tax (£135 is also the threshold for import tax). Ways you could do this include through bundle discounts, or by dividing packages into two; for example, if you are sending two items to one location, consider sending them in two different packages to ensure neither package goes over the £135 threshold..
Another thing worth considering for Amazon after Brexit brand registration. Previously, brands doing business in the UK and the EU needed only an EU registration. However, post 1 Jan 2021, these brands will no longer be able to report potential infringements in the Amazon UK store and hence the brands will need to register both their UK and EU trademark in Brand Registry.
Finally, whilst it is not always for smaller Amazon sellers, it is certainly worth considering maintaining an inventory in both the UK and the EU. This will allow you to skip a lot of the customs procedures and will greatly reduce the risk of delays or a loss of sales.
Conclusion – Amazon After Brexit
Hopefully this advice has been helpful. At J&P we specialise in helping cross-border traders comply with VAT obligations and we are vastly experienced at working with Amazon traders. Should you need to register for UK or EU VAT or trademarks, or need any help with customs procedures we would be more than happy to help you.
Contacts us today at enquiries@jpaccountant.com, or give us a call on 0161 637 1080.
Online Market Places New VAT Responsibility
Regular readers of this blog, as well as those of you who closely followed Brexit developments, will be aware that as of January 1 2021 Online Market Places (such as Amazon and eBay) have been given much greater responsibility when it comes to calculating and reporting VAT on all sales made to UK consumers. The EU will be implementing similar regulations from July 2021. This article will have a look at these new regulations in more detail and will also show you what this means for your cross-border ecommerce operations.
When Is An Online Marketplace Responsible For VAT?
There are a few golden rules to remember when answering this question. Firstly, Online Market Places (OMPs) are only responsible for accounting for VAT on B2C sales, not B2B sales. Whilst this seems redundant, since most sales made on OMP are B2C by nature, it is still worth noting to make sure you do not accidentally neglect to pay VAT on your sales.
Secondly, OMP VAT responsibilities only extend to sales that have a value of up to £135 when the goods are being acquired from overseas. This includes sales below £15, since the Low-Consignment Relief was abolished at the beginning of this year. This is because up until this value goods are not liable for import VAT, just sales VAT.
The value refers to the intrinsic price of the product and does not take into account the extended costs of the product, such as transport costs.
Thirdly, OMPs are responsible for the VAT obligations of all purchases under £135, regardless of whether the goods are stored in the UK or not, and also regardless of whether the seller resides in the UK or not. In fact, when the goods are stored in the UK OMPs actually have more responsibility, since they are responsible for collecting the VAT on all transactions, regardless of price.
What Is Specifically Meant By An OMP ‘facilitating’ a trade?
Online Market Places are electronic interfaces such as marketplaces, platforms, portals or similar that facilitates the sale of goods to customers. ‘Facilitating’ shall mean where any of the following conditions are met
- sets the general terms and conditions of the sale;
- authorises the charge to the customer for payment; and
- involved in ordering or delivering the goods.
A business which only provides one of the following will not be regarded as an OMP if:
- the processing of payments in relation to the supply of goods (e.g. PayPal);
- the listing or advertising of goods;
- the redirecting or transferring of customers to other electronic interfaces where goods are offered for sale, without any further intervention in the supply
The above description applies to Amazon, eBay, Bol and many more. In order for the OMP to correctly account for your VAT, they will need to know:
- Ship from country, where the seller’s goods where at the time of the sale
- If an import, the intrinsic value of the goods consignment to determine if not exceeding £135
- If the goods are within in the UK, whether the seller is non-resident
- If the customer is a VAT registered business entitled to zero-rating on imported goods not exceeding £135. In the case of non-UK seller domestic sale of any value, this should not be a deemed supplier transaction.
- Nature of the goods to determine correct standard, reduced or zero-rated VAT treatment.
Conclusion – Online Market Places & VAT
Whilst Online Marketplaces will not be responsible for collecting VAT on every transaction, it is clear their responsibilities have been increased greatly. Remember that their obligations do not extend to B2B sales or sales from overseas which exceed £135. Also, it is worth pointing out that whilst they now have to take on the responsibility for VAT, this does not extent to product liability, and thus you will still be responsible for the quality of your product and supply chain.
At J&P, we specialise in helping small businesses that use OMPs expand their business.
If you are a business who participates in cross border e-commerce through Online Market Places, we would be more than happy to help you register for UK & EU VAT, the UK VAT deferral scheme, EU and UK EORI number, file your UK & EU VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through Brexit and our long history of working with Amazon and eBay sellers means we can offer you expert advice, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
The New EU Ecommerce VAT Package
The New EU Ecommerce VAT package is slowly approaching. The package was originally due to take effect on January 1st 2021, but was pushed back to July 1st 2021 in order to give businesses and cross-border sellers more time to prepare, especially in light of the coronavirus. This article will give an overview of the major changes that you can expect to see from the package, as well as advice as to how best to prepare your business.
The Background
The new rules are not an individual piece of legislation. The EU have been slowly implementing the package for a number of years since, due to the rapid innovation of the ecommerce sector, this gave them to chance to edit regulations if the need arose.
In April 2016, the European Commission launched its Digital Single Market Strategy for Europe (DSM Strategy) as part of the VAT action plan. This included an initiative to modernize VAT for e-commerce, which aimed to simplify VAT obligations for businesses involved in e-commerce while at the same time combating VAT fraud and ensuring fair competition for European businesses. The new rules are an extension of this strategy.
The Main Changes That Will Result From The Package
The first notable change is the launch of the One-Stop EU VAT return. This is arguably the most notable change as it will make accounting for VAT much easier. Currently, each country has its own Distance Selling Threshold (a threshold of sales of which if you exceed you will be required to pay VAT) and you must be VAT registered in each country that you exceed the threshold for.
This ‘simplification’ will be replaced by the One-Stop-Shop (OSS). Cross-border sellers shipping goods from their home country to customers across the EU may opt to use OSS to report all their pan-EU sales.
Please note that even companies that are registered from outside the EU will be eligible to use this service, including those in the UK.
This will be accompanied by the ending of low-value import VAT exemption, since this has proved to be a rule that was manipulated by many in an attempt to pay less VAT.
What The EU Ecommerce VAT Package Will Mean For VAT & Online Market Paces
Another major change is the increased VAT obligations placed on market places. The July 2021 reforms will oblige market places which facilitate cross-border sales to consumers via third parties to become the ‘deemed supplier in certain cases. This is also termed the full liability regime.
As it is termed ‘full liability’, you could be forgiven for thinking this means that the marketplace will also be taking on product liability; this is not the case.
From July 1st, the market place will charge the customer VAT at the point-of-sale and declare it instead of the seller – at least for imports that do not exceed £135. This will mean less VAT obligations for cross-border sellers who use market places such as Amazon.
The EU Ecommerce VAT Package: A Win-Win-Win?
It certainly seems that these rules will benefit all involved. Businesses will benefit from a substantial reduction in cross-border VAT compliance costs, which will in turn facilitate greater cross-border trade.EU Businesses will be able to compete on equal footing with non-EU businesses that are not charging VAT, and member States will gain through an increase in VAT revenues of EUR 7 billion annually.
Of course, adapting your business and VAT registration will still be difficult, but that’s where we come in.
If you are a business who participates in cross border e-commerce, or importing of any kind, we would be more than happy to help you register for UK VAT, the UK VAT deferral scheme, EU and UK EORI number, file your UK and EU VAT returns, and help you comply with VAT in case your account faces any issues.
Essentially, we can help you prepare for the imminent new EU Ecommerce VAT rules. At J&P, helping your business is our passion. We are here to support you through any difficulties you may face, such as these new regulations, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
The ‘How To Guide’ Of Exporting Post-Brexit
Following on from our Brexit Import Guide (which you can find here) this is our how-to guide for exporting from the UK post-Brexit. As you will know, the UK is now out of the EU VAT regime and customs union from 1 January 2021 following the Brexit transition period. Subsequently, the UK has introduced its new Border Operating Model for the control of imports and exports of goods between the EU and UK excluding Northern Ireland (‘GB’ or ‘Great Britain’). This guide will tell you all you need to know about the new rules regarding exporting, and what you need to do to sell your goods overseas.
What You Need To Ensure Before Exporting
Firstly, you must find out whether your goods have any specific rules, such as whether you need any specific licenses to export your particular goods. Goods of a sensitive nature, such as medicinal, weaponry or plant/animal products all require special licenses, as do precious goods such as diamonds or art.
Should you find that you do require a specific license or documentation to export your goods, you must ensure you do so before attempting to export them post-Brexit as otherwise they will not make it through customs.
Don’t Forget Your EORI Number
As with importing, you must also ensure that you have a GB EORI number before attempting to export. This is a unique identification number used on export (and import) paperwork to identify the exporter with customs authorities. It is worth pointing out here that if you are moving goods to or from Northern Ireland you will also need to obtain a separate EORI number that begins with XI.
This also applies for the EU and you will need a separate EU EORI code in order to export goods to the EU.
Depending on how much you sell to another country, you may also have to pay VAT in that country. Each country has a different distance selling threshold so you should be aware of what this is for any country to which you sell a lot of goods. Moreover, if you have to pay VAT to another country you must find out whether that country is one in which you have to appoint a fiscal representative post-Brexit.
Work Together With Whoever Is Receiving The Goods
To do this, it would be first prudent to check that whoever is receiving the goods is able to import them; for example, make sure they are aware as to whether they need to make an import declaration in their country, or whether they need licenses or certificates to receive goods from the UK.
It is also worth considering that it will likely be you who deals with the customs declarations (DDP). Therefore, you will need to fill in a export declaration form, as well as an import declaration form under for the goods to get through both UK customs and EU customs.
What You Need For Customs When Exporting
Customs are undergoing a lot of change post-Brexit. It is possible to appoint an agent to deal with customs for you. Due to the complicated nature of the new customs rules, this is certainly recommended. Regardless of whether you hire an agent or attempt to complete the process yourself, you will need:
- Commodity code for the product, which identifies the digits that identify a product, its materials and production method. The EU uses the six-digit global Harmonised System, or HS Code, and adds a further two digits ‘CN heading’.
- Any certificates and licences
- An exporter statement of origin to allow your importer to qualify for zero tariffs.
For the EU, you may need other documentation to get your goods into the destination country. Ask the person or business buying your goods what information you need to provide. It is worth remembering that you can also apply for a VAT Deferral Account to make this process slightly easier. You can find our article on that service here.
There is also a simplified customs declaration procedure that can be used in specific circumstances. To use this you must have access to CHIEF and you must be authorised by the HMRC.
To become authorised to use the simplified declaration procedure, you need to:
- have a good customs compliance record, including VAT returns and duty deferments
- have a regular pattern of customs declarations against your Economic Operator Registration Identification (EORI) number
- show how you’ll record all declarations for no less than four years after their submission date
For more information on this procedure, click here.
Conclusion
This concludes our two-part guide on how to import and export from the UK post-Brexit. Please feel free to get in touch if you have any further questions.
If you are a business who participates in cross border e-commerce, or exporting of any kind, we would be more than happy to help you register for UK VAT, the UK VAT deferral scheme, gain an EU and UK EORI number, file your UK and EU VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through Brexit, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
The ‘How To Guide’ Of Importing Post-Brexit
Post-Brexit, importing goods is perhaps one of the most difficult challenges facing UK businesses. Whilst, on the surface, the zero-tariff agreement seemed to offer an easy solution to this issue, upon closer inspection it has become apparent that this agreement has come with many caveats. This article will outline exactly what you need to know before importing to the UK.
First Things First When Importing, EORI Number
The number one most important thing for you to do before attempting to import goods into the UK post-Brexit is to acquire an EORI number.
An EORI number – which stands for an Economic Operator Registration and Identification Number – is a unique ID code used to track and register customs information in the EU, and you can register for one as an individual or as a business here.
It is also worth noting that this EORI must begin with GB – if you already hold an EORI number that does not begin with GB you will need another. THE HMRC should have already issued you a new number if you are a UK VAT registered business with international trade but, if they have not, you must contact them as soon as possible.
For the convenience of trading between EU and UK, traders are suggested to register both UK and EU EORI number.
Import VAT Obligations
It is worth pointing out here that certain goods require the importer to obtain a licence or certificate from various UK government departments. This includes animals, plants, agricultural products, medicines, chemicals and weapons. Please ensure you check whether this applies to you before proceeding.
There are a few different options when it comes to settling your UK import VAT. One option is to make your customer pay under Deliver At Place Incoterms. However, since this is far from the norm and most customers will refuse to do business with you, we do not recommend this approach.
The simplest way of settling the VAT is just to pay it at customs. There is a way to defer this payment, but this will require you to set up a VAT deferral account. You can find the information on this on our previous article here.
The HMRC have announced a ‘soft-landing period’ in which they are giving importers the option of deferring the completion of customs declarations until June post-Brexit. However, please bear in mind that this does not apply to sensitive products such as medical products or livestock.
Customs Post-Brexit
When it comes to customs declarations it is usual, and, indeed, recommended, that you should employ the help of a customs intermediary as the process is very complicated.
If you are going to attempt to do it by yourself, you should be aware that you must obtain a commodity code for your product, and include this on your import declaration. This will determine the rate of duty you need to pay and if you need an import licence.
It will also allow you to work out the value of your goods. When you make your import declaration, you’ll need to include the value of your goods – this helps work out how much duty and VAT you’ll need to pay.
Tariffs – When They Apply When Importing
One of the most important things for importers to bear in mind when accounting for tariffs is the ‘rules of origin’.
Essentially, this means that no tariffs or quotas apply to trade between the two parties – as long as goods “originate” in the other party. Therefore, “origin” will be a key consideration for any businesses moving manufactured goods between the UK and the EU post-Brexit.
The rule of thumb for this is that at least 55% of the materials (and the processes by which they were made) must originate in the country of the selling party. Importers must be able to provide evidence of this, usually in the form of a certificate or documentation.
If the origin of the goods cannot be evidenced satisfactorily, tariffs may apply.
The £15 Low Consignment Relief No Longer Applies, £135 Is The New Magic Number
An import VAT regime has been introduced on 1 January 2021 for imports of goods/consignments valued at £135 or less. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments.
HMRC clarifies that online marketplaces (OMPs) involved in facilitating the sale of imported goods, will be responsible for collecting and accounting for the VAT, even when the goods are in the UK at the point of sale.
These goods will pass immediately through UK customs if the customs declaration makes clear the sales VAT has been charged at the point-of-sale.
Conclusion – Be Aware Of The New Rules And Consider Getting Help
This guide provides an overview of how to import post-Brexit, but there are many rules that apply to individual products. The best you can do as an importer is make sure all your identification and documentation is in order, as well the documentation of your exporter, and consider appointing experts to help with your VAT and customs.
If you are a business who participates in cross border e-commerce, or importing of any kind, we would be more than happy to help you register for UK VAT, the UK VAT deferral scheme, EU and UK EORI number, file your UK and EU VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through Brexit, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
