Now that the UK has left the EU, those exporting and importing goods between the UK and EU must review how this affects sales VAT, import VAT and customs duty, as well as the controls and procedures at the border.
On 30 December 2020, the UK and EU entered into the Trade and Cooperation Agreement. Whilst co-operative in nature, the terms of the Agreement are prescriptive, and guidance is thus far limited.
The key considerations for importers and exporters post-Brexit, are as follows:
- Sales VAT:
- Where goods are sold in the UK, provided they are exported from the UK within the appropriate time (which is often three months) and with appropriate evidence of the export, the sale should be a zero-rated supply for UK Sales VAT purposes. Otherwise, UK sales VAT would apply in the normal way.
- If a buyer is UK resident or a visitor to the UK and buying goods for personal use that they will export from the UK shortly thereafter, zero-rating will no longer apply as it used to do under certain schemes, such as the Retail Export Scheme.
- Import VAT and Customs Duty (together, import duties): The Trade and Cooperation Agreement forbids the imposition of tariffs, quotas, and import/export taxes at the UK-EU border, if the goods "originate" in the UK or the EU. Interpretation of that rule will however depend on the receiving jurisdiction, and its local rules, rates and procedures. Where duties are payable, the importer of record is usually liable to pay them. As a result, where goods cross the border, you must consider the following:
- The receiving jurisdiction(s) may impose import duties on certain goods based on their value, subject to exceptions and any applicable reliefs (such as Temporary Admission Relief) in that jurisdiction. Such reliefs may need to be claimed in advance in order to apply.
- There will be new customs, safety and regulatory checks, which will likely to cause delays and friction when moving certain goods across the border, especially in the early part of 2021.
- Licences: Exporters may require special licences to export certain goods, depending on the exact type and classification of the goods, its age and/or its value. For example, there are several restrictions on exporting certain artwork from the UK. Importers and exporters of commercial goods must also obtain an EORI number that starts with GB in order to export goods from England, Wales and Scotland. The procedure in Northern Ireland may differ.