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How to prepare for Brexit – checklist

Read our quick-start guide, outlining a variety of areas that could impact your business, to help you start preparing for Brexit.

While there is still no certainty around what Brexit will mean and planning for it seems impossible, businesses that sell and buy from the EU need to have contingency plans in place which will need to be sufficiently flexible to cope with a variety of possible outcomes. ICAEW’s checklist covers the areas that should be considered, including movement of goods, product compliance, contracts, people, and financial planning (cash flow). These considerations reflect "no deal" being reached, but may also be relevant in other scenarios.

Page last updated

29 March 2019

The UK government has been sending instructions to a wide range of businesses, including those that trade with the EU, advising them to take actions to prepare for a situation where the UK leaves the EU with "no deal". 

ICAEW’s Brexit hub contains information on the technical implications of Brexit for the accountancy profession:

In this guide we summarise the key business implications of Brexit. More detailed guidance is available in our framework for preparing your business for Brexit.

Movement of goods

Key areas Key actions
Customs

HMRC has issued instructions to businesses that trade between the UK and the EU-27, or with the rest of the world, to prepare for a no-deal Brexit. HMRC estimates that there are 240,000 UK businesses that trade only with the EU; they would all need to comply with customs formalities in the event of no deal. Grants are available to help with the costs of customs training:

Businesses should be aware that the guidance has evolved since the HMRC letters in December 2018. Detailed guidance can be found at: Customs procedures if the UK leaves the EU without a deal. A range of government guidance has been provided by both the UK government and the European Commission for entities that trade between the UK and the EU-27.

The government says that importing/exporting businesses need to take these actions:

  • Register for a UK Economic Operator Registration and Identification (EORI) number. Businesses that already have an EORI number from another member state (one that does not start GB) can continue using it for now.
  • decide if they want to hire an agent to make import and/or export declarations, or make them themselves by, for example, buying software that interacts with HMRC’s systems;
  • contact the organisation that moves their goods to see if they will need to provide any additional information to them.
  • Get ready to comply with any instructions that may be issued by EU-member states that they export into.

Importers without an agent

Importers to the UK have the option of registering for ‘Transitional Simplified Procedures’ (TSP), which HMRC introduced on 4 February 2019. TSP are simple measures that enable registered importers to defer making customs declarations and paying duty.

Customs freight simplified procedures are another way to access simplified procedures, but HMRC authorisation is required to use them. The registration process may take some time and HMRC advises that most businesses without an agent will find that registering for transitional simplified procedures is their best option.

In either case companies will also need a duty deferment account.

Importers with an agent

An agent may be able to use Customs Freight Simplified Procedures on the importer’s behalf. A duty deferment account is required.

Exporters

Find out the commodity code of your goods: Commodity codes classify your goods so you that can fill in export declarations accurately. Research the destinations you want to export to. This background information, along with the commodity code of the goods will help you work out if the goods will incur import duty in the destination country.

Choose the right customs procedure code for your goods: Customs procedure codes identify the customs or excise processes that you may want to use depending on what your business does, for example importing goods into a customs-approved warehouse, so that you can suspend payment of duty and VAT until they’re sent to a UK customer from the warehouse.

ICAEW’s library can help you find information about all aspects of exporting, including government guidance on shipping and logistics which can help your clients decide whether to use the services of a freight forwarder and how to find one.

High volume traders

High volume traders with the EU have been asked to consider moving their goods using the Common Transit Convention (CTC), which they expect to remain in place after Brexit. CTC means that you do not have to pay duty on these goods until they arrive at their final destination. Companies would either need to use an agent to administer CTC for them or make transit declarations themselves using the new Computerised Transit System. HMRC warns that Offices of Destination and Departure are likely to be extremely busy in the event of the UK leaving the EU without a deal. They invite traders to apply for authorised consignor/consignee status allowing them to start and/or end movements from your own premises. To do so companies will need to apply for a Customs Comprehensive Guarantee.

Running a storage facility

Businesses that operate a storage facility for imported goods might wish to apply for authorisation to operate either a customs warehouse or a temporary storage facility.

  • A customs warehouse allows customs duty and import VAT to be suspended while the goods are in the warehouse.
  • A temporary storage facility is an authorised location close to a seaport or airport where goods are stored under customs supervision.

Goods that will be modified or are a part for something else

Inward processing relief might be available for goods that are being repaired or processed. It enables importers to suspend customs duty and import VAT.

Outward processing relief enables goods to be temporarily exported from the UK for processing or repair. It provides full or partial relief from UK customs duty when the goods are reimported.

Goods that are in the UK temporarily and are not modified

Businesses may wish to use the ‘temporary admission’ procedure to import non-UK goods temporarily. It provides total or partial relief from customs charges for a specified period of time.

Commercial samples, professional equipment or goods going to a trade fair or exhibition might be eligible for an ‘ATA Carnet’. Where a freight forwarder is used, they would normally apply for this on the importer’s behalf.

Importing goods that meet defined criteria

Goods that meet defined criteria might be allowed a reduced or zero rate of duty as long as they are put to certain uses specified by HMRC.

Excise traders

There are additional actions for traders of excise goods (alcohol, tobacco and certain oils).

Traders with non-EU countries

Some businesses that already trade outside of the EU have already been authorised to use ‘customs facilitations’ to make customs easier. One example are Customs Freight Simplified Procedures. A no-deal Brexit may have implications for their authorisation to use the customs facilitation. If the facilitation has been issued by another EU-member state then they may not be able to use it after March 2019. HMRC advises affected businesses to go to www.gov.uk/hmrc/customs-authorisation-changes or speak to their customs agent, if they have one.

VAT

There are also some actions in relation to VAT:

Accounting for import VAT: If the UK leaves the EU without a deal importers will be able to declare and recover import VAT in their next VAT return, rather than when their goods arrive at the UK border. This is called VAT postponed accounting. To do this they will need to provide their VAT registration number on their customs declaration. If the UK leaves the EU without a deal, it will also be possible to use VAT postponed accounting when they import from the rest of the world.

Business have been asked to prepare by:

  • talking to their tax agent about how it may affect their business, and authorising them to use postponed accounting for import VAT on their behalf; and
  • finding out from their software provider how the changes will affect their processes.

VAT registration checks: Businesses that currently use the EU’s VAT number validation service (VIES) to check a customer or supplier’s VAT number, are advised that UK VAT numbers will no longer be part of this service after an exit with no deal.

If they need to check a UK VAT registration after that time, they can use the UK VAT number checker, which will be on GOV.UK from the exit date. Businesses have been asked to consider how these new arrangements affect their business processes, for example IT systems

EU VAT refunds: If the UK leaves the EU without a deal, UK businesses will be able to reclaim VAT from EU countries, using existing processes for businesses based outside the EU.
Business have been advised that if they intend to submit EU VAT refund claims for 2018 using the EU VAT Refund Electronic System, they should submit these before the exit date, instead of the normal deadline of 30 September 2019.

VAT MOSS: Some businesses use the UK’s VAT Mini One Stop Shop (MOSS) to declare sales of digital services to consumers in the EU. They can continue to use the UK’s MOSS portal in the normal way to submit and pay their returns until the UK leaves the EU. However, they will not be able to use the UK’s MOSS portal to declare VAT on sales of digital services to UK and EU consumers that are made after the UK leaves the EU. If they wish to continue to use MOSS after the UK leaves the EU they will need to register for MOSS in an EU member state.

UK businesses will only be able to register for MOSS in an EU member state after the UK has left the EU. If they want to continue to use MOSS, they must register for the scheme by the 10th day of the month following their first sale after the UK leaves the EU. For example, they’ll need to register by 10 May 2019 if the UK leaves the EU on 12 April and they make a sale between 13 and 30 April. 

Supply chains

Supply chain mapping is an essential step in Brexit planning. Knowing where your inputs come from, and what product category they fall into can help you assess the possible tariffs that might apply.

For those who export goods to the EU, for example, you should consider the implications of a worst case scenario. This would be that the UK will leave the EU without any trade deal and all exports and imports to the remaining EU countries will now be subject to tariffs under the rules of the World Trade Organisation (WTO). It is also important to remember that 57% of UK exports go to non-EU countries and might already be subject to tariffs or quotas depending on the arrangements the EU customs union has with the destination country. Some exporters will therefore already be familiar with customs procedures, but extending them to all exports will clearly come at a cost. A more serious problem will be faced by those UK exporters who only export to the EU, for whom applying customs procedures will be entirely new. In the event of "no deal", the transitional and ongoing costs for these businesses could be considerable in the short-term. You can find the WTO and EU third-country rates online.

Keep in mind that for major manufactured inputs you might need to consider where supplies originate.

Further reading