Posted: Tue 2nd Mar 2021
The UK is no longer an EU member state. It is not part of the Customs Union or Single Market and therefore different rules apply to exporting. For many businesses this is a confusing time.
It is estimated that 135,000 UK companies have only ever supplied to the EU previously, so have no experience of customs declarations, licences, VAT on import, rules of origin etc.
The UK-EU Trade & Cooperation Agreement finalised at the eleventh hour has done little to alleviate the confusion, though it does offer tariff-free trade for qualifying goods. This blog aims to identify the main points you need to consider to export from the UK in the post-Brexit era.
It all starts with the HS Code. This is the customs harmonised coding for your product recognised by most countries in the world. It determines everything that follows such as duty rates, licences, approvals, procedures to follow. Make sure it is right as it can make a big difference.
Every shipment leaving the UK for the EU is now subject to Customs Declarations. To export from the UK, you must have a GB EORI number and either appoint a customs agent/freight forwarder as intermediary to handle the documentation on your behalf, or register with the National Export System (NES) and apply for access to the CHIEF system to electronically submit declarations yourself. We recommend the use of an intermediary in most cases.
Remember Northern Ireland is now effectively an export destination for the rest of the UK.
Check if you can take advantage of any Customs Simplified procedures such as Customs Warehousing; Inward or Outward Processing Relief; Temporary Access; Returned Goods Relief; Transit etc. These could save you a lot of difficulties and costs.
Incoterms set the responsibilities in the export-import transaction between you and your customer. As such they are now more important than ever when dealing with the EU. Take care when agreeing terms, therefore. DDP brings maximum responsibility to you as the exporter, including the liability to pay applicable duty and VAT. EXW brings maximum responsibility for our buyer. We recommend FCA or DAP terms which makes each party responsible for the shipment in their own countries.
Rules of Origin
Rules of Origin determine the economic nationality of your products.
Under the terms of the UK-EU TCA, trade in all goods is tariff free, providing they meet complicated rules to be classed as made in UK. They are different for virtually every product and again it starts with the HS Code. Check the rules that apply for your products to determine whether you can claim zero duty under the terms of the agreement. Otherwise, WTO rates will apply.
This is one of the most complicated areas you need to get to grips with post Brexit. VAT is now due at the time of importation in your customer's country. Previous simplifications, such as triangulation, are no longer available to UK businesses. Supply chains have therefore become much more complicated.
Choosing the wrong Incoterm can have a profound effect on your transaction. DDP will make you liable to pay the VAT and duty. Reclaiming the VAT can mean having a VAT Number and fiscal representative in the country.
Certificates & licences
Depending on your product you may now require additional certificates, such as Export Health Certificates for products of animal origin, or Phytosanitary Certificates for plant products. Check the requirements for your products and make sure you are prepared.
We have summarised here the areas you need to consider when exporting from the UK post Brexit. There are many considerations and many challenges to overcome. Each cannot be taken in isolation. Using the wrong HS Code can affect the Rules of Origin that apply, the licences required. The wrong Incoterms can have implications for VAT and leave you with unforeseen costs if you do not pay attention. Supply chains can now be complicated.
If in doubt, we recommend you ask for specialist advice. In the end of the day, it could stop you losing business, save you thousands and avoid countless sleepless nights!
_Mike is a trusted Enterprise Nation adviser and export consultant who helps companies expand into international markets. Discover the services he offers exclusively to small businesses.
For more Brexit advice, check out our Brexit Advice Service.