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How to prepare for a no-deal Brexit

How to prepare for a no-deal Brexit

Research from the British Chambers of Commerce shows a high number of UK firms aren’t ready for a no deal Brexit.

I went to a very informative and useful workshop yesterday run by the DTI. If you export or import from the EU and haven’t had the time, head-space or inclination to think about this, here’s what you need to do.

Find out what your EORI number is. If you didn’t register for one and you’re VAT registered HMRC will have given you one – it looks very similar to your VAT number. If you’re not VAT registered you’ll need to self-register with HMRC to get your EORI number. You can do that here At the moment we don’t have to make export declarations when we send goods to the EU. In a no-deal Brexit scenario every consignment going to the EU will need an export declaration (like for goods going outside the EU at the moment) and your freight forwarder will need your EORI number.

Incoterms. These are key elements of international contracts of sale. They tell the parties what to do with respect to carriage of the goods from buyer to seller, and export & import clearance. They also explain the division of costs and risks between the parties. Check what Incoterms you are using to import/export from and to the EU at the moment or you might get caught out. If, for example, you are currently exporting to your customers under DDP (Delivered Duty Paid) then the cost of selling to your customers in the EU will increase by whatever percent tariff the EU decide to apply to your goods as you will be responsible for paying the duty. Your local Chamber of Commerce will be able to give you more information.

Find out the Commodity Code for your products. This is an 8 (exports) or 10 (imports) digit number that will determine the level of duty that the EU may impose on your goods after a no-deal Brexit so it’s important to get it right. If you don’t know your commodity code you can find out here . Once you have that you can go here to check what duty the EU may apply to your products under WTO rules if we leave without a deal and become a third country.

If you’re importing from the EU it’s a good idea to register for Transitional Simplified Procedures (TSP). Traders registered for TSP will not need to make full customs declarations at the border and will be able to defer paying their customs duties.

To be eligible, traders must:

    • Be established in the UK
    • Have the intention to import goods into the UK from the EU
    • Have an Economic Operator Registration Identification (EORI) number

You will still have to make a complete declaration but you have until the 4th working day of the following month to do so. You can register for TSP here.

Talk to your freight-forwarder about what they need from you to ensure your goods continue to move smoothly between the UK and the EU. They may need a Letter of Empowerment to make customs declarations on your behalf and it is worth investigating whether it is worth setting up your own Duty Deferment Account or if it will be more economical to pay the charges to use your freight-forwarders. A Deferment Account is effectively a direct debit mandate that allows HMRC to take a monthly payment of duties 15 days after supplementary declaration is made. Guarantees are required in order to defer duty to make monthly payments.

This is not a comprehensive list but it’s a good start and there is a questionnaire you can complete to give you information relevant to your particular situation here
If you currently complete your own customs declarations or you want to train your staff to do so there is £16m of funding available, you can find out more here

Finally, don’t forget that the world is a big place and many economies outside the EU are growing much faster – this could be a good opportunity to broaden your horizons!