8 key steps to prepare for Brexit

There are 8 key steps* to take in order to prepare your business for Brexit - whether you're a UK business exporting / importing goods with EU countries, or are a company based in the European Union and will be selling to or buying goods from the UK from January 1st 2021.

In addition to following these steps and complying with all Tax and Duty rules, you need to know where your costs will change.

7bridges has created a P&L calculator, designed to illustrate how the costs of moving goods might change before and after Brexit. Armed with this insight, you can prepare a strategy to:

  • minimise costs,
  • improve your margins
  • and maintain customer experience within Europe and UK.
 
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Step 1

Check if you need to change your company registration.

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Step 2

Find your EORI number, or apply for one now if you don't have one.

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Step 3

Find your Commodity Codes & Customs Procedure Codes.

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Step 4

Value goods (if you're importing them to the UK from the EU)

 

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Step 5

Check if you need licences for restricted goods

 

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Step 6

Prepare your Customs declarations

 

 

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Step 7

Prepare to make VAT and Duty payments

 

 

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Step 8

Apply for a tech grant to help execute customs declarations

 

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Calculator

Understand the impact Brexit may have on your P&L

 

Step 1 

Check if you need to change your company registration.

According to the UK Government, most UK businesses wont need to change the way they report information to companies house. However, you might need to if you are any of the following: 

➡️ You can find the information you need on the UK Government website.

Step 2 

Find your EORI Number - or apply for one now

UK businesses that import or export goods in and out of the EU will need their own Economic Operator Registration and Identification Number or "EORI" number once Britain has left the EU (assuming there is 'no deal'), as this will be needed to import or export goods across any EU country.

You will also need an EORI number if you move goods between Northern Ireland and non-EU countries.

If you are VAT registered, you may already have been issued with an EORI number, but if you haven't, you will need to apply for one. If you are not VAT registered, you are less likely to have been issued one automatically.

Why is your EORI important?

Your EORI number will be used in various types of forms, when Britain leaves the EU, including customs declarations and clearances.

If you don't have an EORI number by 1st January 2021, your business is likely to suffer increased costs and delays in moving goods across borders.

Validate existing EORI

If you think you already have an EORI number, you can validate it here:

➡️ EORI Number Checker

Apply for an EORI

If you don't have an EORI number, the application process should be relatively simple. RBR Advisory estimates that it takes ten minutes to apply.

The UK government says it can take a week to be issued to you.

Required Info for VAT registered businesses:

  • Contact details of relevant Client personnel:
    • Name, Job Title, email address & telephone number
  • VAT details:
    • VAT Registration Number, VAT Registered Name, Trading Name (if any), VAT Registered Address and Postcode

➡️ EORI Application Form

Step 3

Find your Commodity Codes & Customs Procedure Codes for goods.

A: Commodity Codes make clear what VAT and tariffs you should be paying, when moving goods in and out of the UK or EU from the 1st January 2021.

You will need to ensure you have the right Commodity Code for your customs declarations. If you don't, you risk damaging your bottom line with expensive fines, top up taxes and delays in delivery shipments.

Your Commodity Codes are needed, in order to:

  • Complete customs declarations
  • Check if VAT and Duty are payable
  • Check if relief is available
  • Check if a licence is required

B: Customs Procedure Codes, or 'CPC's, are 7 digit codes that identify the reasons for import / export.

Customs will need these to ascertain how your shipments are processed and who will be collecting the related duties and taxes.

It's important that your CPCs are correct, to ensure the swift release of your shipments.

Find your Commodity Codes

You can find your Commodity Codes by using the Trade Tariff Tool:

➡️ Trade Tariff Tool

If you haven't used the tool before, you can find additional guidance on how to use it here.

You will need the following information:

  • What are the goods made of
  • How are the goods constructed
  • Intended use of the goods.

The result of Trade Tariff Tool gives you several important outcomes:

  1. Import and/or Export Commodity Code;
  2. VAT & Duty payable
  3. Restrictions/Licence requirements

Identify your CPCs

You can find lists of CPCs for imports and exports, and further guidance on the UK government website:

➡️ Customs Procedures Guidance

 

Step 4

Value goods for Customs Duty (import only)

If the UK leaves the EU customs union on 1st January 2021, you will need evidence to support the value of goods imported from the EU to the UK.

This valuation will be used in order to calculate the amount of Customs Duty you need to pay, and the documentation may be inspected by officers.

The UK government recognises six ways of calculating values for customs duties. The most common method is the 'Transaction Value' method. You can find an explanation here:

➡️ Value Goods Using Transaction Method

 

Step 5

Check if you need licences for restricted goods

Some rules are changing around the export of controlled goods to the EU from the UK, vice versa, from 1st January 2021.

There are many types of controlled goods, including firearms, medicines, livestock and many more - so it's important that you have all of the correct licensing and certification in place.

The Trade Tariff Tool should identify if you need a license for specific goods:

➡️ Trade Tariff Tool

Step 6 

Prepare your Customs declarations

In the case of a no-deal Brexit, your business will need to handle Customs declarations differently from 1st January 2021.

Need help with cross-border documentation?

Whether you're exporting goods to the EU, or importing EU goods to the UK, the 7bridges technology can automate the production of cross-border documentation for you. It can also transmit all the necessary data to Customs agencies. It's part of our automated shipping and returns technology in the Send module of our smart logistics platform.

You may even be eligible for a technology grant from the UK government, to pay for it.

If you'd like to learn more, arrange a call with our expert team now.

Importing goods from the EU to UK

For businesses importing goods from the EU, the government has prepared a checklist and guidance for you to follow:

➡️ Importing goods from EU to UK

Note: some businesses will be able to delay their import declarations by up to 6 months, but this does not apply to businesses with a 'poor compliance record' or to businesses importing controlled goods.

Exporting goods from the UK

The way UK businesses trades with the EU, and many other countries will change from January 1st 2021, when the country is no longer governed by EU trade agreements. See this list of countries with signed, pending or expected trade agreements

Regarding exports from the UK to the EU, the government has prepared a checklist and guidance for you to follow:

➡️ Exporting goods from UK to EU

 

Step 7 

Prepare to make VAT and Customs Duty payments

VAT is charged on imported goods at the same rate as if they were purchased in the UK and is payable directly to HMRC. Import Duty is payable depending on the classification of goods. Some goods can be zero-rated (up to an annual quota). Certain goods (for example, tobacco & alcohol) are also subject to Excise Duties.

It's crucial that you're set up to make VAT, excise duties and Customs Duty payments, otherwise your goods may be held by Customs - risking spoilage, customer delivery delays and lost profits. In order to minimise this risk, you can set up a deferment account.

Your goods won't be released by Customs until VAT, excise duties and Customs Duty have been paid - unless you've set up a deferment account

To make a deferment account easier to manage, eligible traders can apply for the Simplified Import VAT Accounting (SIVA) scheme. This scheme can provide compliance cost savings by reducing the amount of funds needed to be maintained in your deferment account. 

You may be eligible for SIVA if you meet the following criteria:

  • VAT registered for 3 years & good VAT compliance history
  • Good payment history with HMRC
  • Sufficient financial means to meet any amount deferred under SIVA
  • Good HMRC offence record
  • 12 month record of international trade operations
  • Good compliance record for international trade

 

Apply for SIVA

If you're eligible for SIVA, you should apply for this prior to making deferment account arrangements.

➡️ Application for Simplified Import VAT Accounting (SIVA)

Set up a deferment account

A deferment account enables you to defer payment of VAT and Duty, meaning that goods can pass through customs significantly faster.

In order to set up a deferment account, you will need to complete several forms and post them to HMRC at: 

HM Revenue and Customs
Central Deferment Office
8th Floor, North Central                        Alexander House                                        21 Victoria Avenue                                    Southend-on-Sea                                      Essex, SS99 1AA

Setting up your Deferment Account - Required Forms:

➡️ C1200 - Deferment Application

➡️ C1201 - Form of Guarantee

➡️ C1202 - Direct Debit Duty Deferment

➡️ C1207N - Agents / Freight Forwarders Authority

 

 

Step 8

Optional: apply for a technology grant of up to €2M

The UK government are offering grants to UK businesses to help your team with customs declarations. There are three types of grants available, up to a value of €2,000,000. They can give you 100% of the costs of your technology needs relating to improving your customs declarations efficiency if you purchase a ready-made solution (like 7bridges!).

According to PwC (the intermediary arranging the grants on behalf of the UK Government):

"You must use the IT funding to buy software that will help your business to complete customs declarations more efficiently. It must be a ready-made solution. You cannot use the funding to commission bespoke software.

You can also use the funding to:

  • Buy hardware that’s needed for the software to run
  • Install and configure the software and hardware
  • Buy the first year licence
  • Train employees to use the software" 

➡️ Apply for a technology grant via PwC

P&L Calculator

See where your costs will change

This tool is designed to help you:

  1. Understand at a high level the impact Brexit may have on your P&L, if you're an SME
  2. Focus your efforts on the basic data that is necessary to trade internationally in a post-Brexit world

What the tool can show you

The P&L calculator can show you an estimated change in your:

  • Production costs
  • Fulfilment costs
  • COGS
  • Gross margin

Using the Excel calculator 

To make the tool work for your business you will need to pull some business data together and you may need to use some of the websites this tool links out to (for example, the UK Government's Import and Export checking tools) to find specific data about your products.

There are 6 key steps in the tool:

  1. Input your product data
  2. Input your sales data
  3. Determine the tariffs your products will be affected by
  4. Input your fulfilment site data
  5. Input your transport data
  6. Update the model and review the impact on your business

To download the excel sheet, simply fill out the form and we'll send it in an email.

Screenshot 2020-12-17 at 09.38.36

 Download the P&L Calculator

 

We hope you find the toolkit helpful! If you'd like help with your logistics in a post-Brexit world, drop us a line.

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  • An eligible purchase for the technology grant

Speak to one of our team to learn more:

DISCLAIMER

*This Brexit Toolkit and P&L Calculator (together the 'Materials') are provided for informational purposes only. No undertaking, warranty or other assurance is given, and none should be implied, as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information or opinions contained in the Materials. The information contained in the Materials is not subject to completion, alteration and verification nor should it be assumed that the information in the Materials will be updated. The Materials should not be construed as legal, tax, regulatory, financial, investment, trading or accounting advice or services and users of the Materials are urged to consult with their own advisers in relation to such matters.In all cases persons should conduct their own investigation and analysis of the information and data in the Materials.

Any forecasts, opinions, estimates and projections contained in the Materials constitute the judgement of 7bridges and are provided for illustrative purposes only. Such forecasts, opinions, estimates and projections involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forecasts, opinions, estimates and projections. Accordingly no warranty (express or implied) is or will be made or given in relation to, and no responsibility or liability is or will be accepted by 7bridges or any of its directors, officers, employees, agents or advisers in respect of, such forecasts, opinions, estimates and projections or their achievement or reasonableness. Users of the Materials must determine for themselves the reliance (if any) that they should place on such forecasts, opinions, estimates and projections.