EU trading: everything businesses need to know
When Jem Skelding started his natural ingredients business Naissance in 2005, it was, he remembers, “just me, a laptop and a phone in a tiny spare room, using my credit card to buy stock”.
Sixteen years on, the Neath-based firm has ballooned into a £25m turnover business employing more than 100 people. Trading with the European Union (EU) has buoyed much of that success; today, roughly two-thirds of its sales come from the EU. Such is the popularity of its ethically-sourced oils in Europe that when Covid-19 hit Italy in early 2020, Naissance saw increased demand for its aloe vera gel and vegetable glycerine as Italian people started making their own handwashes and sanitisers – at a time when shop stock was low.
The Brexit deal announced on Christmas Eve – and implemented on 1 January – means that firms such as Naissance can continue selling to EU customers without paying tariffs. However, the end of the UK transition period on 31 December also meant a number of changes to customs checks and paperwork that British businesses now need to familiarise themselves with. Being unprepared could trigger disruption and increased costs for businesses. As Skelding says: “If the paperwork isn’t correct, it could cause delays – meaning customers may not get their products when they need them.”
In recent months, Skelding has taken preparative steps, such as acquiring an EORI (economic operator registration and identification) number – which he says is “not painful at all” – and signing up for duty deferment. “It’s a significant benefit. We send dozens of shipments to the EU every day. [Paying] one single bill is so much easier than paying tax on every single shipment, not to mention the huge administrative burden of chasing them up.”
Skelding’s advice to other SMEs is simple: “Don’t bury your head in the sand. If you’re struggling, there is help out there, such as at gov.uk/transition, which has a useful checklist to make sure you’ve ticked all the boxes. There’s light at the end of the tunnel. Whenever there’s substantial change, there are opportunities too.”
Trading with the EU: what SMEs need to do now
Find a customs agent
An estimated 250,000 businesses will be making customs declarations for the first time in 2021, which now need to be completed for any goods leaving or entering the UK via the EU. Customs declarations can be complex, so many firms usually appoint a customs agent to do the paperwork for them. You can find a list of approved agents at gov.uk/guidance/list-of-customs-agents-and-fast-parcel-operators.
Get an EORI number
To move goods between Great Britain (England, Scotland and Wales) or the Isle of Man to any country overseas, businesses need an EORI number. Without an EORI, it’ll take HMRC much longer to clear your goods at the border, resulting in unwanted delays and possibly expensive storage costs. To transport goods between Great Britain and the EU, you’ll need an EORI with a “GB” prefix. And your EU partners will need an EORI with an “EU” prefix if they want to receive your goods (make sure you check they have this). Applying takes less than 10 minutes at gov.uk/eori.
Use government assistance
After a tough year when many businesses have undergone economic strain due to Covid-19, assistance is available so companies can adjust to the new processes, such as:
Duty deferment
Paying customs charges for each individual consignment imported from the EU is time-consuming. Consider a duty deferment account, which enables firms to pay once a month via direct debit.
Postponed accounting
If a business imports goods from the EU, it may need to pay import VAT on them. However, by using postponed accounting, businesses can avoid paying this at UK ports and airports, simply accounting for it on their next VAT return instead.
Delayed payments
Full border controls on goods entering the UK will not apply until 1 July 2021, with border checks staggered into three stages. If you’re not importing goods such as alcohol and tobacco, you can delay payments and defer submitting customs declarations for up to six months.
The UK government has a Brexit checker tool, which provides information for businesses on how they can adapt to the new trading landscape at gov.uk/transition.
This advertiser content was paid for by the UK government. All together (New rules for business) is a government-backed initiative tasked with informing the UK about the Brexit transition period. For more information, visit gov.uk/transition
