As the UK reaches the end of the transition period, it’s essential that businesses know how they’ll be affected by changes to the way they trade and operate.
For many businesses, big and small, cutting through the masses of information is the first hurdle, so we've compiled the key bits of information to best let you know how you might be affected and how to prepare your business for the upcoming changes.
What we know about Brexit so far, and why it’s important to stay informed
There will be changes in the following five areas:
Trade, importing and exporting: failure to comply with the new customs procedures will mean you will not be able to import or export goods. For more information, visit gov.uk and search ‘how to import and export goods’ and/or visit the government's hubs for importers or exporters
Placing goods on the Great Britain and EU market: you’ll need to label any goods correctly in order to market them
E-commerce regulations: new rules will apply to online shopping, advertising and contracting
Transferring personal data between the UK and other countries: ensures you’re able to continue receiving data from the EU
Hiring staff outside and inside the UK: affects who and how you employ staff from the EU under new rules
The government’s tailored checklists will help you work out what’s relevant individually to you. For more information on how the changes will affect you and how to prepare accordingly to keep going, business as usual, from 1st January 2021, visit gov.uk/transition.
What should businesses be doing now?
These first few steps and checks can help set things in motion to prepare for 1st January 2021.
- EORI number: apply for an EORI number starting with GB – ALL businesses moving goods in or out of Great Britain will need this. It only takes 5-10 minutes to apply and you should get a registration within 1 week. Visit www.gov.uk/eori for more information and to apply
- Intermediary: Using an intermediary to make declarations for you can help speed up and ensure accuracy of processes and prevent goods being held up
- Licences: you might need an import or export licence for your goods – make sure you have one if this is the case, e.g. for chemicals or food
- VAT: don’t underestimate VAT. Be clear on your obligations and what you might have to pay
- Deferred declarations: can be helpful and enable you to pay duty on a direct debit basis instead of all-in-one-go on individual consignments. This makes sense if you’re regularly moving goods in or out of Great Britain
Trade, importing and exporting
We can expect three stages of changes on controls on imported and exported goods being introduced. Compliance with these requirements is unavoidable, so be sure to keep an eye on your responsibilities under them.
From January 1st 2021, businesses importing goods will need to prepare for new requirements such as customs declarations. Traders will likely need to consider how they account for and pay VAT on imported goods from this date too.
- Customs declarations: unless you’re importing goods that are ‘controlled’ or ‘excised’ (e.g. tobacco and alcohol), it may be possible for you to delay customs declarations on imported goods for up to six months after the date of their import. Record keeping in relation to imported goods will matter. Make sure you keep thorough ones
- Tariffs: may be payable on relevant goods but again, it may be possible to defer duty payments until the customs declaration has been made
- UK safety and security declarations: will not be mandatory for imported goods for the first six months of 2021. Full controls will come into force as of 1st July 2021
- Controlled and excise goods: customs declarations will be required from 1st January 2021. Physical checks will also be needed at the destination point or other approved premises on high risk, live animals and plants. Pre-notification will be required for the movement of some goods, though there will not be a requirement that such goods enter Great Britain by a border control post
- Customs controls: within the EU, there will be full customs controls for exports. From 1st January 2021, export declarations and UK exit safety and security declarations will be required for all goods
- Animal and animal origin products: will be subject to full controls on import and export activity, meaning they must be pre-notified and travel with the relevant health documentation. Examples include meat, honey, milk, egg products, plants and plant products
- Physical checks: these goods will be subject to physical checks at the point of destination
Full controls will affect all goods, but what does this mean?
- Point of importation: full customs declarations being made at the point of importation
- Tariffs: all relevant tariffs must be paid
- Full safety and security declarations: must be made on certain goods (including those goods subject to sanitary and other hygiene checks). These will have to be produced at border control posts and physical checks will be increased, including, where relevant, the taking of samples
Rules of origin - important if you have goods manufactured in more than one country
If you have goods that are manufactured in more than one country, it’s important to understand how rules of origin will work from 1st January 2021.
What are rules of origin, and why do they matter?
Once the Transition Period comes to an end, exports will no longer be classed as ‘EU origin’ but rather ‘UK origin’. According to the government, these rules determine a product’s economic nationality, since goods imported/exported to particular countries may be subject to lower or no customs duty whilst others may attract full excise.
Visit www.gov.uk/guidance/rules-of-origin for more detailed information and keep an eye on theses rules, as new rules will come into force for particular countries in the near future.
You can find a list of trade continuity agreements signed successfully by the UK here on .gov.uk
And you can use this really useful tool from .gov.uk to check what you need to do for which countries you’re trading with.
The UK’s new Global Tariffs Scheme (UKGT) – a UK-specific tariff
Manufacturers should be aware of this new scheme that aims to make it easier and cheaper to import overseas goods for manufacturing and result in less admin too.
During the transition period (up to 31st December 2020), the EU common external tariff will apply. Then, from 1st January 2021, the UKGT will apply to goods from countries with whom the UK does NOT have a trading agreement in place.
You can check which tariffs apply using this tool from .gov.uk. You’ll need your EORI code or a description of your product to use the government’s tool. There is help on the site to help you find out the commodity code if you don’t have it to hand.
Trade continuity agreements
These are agreements that the UK is hoping to sign in order to replace existing trade agreements in the EU. They’ll be relevant if you’re currently trading with other businesses in other EU countries and benefitting currently (and up to 31st December 2020) from the EU’s free trade and common market arrangements.
At time of writing, the UK has signed 20 free trade agreements with many different countries. Once in place, the agreements enable you to continue trading as you do today after the transition period is over. However, where agreements are not in place by 1st January 2021, trade will take place on WTO terms.
To best prepare, by the end of this year, ensure that you check to see if a trade continuity agreement has been signed by the UK with any country you are currently trading with through an EU trade agreement.
Placing goods on the market
NB: It’s important to keep in mind that this guidance does NOT apply to goods on the market in Northern Ireland or goods flowing between Great Britain and Northern Ireland. Different rules apply here, which you'll need to check.
Labelling and how to ensure new approach goods are labelled correctly
‘New approach goods’ refer to those not already in circulation on the market.
The main change here relates to CE mark goods. From January 2021, you’ll need to use the UK’s new product mark – the new UKCA mark.
UK declaration of conformity will need to be completed for you to put UKCA mark on your goods but compliance for the UKCA will be essentially the same steps and standards as the current CE mark. Nothing will change if you presently self-certify for the CE mark – you can do the same for UKCA.
If you plan to continue to place products on the EU market, you’ll still need to use the CE mark. However, you should mark products both CE and UKCA if you intend to market goods in Great Britain and the EU (but be sure to check that the rules are met for both markets!).
Find out more about using the UKCA mark from 1 January 2021 here.
If you use a conformity assessment body:
All existing UK bodies currently accredited will automatically transfer over. If you use any conformity assessment body, make sure you know your options for these assessments going forward. Be sure to arrange for separate certificates for both CE and UKCA marks for those goods that will require both – delays may be expected so start the process now.
It is important to know that importers have a higher burden in terms of labelling and standards compliance obligations.
A conformity assessment is an important part of GB quality assurance, providing confidence in goods, services, management systems and people and helping to keep us safe, as well as economically and ecologically responsible. These assessments are also considered by the government and other national policy-makers to keep businesses competitive, to facilitate trade, create market advantage and encourage healthy market dynamics.
The assessment itself, which may be carried out by a range of different, approved bodies, on behalf of the government, aims to demonstrate that particular products/services do in fact meet the standards required of them and as described on any label or in any particulars, and that they are compliant. Typically, conformity assessments will include testing (including, as relevant, the taking of samples), inspection and certification.
A conformity assessment body is an organisation authorised by government to carry out these assessments. UKAS is the UK’s solely appointed accreditation provider for conformity assessment bodies. All assessment bodies must meet UKAS’ requirements and standards. There are a number of accredited bodies in the UK. You can find out more about them here.
You’ll need to comply with each EEA country’s e-commerce rules you operate in. Previously, the directive harmonised it for UK traders, but it will no longer be of any benefit. The directive does not apply to all online services (check on the gov.uk website) but make sure you know whether your services were in scope and therefore require new compliance obligations.
These regulations affect online shopping, contracting and a variety of other services and goods. Search ‘ecommerce directive after the transition period’ on gov.uk. Compliance is needed by the 1st January 2020 otherwise you risk non-compliance if you don’t follow the key rules for online services in EEA countries.
What to do if you have a .eu domain name
If you’re not an EU/EEA citizen, resident or business that is established in the EU/EEA, you should consider using another domain. You should prepare to migrate services and functions that your EU domain is liked to or supports before 1st January 2021.
IP rights and trademarks
Action will be needed on IP rights so you may want to consider taking advice. You can find out more about Intellectual property after Brexit [here]https://www.gov.uk/government/news/intellectual-property-after-1-january-2021].
Transferring personal data between the UK and other countries
When receiving data from the EU/EEA, you need to map data flows with EU partners and put alternative arrangements in place – most commonly being Standard Contractual Clauses being put in place, so that you can continue to receive personal data from EU providers.
Servers should be located here in the UK.
Hiring staff outside and in the UK
After 1st January 2021, the UK will move to a points-based immigration system – this will not apply to EU citizens already living in the UK prior to 31st December 2021 who will be able to apply for EU settlement status any time before 30th June 2021. You may direct employees to the EU settlement Scheme if you wish.
Anyone you wish to employ after 1st January 2021 from the EU (who doesn’t already have EU settlement status), will need to apply under the new points-based immigration system in order to start work for your business/organisation. They will need to be sponsored, so you should ensure that you are a Home Office Licenced visa sponsor. If you wish to sponsor migrants and you aren’t a licenced sponsor already, you can (and should) register now to recruit through the skilled worker scheme from January 2021 – the process takes approximately 8 weeks. Licences are valid for 4 years if you’re successful.
Whilst this new system will entail new requirements (job, salary, language), which may affect your ability to employ people from the EU, you will be able to recruit skilled workers globally. Irish citizens will be treated the same as UK citizens and thus unaffected by the new rules.
Visit www.gov.uk/uk-visa-sponsorship-employers for more information.