DORSET BUSINESS FOCUS / INTERNATIONAL TRADE
What’s New This month in International Trade If you own a UK company and need to trade to the EU, you could be going through some difficulties with the new rules since the Brexit transition ended. Even big companies such as John Lewis and Marks and Spencer are suspending certain services to the EU due to problems with customs and some EU customers have been hit with charges when buying from the UK.
Invoicing Specific origin wording should be shown on invoices. This is essential for your business because the origin statement (along with HS code information) determines the amount of duties and taxes you’ll have to pay for all your imports into the UK or exports to the EU.
So, here’s a guide that will tell you everything you need to know about how to go about importing and exporting goods in and out of the UK. 1. Obtain an EORI (Economic Operators Registration and Identification) number. 2. Check what import licences or certificates you may need depending on the goods exported such as food, livestock, products etc. 3. Decide whether you will be responsible for your own declarations or whether you will use a Customs Intermediary (CI) to complete the declarations for you 4. If you do decide to complete the declarations yourself then you will have to train a member of staff on how to complete the declarations and will probably need to purchase specialist software as well. The business will need to register to use the National Export System (NES). An export declaration must be completed before export, using NES which provides a unique reference number (URN). You will also need to apply for a CHIEF Badge. CHIEF stands for Customs Handling of Import and Export Freight and is the computerised entry processing system. This will be replaced with a new system, the Customs Declaration Service (CDS), within the next two years. 5. Exporting procedures - these depend on the various processes which are outlined below: 6. Standard Export procedures: the export declaration URN is required to allow the goods to cross the border. The business must make sure that the EU importer has done everything needed, including having an EU EORI, with the right licences and certificates and completing a correct import declaration. 7. Transit: this can be used when goods are moving across several territories or if the business wants to complete customs procedures away from the border. The business or the CI can apply for 'authorised consignor' status, which allows the goods to start movement (and move in to Transit) from an authorised location belonging to the CI or business and not the designated Office of Departure (OD). 8. If completing its own declarations, the business needs to register for the New Computerised Transit System (NCTS). A guarantee must be provided before the movement of goods can start which should be arranged with a bank or financial institution and must be authorised by HMRC. Before export, as well as an export declaration, a Transit declaration must be completed on NCTS. This provides another URN.
Your invoice should clearly state: • The origin of each product (please refer to the www.gov.uk website for detailed guidance on the rules of origin) • A statement at the bottom of your invoice which reads: The exporter of the products covered by this document (insert EORI No.) declares that, except where otherwise clearly indicated, these products are of (insert) preferential origin. …………………………………............(Insert place and date) …………………………………........... (Insert name of the exporter) Where your invoice covers a mix of goods of UK, EU or other third country origins, the statement will apply only to the UK/EU origin goods. If your invoice contains no goods of UK or EU origin, the statement can be omitted. It is the responsibility of your business to ensure invoices contain all necessary detail to ensure accurate and timely export and import declarations can be made and to avoid unnecessary duties and taxes to your business or your customers.
VAT With Brexit, VAT procedures have changed considerably, so make sure your accountants are fully up to date with the new procedures. Businesses that import goods would normally have to pay import VAT on arrival before those goods can be released from the port. However, HMRC has agreed that this import VAT can be paid as part of the normal quarterly VAT return under the Postponed VAT Accounting (PVA) system. The importer doesn’t have to use PVA, but it helps with cash flow if they do. To receive statements from HMRC on the amount of import VAT that has been postponed, and which needs to be reported on the VAT return, the trader also needs to register for the Customs Declaration Service (CDS). Goods leaving the UK for the EU were called 'removals' but will now be called 'exports'. If certain conditions are met, the export of goods can be zero-rated for VAT purposes but records must be kept in order to prove this. The conditions are: • Official or commercial evidence (for example from a customs system or certificates of shipment) to prove the entitlement to zero-rating. • The goods must be exported from the UK (and evidence obtained) within either three or six months depending on what types of goods are exported. If the conditions are not met, or there is not sufficient evidence, then the supply will be treated as standard rated. Zero-rated supplies must still be accounted for even though there is no VAT liability. There will no longer be any requirement to adhere to distance selling regulations and there will no longer be a requirement to verify the VAT status of the recipient. If you’re importing goods from the UK to the EU and delivering on duty paid (DDP) terms, then local EU VAT advice must be sought. If you need support with understanding and implementing the export and import processes and procedures, please contact international@dorsetchamber.co.uk
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March 2021 | Dorset Business Focus
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