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VAT in Preparation For Brexit


HMRC has written to all VAT-registered businesses to make sure that they are prepared for new trading rules with Europe now that Britain has left the EU.


The new rules, which have applied from 1st January 2021, significantly affect everyone who trades with Europe, either importing or exporting, no matter what the type or value of goods or how they are transported.


HMRC has stressed that despite the last-minute deal agreed between Britain and the EU in late December 2020, the rules will not be changing.


What changed on 1st January 2021?


From the start of January, firms are now responsible for completing import and export declarations for all the good they move between Britain and the EU.


Companies who import non-controlled goods should have decided if they wish to delay making import declarations for up to six months or make the full declarations.


Most traders importing non-controlled goods will be able to delay making import declarations. This can be done by making a record of the import in their commercial records at the time of import. They will then have up to six months to submit supplementary declarations. HMRC will need to receive those within 175 days from the date that the goods are imported.


As of 1st January, companies who choose not to delay or who are importing controlled goods now need to make full import declarations.


Unlike import declarations, export declarations cannot be delayed; HMRC needs these to let goods cross the UK border. Companies who export goods to Europe now need to make export declarations.


The process is the same as that used for trading with other non-EU countries.


If companies are ready to make their customs declarations, they will be able to select from two options:


Firstly, they can engage a customs specialist to do it for them: these specialists can include freight forwarders, fast parcel operators and other customs agents. It’s believed that as many as a third of all traders may already have a specialist ready to assist them, but that still leaves many other companies who may need to make use of their services.


Secondly, they can carry out the declarations themselves. This means that they will need someone who has extensive knowledge of the subject in-house and the right systems and authorisations in place. Businesses who have not got these ready will find that it is already too late. It is not surprising, therefore, that most businesses will choose to outsource the task.


Businesses who do use a customs specialist will find that the rules regarding them will be changing. From 1st January 2021, they have been able to make simplified declarations using their own authorisation, so the business that uses them will not have to be authorised itself.


However, the specialist will only be able to do this if


  • the business is established in the UK;

  • the business imports goods into Great Britain (defined as England, Scotland and Wales);

  • the specialist has the appropriate authorisation.


If goods do not have the right paperwork, or if it is incorrect or missing, it may be seized and the business will face delays and possibly extra charges. Contractors who have been employed to transport the goods may decide they don’t want to collect them if they are not convinced that the right documents are available for border crossings.


Businesses that move goods between Great Britain and Northern Ireland will find the Trader Support Service can provide them with guidance on the new processes that will operate under the Northern Ireland Protocol which began on 1st January 2021. A link to the Service can be found here.


Trader checklist


HMRC has drawn up a short checklist for businesses to use to ensure that they have done all that they need to do in order to prepare for the new trading rules. It can be found by following this link.


The government has complied a list of the guidance relevant to companies importing and exporting and it can be found by following this link.




Written by

Caroline Lamyman, Tax Advisor at rradar