Whether you import goods to the UK or export from the UK to the EU, this post contains key updates you need to be aware of, and for many, take action on before the end of the year.
After the post-Brexit transition period comes to an end, there are specific changes that EU businesses not currently established in the UK will need to make when moving goods or offering services.
While the primary focus in this post is for overseas businesses who trade with the UK market, there is still pertinent data that UK-EU importers and exporters can benefit from knowing before the changes take effect on January 1st, 2020.
This update offers some practical steps you can take to make sure your business is ready
UK – EU Trade Agreement
As discussions are still ongoing, it is uncertain whether a trade agreement with the EU will be reached before January 1st, 2021. Regardless of whether or not a deal is in place, there will be changes to the following:
- How businesses provide services within the EU Market
- The way goods are exported and imported
- The hiring process for those looking to hire people from the EU
While the government has already launched a major campaign to help businesses prepare for the forthcoming changes, there are still many who need to take immediate action to ensure their business can keep moving.
In the next section of this post will break down the specifics relating to exports, imports, and customs as they stand at present. These changes apply to importers and exporters who work in the EU trading with the UK, and those in the UK trading with the EU.
You will essentially be using the same export and import processes used for non-EU countries without a trading agreement with the EU or UK. In summary, when moving goods across the border, this will mean:
- The carriers will need specific information to move your goods between territories
- Import and export declarations are needed to enter or remove goods into or from the UK or EU customs territory
If you already have a UK trading partner, it will typically be the trading partner who makes the UK declaration. Still, the specifics of what you need to do will ultimately depend on the arrangements you have in place with any customs representatives, carriers, or trading partners. If you do not have any of these provisions in place, then you need to get a UK representative to act on your behalf to deal with customs for you.
For a more comprehensive overview of the specifics for those looking to buy or move goods from the UK after Brexit, the government has produced a PDF that can be accessed here.
Other customs-related resources that could be useful to you are linked below:
There will be changes to VAT IT systems and import VAT on parcels you need to be aware of. For organizations selling to UK buyers, you may also need to notify customers of any changes to charges before January 1st, 2021.
If you sell to UK buyers and are based outside of the UK, you will need to pay Import VAT.
- For goods worth £135 or less, you are responsible for the Import VAT
- For goods over the £135 threshold, the buyer will need to pay the Customs Duty, Import VAT, and if applicable, any Excise Duty
Aside from the above, key changes are being made to VAT IT systems.
- A new digital service for the checking of UK VAT numbers will be introduced
- There will be changes to how you claim VAT refunds for UK business expenses
- If you sell digital services, there are key changes* to how you pay VAT on services you provide to customers in the UK.
If you operate a service-based business, you will need to check how these services are now going to be regulated and how professional qualifications gained in the European Economic Area and Switzerland will be recognised in the UK after January 1st, 2021.
This is particularly important if any of the below apply to your business.
- If you send your employees to the UK to do business on your behalf
- If you are planning to merge with a UK-based business
- If you have subsidiaries or branches in the UK
- If your employees provide services within or as part of a regulated profession
- If you operate within a service sector in the UK
If you employ UK nationals that need a professional qualification to practice in the EU, then you must ensure their qualification is still recognised by the relevant EU regulator.
For further reading and the most up to date guidance on the relevant recognition of professional qualifications, please refer to this section of the government website.
Selling Manufactured Goods
If you manufacture goods that are sent to the UK market, there are going to be key regulatory changes* to approvals, testing, and labelling that come into force on January 1st, 2021. Knowing which rules apply to you depends on the type of goods you manufacture.
- If the goods have already been placed onto the market, or they will be prior to January 1st, 2021, then you do not need to do anything unless you intend to manufacture more goods in the future.
- If you are placing goods that are classified as vehicles, medicines, chemicals, or aerospace-related products, the rules are going to be different from those which apply to standard or ‘new approach goods’.
- If you are placing goods that are classified as medical devices, construction projects, products that require energy labelling or eco-design features, civil explosives, or rail interoperability constituents, then again, the rules are different.
*At present, these changes only apply to placing goods into the Scottish, Welsh, or English markets. For Northern Ireland, the guidance will likely be different. If you plan to place manufactured goods in the Northern Irish market from the EU, further guidance can be found here. If goods are coming from the GB region, further guidance can be found here.
The legislative framework is comprehensive, and for some, rather difficult to follow in terms of knowing which regulatory framework is applicable to your business. If this is something you need clarity on, our company and commercial team here at OGR Stock Denton can help.
Changes to CE Markings
This is another major consideration for those selling manufactured goods to the UK market. As part of the preparations needed, you should also check whether or not you need to make changes to your conformity assessment or markings before or after January 1st, 2021.
Before this date, a Pi mark, wheel marking, or CE mark have always been used to place goods onto the UK market. Going forward, the UKCA mark is going to be the conformity assessment marking for most of the goods that today use the CE Mark.
Although for certain products, the CE mark is going to be accepted in the UK until January 1st, 2022, it is vital that your business readies itself as soon as possible to use UKCA markings. I can also confirm that at this point, it will be possible to use both the UKCA and CE marking, as long as you are completely compliant with both EU and UK regulations.
According to the latest government guidance, those businesses that need to use the UKCA mark immediately from January 1st, 2021, include those where all of the following applies:
- If you are covered under legislation that requires UKCA marking
- If a conformity assessment has been undertaken by an official body in the UK, and you have not transferred your CA files from the UK body to the EU equivalent prior to January 1st, 2021.
- If you require a mandatory conformity assessment by a third-party
Understanding Your Changing Legal Responsibilities
For manufacturers, your legal obligations will largely remain unchanged from January 1st, 2021. However, your regulatory requirements, VAT, and customs processes will most likely be affected and require some key changes in order to remain compliant.
For UK suppliers and distributors, it is essential to confirm whether it will be your supplier or your business that will become an ‘importer’ from January 1st, 2021. If it is your business who will be bringing goods from outside of the UK and placing them into the GB market (the rules for NI are going to be slightly different), then you will become an ‘importer’. Here’s a quick summary of how your legal responsibilities could change, along with some of the practical steps you may need to take.
- Ensure the right conformity assessment procedures have been undertaken and that all conformity markings are compliant under the new legislation.
- Making sure that all labels for goods include your company name and address – it is possible to provide this information on accompanying documentation until December 31st, 2022.
- Make sure your business has a system to store all conformity declarations for a period of ten years.
- Ensure the manufacturer has produced the correct technical documentation for their goods and that all labelling is fully compliant.
Although we are already well into the final quarter of the year, I do expect there to be more changes. While I intend to keep you updated in the form of further posts, you can also sign-up to receive emails directly from the government site here.
If you would like to get guidance on whether or not your goods will be affected and confirm the steps you need to take in order to become compliant with the new regulations, please contact one of our commercial solicitors today for further advice.