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With the UK effectively leaving the EU, the Customs Union and the Single Market at the end of the transition period (which the UK government has clearly stated will not be extended beyond 31 December 2020), there are certain Brexit implications that we know will arise regardless of whether or what kind of agreement is reached on a future relationship.

On this basis, we have set out below key actions required by businesses before the end of 2020.

VAT & Customs

  1. Understand the potential impact on your supply chain
    Ensure you have reviewed your supply chain to understand the potential impact of a customs and VAT frontier on the movement of your goods including the impact of trading under a FTA (see page 19). Ensure hauliers and freight forwarders are prepared with the relevant permits and registrations. Be aware that even if a FTA is agreed, it may not cover all goods traded between ROI and GB.
  2. Contracts
    Assess whether the terms of your contracts (especially incoterms) with your suppliers and customers meet your needs post Brexit, in particular who is responsible for import clearance and any duties arising. Incoterms are internationally recognised trade terms that define each party’s obligations, costs and risks associated with the delivery of goods from seller to buyer.
  3. Obtain an EORI number
    To operate within a customs regime, importers and exporters of goods need to be customs registered. If not already registered, an application should be filed with Revenue via Revenue’s Online Service (ROS) for an EORI (Customs) number if you are trading goods between ROI and GB. An EORI number will not be required for supplies on the island of Ireland.
  4. Customs Classification and Origin
    The rate of Duty arising on goods depends on their Customs classification and origin. Ensure you have confirmed the commodity codes and origin for all goods moving into and out of GB and vice versa and you understand the potential tariff implications associated with the movement of your goods between ROI and GB including under a FTA.
  5. Filing Customs declarations
    Irrespective of the outcome of FTA negotiations, reporting for customs will now be required when trading between ROI and GB. Consider how you will file Customs declarations for your export or import of goods. Most declarations are filed by Customs agents/freight companies on behalf of traders. Depending on your profile, you may prefer to bring the declaration process “in-house”. Make sure you understand the information needed to file Customs declarations and where you will get it. For many businesses the required information is not readily available from existing ERP / management information systems.
  6. Export/Import Controls
    Understand whether any additional controls will apply to your goods such as licensing requirements, Sanitary and Phytosanitary (SPS) controls or advance notification requirement (e.g. for agri products).
  7. Use of Customs relief/simplifications
    Make sure you are aware of the reliefs and simplifications available such as customs warehousing, inward processing relief, transit which could mitigate the impact of Brexit on your business in ROI or GB. A guarantee is often required to avail of some reliefs so apply early.
  8. Impact on ERP/finance system
    As customs declarations will now be required when trading between ROI and GB, this will have consequences for ERP / finance systems. Assess what changes may be required to your ERP (Enterprise Resource Planning) or finance systems in anticipation of a changed VAT and Customs Duty accounting regime post Brexit.
  9. GB will become a third country for VAT purposes
    The VAT rules for trading goods and services on the Island of Ireland will remain the same but the rules for trade in goods between ROI and Great Britain will change and the rules for the supply of certain services cross border to and from GB will change also. Familiarise yourself with how these new rules will operate and apply to your business. For example, those particularly impacted include sellers of goods B2B into GB from ROI and vice versa and also those supplying goods and certain services B2C from ROI to GB and vice versa. Determine if any additional VAT considerations will arise from your movement of goods post Brexit or your supply of services, e.g. additional VAT registration requirements.

Other areas

  1. People
    The UK will introduce a new immigration regime from 1 January 2021 – non-Irish EEA nationals are unlikely to be subject to a more beneficial regime than non-EEA nationals. Non-Irish EEA nationals who currently reside in the UK need to apply for their right to remain in the UK under the EU Settlement Scheme.
  2. Tax impact of intra-group payments
    The most significant in terms of direct tax costs to companies are likely to be provisions that apply in relation to group structures where there is a UK tax resident company in a group. Consider the tax treatment of dividends, interest and other payments to / from EU / EEA Member States after the end of the transition period and whether making such payments prior to the end of the transition period / restructuring group operations may be beneficial from a tax perspective.
  3. Data issues
    Review data flows and consider if restrictions will apply to the movement of personal data from the EU to the UK and whether any derogations can be obtained or arrangements put in place to facilitate the ongoing transmission of such data if mutual adequacy decisions are not made by the EU and the UK before the end of the transition period.
  4. Company law issues
    Irish registered companies that are relying on UK resident directors to satisfy the requirement under Companies Act 2014 to have at least one EEA resident Director will need to take steps to ensure compliance with company law. Irish subsidiaries of UK resident companies will no longer be able to claim the exemption from filing accounts that applies where its parent is established in the EEA – affected groups will have to file Irish accounts or restructure.
  5. Monitor developments in 2020
    Have a process in place to monitor the impact of relevant developments in 2020.

Further information