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The so-called transition period between the UK and EU ends on 31st December 2020, resulting in a new hard border to control the flow of goods on both sides.

HMRC has written to all VAT-registered firms to explain the trading changes required when doing business with EU nations from 1st January 2021.

First and foremost, all firms will have to enter import and export declarations regarding ‘controlled’ goods. Non-controlled goods will have new import processes phased in over three periods in January 2021, April 2021 and July 2021.

HMRC has recommended that businesses undergo checks to find out of their imported goods fall under the umbrella of non-controlled goods and can be transported under staged import controls.

Traders with existing records of compliance will be permitted to defer import declarations on many goods for a maximum of six months after 1st January 2021.

All VAT-registered firms trading with businesses and consumers in the EU must also ensure they have a UK economic operator registration and identification (EORI) number.

HMRC has confirmed that postponed VAT accounting may be utilised by firms from 1st January 2021 to account for import VAT on their VAT returns for goods imported from overseas.

Import VAT will not be applicable at the UK border, providing the value of consignments are less than £135. Excise goods and gifts are the only exceptions to this rule.

Customs duty for all imports will experience new rates from 1st January 2021, which will be known as the UK global tariff.

All VAT-registered firms in Northern Ireland will be able to get free guidance from the Trader Support Service (TSS) which will oversee the new trading processes applicable under the Northern Ireland Protocol.

If you haven’t yet read or received HMRC’s formal communication, you can view it here.


Last updated: 7th October 2020


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