Last reviewed 1 November 2019
The UK is due to leave the EU on 31 January 2020. Although the Government has made a draft agreement with the EU, it is still possible that there will be a no-deal Brexit. Furthermore, if there is no deal it is possible that the UK and EU could enter into agreements for specific areas. Consequently, this is a fluid situation and significant changes may be introduced at any time.
The Government is providing advice regarding how to prepare for a no deal Brexit. The start point for finding out what needs to be done is at https://www.gov.uk/get-ready-brexit-check . This article provides a few brief pointers for businesses that trade with the EU. It must, however, be emphasised that this article cannot cover all the matters that a business needs to deal with for Brexit. It should also be noted that many of these points will apply even if there is a deal with the EU regarding Brexit. The changes that will be caused by Brexit are extensive. For example, leaving the EU means that the pet passport scheme ends and different procedures apply and it can take up to four months for the new process. Businesses, therefore, need to look at every aspect of their interactions with the EU (as well as in their supply chain) to ensure a smooth transition.
Whilst it may seem obvious, it is necessary to ensure that your passport is up to date and that you meet any necessary immigration rules. For example, most EU countries will require the passport have an expiry date of at least six months after the date of entry (currently it is sufficient for the passport to be valid on the day of travel).
It should also be noted that European Health Insurance Cards may not be valid after Brexit. Appropriate health insurance may, therefore, need to be considered particularly for any pre-existing conditions (which is often not covered by insurance, but was covered by the Health Insurance Cards). Visas will not be required for short stays (up to 90 days in any 180-day period) but visas will be required for longer stays and for work or study visits. Whilst persons already resident should be allowed to continue to work post Brexit (in the UK if EU nationals, or in the EU if UK nationals), it is advisable to check that any requirements for registration are met to ensure that all regulations are met post-Brexit. For example, there is an EU settlement scheme in the UK for EU nationals that are in the UK prior to Brexit and UK businesses may wish to assist their EU employees to apply for the settlement scheme. Other EU countries are introducing similar schemes and employees working overseas need to apply for these or obtain the correct visas and work permits.
As would be expected extra documents will be needed if driving in the EU post Brexit. An International Driving Permit will be required to drive in most countries in the EU. In addition, if a UK car is taken to the EU a green card for insurance and a GB sticker on the back (even if the number plate already has a GB marked on it) will be required. There may be delays in travel due to extra checks. For example, it will be necessary to show that the traveller has a return ticket and sufficient money for the stay and there may be additional security checks.
It is also possible that free mobile data roaming in the EU may end following Brexit. Mobile phone companies may introduce charges on data roaming and it is advisable for businesses and travellers to check with their providers.
Currently, UK drivers are able to drive in the EU due to the mutual recognition of licences. Should the UK leave the EU without any agreement covering mutual recognition, UK licenced drivers will no longer be able to drive in the EU and international licensing will be necessary. The EU has a requirement for periodic training and the holding a Certificate of Professional Competence (CPC). Without the mutual recognition of UK issued licences and CPCs, UK based drivers will not be able to drive within the EU.
Other matters that need attention are:
No business is permitted to run a haulage business in the EU without an operator’s licence complying with EU regulations;
Continued insurance for haulage work in the EU will need to be obtained;
UK roadworthiness tests are recognised throughout the EU but could end with a no-deal Brexit; and
Cabotage rights within the EU will cease.
Drivers of goods or passenger vehicles operating in the EU need to hold a CPC. The CPC can be issued by an authority in the EU member state where the driver is normally resident, or where the driver is a national of a third country (such as the UK) the CPC can be issued in the EU member state that has issued a work permit. UK nationals employed by an EU haulage company need to follow the driver training of the member state where the undertaking employing them is established. Drivers that are UK nationals and not long-term residents of the EU working for an EU haulier will require a driver attestation issued by an authority within the EU. Road transport operators must have an effective and stable establishment in an EU member state.
Businesses shipping goods to the EU may wish to confirm with their haulage providers that they meet the post-Brexit requirements.
Imports and exports
Where goods are sold that are subject to CE marking in the EU the CE marking can continue to be used. It may, however, be necessary to transfer the certificate of conformity from the UK to an EU conformity assessment body. The UKCA (UK Conformity Assessed) mark is a new UK product marking for goods sold in the UK. When it is required is explained at https://www.gov.uk/guidance/prepare-to-use-the-ukca-mark-after-brexit .
UK based manufacturers will also need to ensure that their legal obligations in respect of goods sold in the EU remain unchanged. Following Brexit the goods sold will no longer be part of the single market in goods, but will be exports from the UK and imports into the EU (and vice versa for goods coming from the EU to the UK). It needs to be confirmed whether an EU representative needs to be appointed for goods exported into the EU. The EU distributor of goods will now be the importer and the goods will need to be labelled with the importer’s address and the details of the manufacturer of EU based representative. The importer also needs to ensure that the correct conformity assessment procedures have been carried out and carry the correct markings. Conformity declarations need to be kept for ten years.
There are special rules in respect of chemicals, medicine’s, vehicles and aerospace. Also, food needs specific labelling. Pre-packaged food and Caseins (milk proteins) must have the Food Business operator or importers address and details on the packaging. Also, the EU organic logo will not be permitted to be used following Brexit unless the UK control body is authorised by the EU for certification and the UK and EU recognise each other’s standards. If there is no agreement to recognise each other’s standards organic food and feed cannot be exported to the EU, but UK organic control logos can be used. Food produced in the UK cannot be labelled as being of EU origin following Brexit. The UK is providing a 21-month transition period for labelling changes for EU goods imported into the UK.
Tariffs may need to be paid on goods exported to the EU or goods imported from the EU. The UK is introducing a temporary tariff for customs rates. The UK rates for goods imported can be found at https://www.gov.uk/guidance/check-temporary-rates-of-customs-duty-on-imports-after-eu-exit . The tariff for goods imported into the EU can be found at https://madb.europa.eu/madb/euTariffs.htm . If the correct tariff is not paid goods will be held at the point of import. In order to move goods into or out of the EU it will be necessary to obtain an Economic Operator Registration and Identification number (EORI) starting with the letters GB.
Contracts will also need to conform with International Terms and Conditions of Service (Incoterms®). Importers may also wish to appoint a customs broker, freight forwarder or logistics provider to assist with imports and exports or alternatively acquire the necessary software and authorisations from HMRC. Businesses also need to consider if they need to take advantage of various customs reliefs, such as warehousing, temporary admission rules, inward processing or outward processing reliefs and specific or end use reliefs. Also, as duty and VAT will be payable on import it will be advisable to set up a duty deferment account to pay these imposts.
It will be necessary to make customs entries for all movements of goods from and to the EU from the UK. When moving goods between or through common transit countries the Common Transit Convention (CTC) can be used. This allows goods to be moved quicker (as customs declarations are not required at each border crossing) and duties only need to be paid when the goods reach their final destination. Also, some customs procedures can be completed away from the border. Declarations can be completed by the owner of the goods but an agent, broker or freight forwarder can be used but they must be given written permission to do this. It may also be beneficial to register for the Transitional Simplified Procedure (TSP) as that can make it simpler to import goods from the EU.
Substantial changes will be made to the VAT system for intra community trade. As has been mentioned above it will be necessary to complete customs declarations instead of declaring the sale and purchase of goods to and from the EU on intrastats and EU sales lists. The government’s aim is to keep the UK VAT system aligned to the EU system (at least initially) to provide a degree of certainty to businesses. The UK will, however, introduce a postponed accounting system for VAT on imports so that VAT will be accounted for on the importing business’s VAT return rather than at import. This will apply to imports from the EU and from countries outside the EU. This will provide a significant VAT cash flow advantage to all importers. It should be noted that the current relief for low value imports sent as a parcel will no longer apply, VAT will be due on all parcels entering the UK unless they are eligible for a specific relief (such as books and children’s clothing). A digital service is being introduced so overseas businesses can register and account for VAT on the sale of goods up to the value of £135. VAT on sales over the value of £135 will be collected from the purchaser.
All sales of goods to the EU will be treated as exports and zero-rated but duty and VAT will be due on import (see above for CTC rules). The distance selling rules will no longer apply when goods are sold to consumers in the EU.
The UK will no longer be part of EU wide systems such as the Mini One Stop Shop (MOSS). Businesses currently using the union MOSS scheme will need to cease using this and register for the non-union MOSS scheme.
EU Brexit preparedness notices
The EU has prepared a number of Brexit preparedness notices. These are at https://ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en
The changes for Brexit are wide-ranging and impact a large variety of activities. Many of the changes will apply whether there is an agreement or not and unfortunately the position will not be clear until Brexit actually occurs. Businesses need to be flexible and invest in their systems and procedures to allow for a successful transition.