Date17 Dec 2021
CategoryTax, VAT & Indirect Tax
It’s not always easy to approach the post-Brexit world of imports and exports without adopting a Grinch-like, glass-half-full outlook. For example, it has been widely reported that new procedures and revised obligations have resulted in additional workloads and costs for many businesses.
Regardless of its source, any change in procedures, or movement from a long-established ‘norm’, will be accompanied by gripes, moans, and frustrations that try our patience and frazzle our nerves. Most businesses have, at some point in time, endured a software update, or a change to a booking system, personnel changes or other events that have created upset, concern, additional work, financial loss or loss of business.
The changes introduced from 1 January 2021 had a significant impact on many businesses, however, there are certainly a number of positive aspects resulting from Brexit that should be highlighted.
UK’s own ‘Global Tariff’
As a result of the UK leaving the EU Customs Union and Single Market, a raft of measures came into force which applied to the movement of goods across borders. Most markedly was the movement of goods between the EU and the UK. One of the more significant ‘positives’ was the introduction of the UK’s own ‘Global Tariff’, which provides a list of commodities and their corresponding rates of import duties. This included considerable changes and has resulted in the new UK duty rates by and large undercutting the duty rates applied by the EU for the same products. The reduced cost of bringing those goods into the UK has benefitted many UK businesses.
Postponed VAT Accounting
The UK also implemented the ‘Postponed VAT Accounting’ process which allowed UK importers to report, rather than pay, import VAT when they brought goods into the UK. Import VAT is now recorded and recovered on the same UK VAT return. This results in a 20% cashflow saving and moved reporting to an online process rather than relying on paperwork and the postal service, as has previously been the case.
Lifted restrictions for the UK’s reliefs and customs special procedures
Without the EU overseeing regulations in the UK, the UK can apply reliefs and customs special procedures without the same level of restrictions or qualifications, making them ever more accessible and easier for businesses to apply. Notable reliefs include the introduction of a financial guarantee waiver when applying for a Duty Deferment Account and the removal of the need for a financial guarantee (in most cases) to operate a customs special procedure such as Inward Processing. The UK’s revised position has saved businesses not only time but money too.
Further import duty savings felt across a range of UK markets
As the UK is no longer a member of the EU, the additional duties which were applied under the Common Agricultural Policy (CAP) no longer apply to UK imports. This has resulted in another import saving for UK businesses.
The UK has negotiated several Trade Agreements with its wider global trading partners, and businesses active in these markets have benefitted from further import duty savings. For some businesses, these new Trade Agreements have presented opportunities to explore emerging supply chain markets.
2022 heralds the next phase of change | Speak to an advisor
So, with all of that in mind does this mean that UK businesses can relax, pour a glass of something comforting and bite into another mince pie? Well, maybe not quite yet….
January 2022 heralds the next phase of change (note that we didn’t mention the dreaded B word again) including the implementation of checks, reporting, controls, and declarations. Now is a good time to look ahead and make sure that existing processes, procedures, and personnel are prepared and ready to meet the new challenges.
In the Grimm Brothers story of the ‘Elves and the Shoemaker’ the elves worked tirelessly throughout each night to help the poor shoemaker and his wife. They produced perfect results each morning to ensure the business was successful. Whilst we may not commit to working overnight every day of the week, you should be comforted to know that we can take the 2022 burden away from you.
At Azets, we can help you explore the options available to your business and support you into the New Year. For further support and advice, please get in touch with your local Azets advisor or directly contact Lucy Sutcliffe, National Customs Duty Director, or Greg Mayne, Director of VAT.