For many businesses, hearing the UK had secured a free-trade agreement with the EU with a week to spare on Christmas Eve was a welcome gift.
It removed the threat of a no-deal and costly new tariffs and quotas that threatened to cause more disruption at the end of the most turbulent year most of us will ever have experienced.
The agreement with Brussels ensures the UK retains membership of the customs union and single market, much like Switzerland’s relationship with the EU.
While that’s the good news for businesses that trade goods with the EU, 1 January 2021 did usher in substantial new barriers and costs for business owners to be aware of.
Customs declarations, safety checks and those at the border threaten to raise costs for businesses and cause severe disruption in supply chains.
There’s a plethora of new regulations to get our heads around – 1,246 pages to be precise. We’ll round up the most relevant of those up in this blog post.
UK businesses that import goods from the EU face the prospect of supply chains increasing their prices to account for the extra costs involved with sending goods across the English Channel.
For example, a firm of florists that relies on flower growers in the Netherlands might have to wait longer for their tulips to arrive this spring – and potentially pay more to their suppliers.
Businesses in that situation or similar have almost no alternative but to pass that price increase onto their customers, especially at a time when cashflow is so tight due to COVID-19.
Speaking of cashflow, now is the right time to review your business’s forecast for the first six months of 2021 as the COVID-19 support winds down at the end of April. We can also factor in any hidden costs from importing goods from the continent to provide a clear picture at this turbulent time.
Costs involving certificates and inspections to get goods into the UK need to be accounted for, along with any import duties and operational fees that could affect your business’s income.
We usually offer this as part of our business startups service, but we also provide this as a wider business planning service which should be of use to importers and exporters based in Devon.
Since New Year’s Day, VAT is now being collected at the point of sale, instead of the point of importation. In practice, this means overseas retailers sending goods to the UK need to register for UK VAT and account for it to HMRC.
The alternative, as some EU firms are choosing, is to simply refuse to register for UK VAT and stop delivering goods to the UK. A bitter blow to fans of Belgian beers.
For domestic businesses that supply goods to the EU, it’s vital to accurately record data on any customs declarations for VAT purposes. On exports to the EU, most goods are now zero-rated for VAT.
If you need any help with accounting for VAT or planning within your business, contact us on email@example.com or call 01363 773191.