Brexit and the Impact on SAP Customers. Part 6
Author: Claire Neale, Solution Architect, NTT DATA Business Solutions UK.
This is the sixth release in the series of Brexit blogs I am delivering to try to keep you abreast of changes required to support your import / export processes post Brexit.
Reminder of Key Points:
- UK (England, Scotland, Wales excl. Northern Ireland) are no longer part of the EU and therefore are no longer required to produce Intrastat Returns or EC Sales Lists;
- Whilst a tariff free trade deal was negotiated between UK and Europe, this only applies to the movement of goods which have a country of origin of UK or a country in Europe;
- Rules of Origin – if a product has more than 40% of its pre-finished value made outside of the UK or EU then it will face tariffs on movement of the goods – tariffs vary by country of origin;
- One of the biggest changes to UK Businesses is they are now having to complete customs declarations for any imports/exports from UK to Europe;
- Additional customs costs as a result of employing customs agents / freight forwarders to complete forms on businesses behalf;
- EORI numbers (Economic Operations Registration and Identification) – businesses need a GB prefixed EORI number to import / export goods to UK; UK businesses now need an EU EORI number to import or export from any of the EU 27 member states. You do not need one from every country in the EU with whom you trade with; you are able to use a single number for the whole of the EU, obtained from any EU member state’s tax authority. Note, UK importers and exporters into the EU will need a customs intermediary and use their EORI number. This is because they are now non-resident within the EU Customs Union; UK businesses moving goods from England, Scotland or Wales to Northern Ireland will require an XI EORI number;
- Duty Deferment – instead of paying duty charges for individual shipments, businesses may find it easier to set up a duty deferment account enabling them to pay duty on shipments once a month, via Direct Debit. If goods are moving across different EU borders, then they should be moved under the Common and Union Transit, which means customs declarations are not required at every border. More information can be found here: https://www.gov.uk/guidance/transit-and-other-suspensive-regimes
- Road Hauliers entering Kent must apply for a Kent 24hr Access Permit, where they depart for EU from Kent, otherwise they face being sent back or fined £300. Additional certificates will be required for chilled or frozen foods, or livestock;
- Goods moving between UK and EU are now subject to VAT and duty charges. Incoterms indicate who is responsible for clearing and paying import duty on goods coming into or going out from UK to EU. There is a requirement for UK businesses to register for VAT in the EU countries where it trades, and to appoint a fiscal representative where mandated in some of those countries;
- The existing rules for imports from non-EU countries now apply to imports from the EU, but with some changes. The government will introduce ‘postponed accounting’ for import VAT on goods brought into the UK with effect from 1 January 2021. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on, or soon after, the goods arrive at the UK border. Customs duty (tariffs) will apply to some goods and excise duties will continue to apply to tobacco, alcohol and certain energy products. The VAT code used by UK businesses will either be a Non Domestic Output VAT or Non Domestic Input VAT at the appropriate rate – please speak to your tax advisors if there is any query on the rate you should be charging;
- A sale can be zero rated provided 2 conditions are met.
- – Evidence that the goods have been removed is obtained and retained – please see HMRC notice 703 requirements https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703 It is important these evidence requirements are met otherwise HMRC could issue assessments standard rating the goods;
- – The goods are exported within set time limits (usually 3 months but there are variations);
- Domestic VAT codes should be used for supply/sale of goods between UK and Northern Ireland please refer to the following link for guidance:
Key OSS Notes
Please keep checking the following main OSS notes for updates:
2885225 Brexit: Through the Transition Period and Beyond
2768412 Recommendations for Brexit in FI
2999650 Brexit: Logistics Invoice Verification
As issues and additional features are highlighted, we are regularly raising calls with SAP for resolution. On a daily basis SAP are still updating some of the corrective actions and we are still awaiting final solutions in some areas.
As ever should you have any questions as a result of this blog please raise a ticket initially via the portal so we can capture that question or request.
Remember to check back regularly for the next in our Blog series on Brexit.