Despite the referendum taking place in 2016 and the UK officially leaving the European Union at the beginning of 2020 – which was then followed by an 11-month transition period before trading rules officially changed – the challenges for businesses of Britain’s departure from the EU are evolving all the time.
If your company exports or imports goods or services to or from Europe – or plans to – complex new regulations can make the process seem overwhelming. There are also everyday factors to think about when doing business with partners in the EU, such as data security.
However, there is a huge opportunity to accelerate growth for those companies that can trade successfully with the EU, so it’s worth wading through the red tape.
This article takes you through the latest Brexit regulations, along with the existing rules that can catch entrepreneurs unaware.
Customs controls
Full customs controls were introduced by the UK government from the beginning of 2022. Previously, importers of goods from the EU to Britain could delay submission of customs declarations for up to six months. Those importing under the new rules must present paperwork at the point of import.
Similarly, exporters to the EU must hold supplier declarations to support their declaration of origin at the time they export. Previously, the declaration could be provided after the export had taken place.
Less than a month before the new rules came into force, research from the Federation of Small Businesses (FSB) found that only 25% of small importers affected by the changes were ready for them to take effect.1
Mike Cherry, the FSB’s National Chairman, advises: “Speak to suppliers to ensure you have all you need to make declarations, consider alternative providers if that looks like an efficient way forward, and think about different transportation routes.
“Stockpiling will naturally be a temptation for those fortunate enough to have the funds for it, but there is already a squeeze on warehousing space – if everyone ramps up storage, that squeeze will only tighten.”
Goods
Exporting goods into the EU has been one of the main areas of political and media interest since the Brexit vote in 2016.
Since some of the provisions of the Trade and Cooperation Agreement (TCA) with Europe came into effect in January 2021, there has been a sharp fall in exports to EU, although it does remain Britain’s largest trading partner.2
Under the TCA, there are zero tariffs and quotas on goods moving between the EU and UK, provided those goods meet the rules of origin. However, the increase in bureaucracy has led to long delays and acted as a disincentive for many businesses.
Establishing rules of origin can be complex and, for first-time exporters, will often require you seek expert advice. When preparing to start exporting, guidance from the House of Commons Library, published in January 2022, suggests the following:
“Businesses need to familiarise themselves with new processes. These include: preparing to make customs declarations, knowing how to classify their goods correctly, and following safety and security requirements for their goods.”3
Services
If you own or run a small business that supplies services from the UK to the EU – or one that buys services from an EU company – there has been less disruption than to the trade in goods.
There are, however, new VAT rules for British firms supplying services into Europe. Here are some key factors to consider.
1. Business to Business (B2B) services: No UK VAT is chargeable for services supplied to businesses outside of the UK, including the EU.
2. Business to Consumer (B2C) services: VAT is applied at the place of supply, which is the UK for a British business supplying B2C services into the EU. Special rules apply for services of consultants, lawyers, accountants, data processing and a small number of other sectors, which are deemed to provide services in the location of the customer and therefore do not pay UK VAT.
3. Digital services: All supplies of digital services are liable for VAT in the consumer’s member state. For B2C digital services, the responsibility for accounting for VAT lies with the supplier, not the customer. Businesses selling digital services to EU consumers need to register for a ‘Mini One Stop Shop’ (MOSS) in an EU member state to ensure they pay the correct VAT.
Despite the referendum taking place in 2016 and the UK officially leaving the European Union at the beginning of 2020 – which was then followed by an 11-month transition period before trading rules officially changed – the challenges for businesses of Britain’s departure from the EU are evolving all the time.
If your company exports or imports goods or services to or from Europe – or plans to – complex new regulations can make the process seem overwhelming. There are also everyday factors to think about when doing business with partners in the EU, such as data security.
However, there is a huge opportunity to accelerate growth for those companies that can trade successfully with the EU, so it’s worth wading through the red tape.
This article takes you through the latest Brexit regulations, along with the existing rules that can catch entrepreneurs unaware.
Customs controls
Full customs controls were introduced by the UK government from the beginning of 2022. Previously, importers of goods from the EU to Britain could delay submission of customs declarations for up to six months. Those importing under the new rules must present paperwork at the point of import.
Similarly, exporters to the EU must hold supplier declarations to support their declaration of origin at the time they export. Previously, the declaration could be provided after the export had taken place.
Less than a month before the new rules came into force, research from the Federation of Small Businesses (FSB) found that only 25% of small importers affected by the changes were ready for them to take effect.1
Mike Cherry, the FSB’s National Chairman, advises: “Speak to suppliers to ensure you have all you need to make declarations, consider alternative providers if that looks like an efficient way forward, and think about different transportation routes.
“Stockpiling will naturally be a temptation for those fortunate enough to have the funds for it, but there is already a squeeze on warehousing space – if everyone ramps up storage, that squeeze will only tighten.”
Goods
Exporting goods into the EU has been one of the main areas of political and media interest since the Brexit vote in 2016.
Since some of the provisions of the Trade and Cooperation Agreement (TCA) with Europe came into effect in January 2021, there has been a sharp fall in exports to EU, although it does remain Britain’s largest trading partner.2
Under the TCA, there are zero tariffs and quotas on goods moving between the EU and UK, provided those goods meet the rules of origin. However, the increase in bureaucracy has led to long delays and acted as a disincentive for many businesses.
Establishing rules of origin can be complex and, for first-time exporters, will often require you seek expert advice. When preparing to start exporting, guidance from the House of Commons Library, published in January 2022, suggests the following:
“Businesses need to familiarise themselves with new processes. These include: preparing to make customs declarations, knowing how to classify their goods correctly, and following safety and security requirements for their goods.”3
Services
If you own or run a small business that supplies services from the UK to the EU – or one that buys services from an EU company – there has been less disruption than to the trade in goods.
There are, however, new VAT rules for British firms supplying services into Europe. Here are some key factors to consider.
1. Business to Business (B2B) services: No UK VAT is chargeable for services supplied to businesses outside of the UK, including the EU.
2. Business to Consumer (B2C) services: VAT is applied at the place of supply, which is the UK for a British business supplying B2C services into the EU. Special rules apply for services of consultants, lawyers, accountants, data processing and a small number of other sectors, which are deemed to provide services in the location of the customer and therefore do not pay UK VAT.
3. Digital services: All supplies of digital services are liable for VAT in the consumer’s member state. For B2C digital services, the responsibility for accounting for VAT lies with the supplier, not the customer. Businesses selling digital services to EU consumers need to register for a ‘Mini One Stop Shop’ (MOSS) in an EU member state to ensure they pay the correct VAT.
Despite the referendum taking place in 2016 and the UK officially leaving the European Union at the beginning of 2020 – which was then followed by an 11-month transition period before trading rules officially changed – the challenges for businesses of Britain’s departure from the EU are evolving all the time.
If your company exports or imports goods or services to or from Europe – or plans to – complex new regulations can make the process seem overwhelming. There are also everyday factors to think about when doing business with partners in the EU, such as data security.
However, there is a huge opportunity to accelerate growth for those companies that can trade successfully with the EU, so it’s worth wading through the red tape.
This article takes you through the latest Brexit regulations, along with the existing rules that can catch entrepreneurs unaware.
Customs controls
Full customs controls were introduced by the UK government from the beginning of 2022. Previously, importers of goods from the EU to Britain could delay submission of customs declarations for up to six months. Those importing under the new rules must present paperwork at the point of import.
Similarly, exporters to the EU must hold supplier declarations to support their declaration of origin at the time they export. Previously, the declaration could be provided after the export had taken place.
Less than a month before the new rules came into force, research from the Federation of Small Businesses (FSB) found that only 25% of small importers affected by the changes were ready for them to take effect.1
Mike Cherry, the FSB’s National Chairman, advises: “Speak to suppliers to ensure you have all you need to make declarations, consider alternative providers if that looks like an efficient way forward, and think about different transportation routes.
“Stockpiling will naturally be a temptation for those fortunate enough to have the funds for it, but there is already a squeeze on warehousing space – if everyone ramps up storage, that squeeze will only tighten.”
Goods
Exporting goods into the EU has been one of the main areas of political and media interest since the Brexit vote in 2016.
Since some of the provisions of the Trade and Cooperation Agreement (TCA) with Europe came into effect in January 2021, there has been a sharp fall in exports to EU, although it does remain Britain’s largest trading partner.2
Under the TCA, there are zero tariffs and quotas on goods moving between the EU and UK, provided those goods meet the rules of origin. However, the increase in bureaucracy has led to long delays and acted as a disincentive for many businesses.
Establishing rules of origin can be complex and, for first-time exporters, will often require you seek expert advice. When preparing to start exporting, guidance from the House of Commons Library, published in January 2022, suggests the following:
“Businesses need to familiarise themselves with new processes. These include: preparing to make customs declarations, knowing how to classify their goods correctly, and following safety and security requirements for their goods.”3
Services
If you own or run a small business that supplies services from the UK to the EU – or one that buys services from an EU company – there has been less disruption than to the trade in goods.
There are, however, new VAT rules for British firms supplying services into Europe. Here are some key factors to consider.
1. Business to Business (B2B) services: No UK VAT is chargeable for services supplied to businesses outside of the UK, including the EU.
2. Business to Consumer (B2C) services: VAT is applied at the place of supply, which is the UK for a British business supplying B2C services into the EU. Special rules apply for services of consultants, lawyers, accountants, data processing and a small number of other sectors, which are deemed to provide services in the location of the customer and therefore do not pay UK VAT.
3. Digital services: All supplies of digital services are liable for VAT in the consumer’s member state. For B2C digital services, the responsibility for accounting for VAT lies with the supplier, not the customer. Businesses selling digital services to EU consumers need to register for a ‘Mini One Stop Shop’ (MOSS) in an EU member state to ensure they pay the correct VAT.