Business after Brexit
How the EU-UK Trade and Cooperation Agreement could affect your business
The UK and EU implemented a new free trade agreement at the start of 2021. If you trade with Europe, it’s vital to understand the new rules and processes so you can assess any short and long-term implications.
The EU-UK Trade and Cooperation Agreement (TCA), brokered at the end of the Brexit transition period in December 2020, cements a new free-trading relationship between the United Kingdom and the European Union.
However, the agreement has ushered in a number of new rules and procedures you should be aware of. On top of other Brexit-related changes which also came into force at the same time, there is a lot of extra information and guidance to digest.
Here is our rundown of what you need to know.
Trading with the EU
It’s important that you consider how the TCA might be affecting your business – or could do so in the future – and what you may need to do to adapt.
For example, you may have realised that you need to factor in additional time and resources to comply with new customs requirements. How you adjust to this is key – invest in staff training, say, or employ people with existing skills and knowledge to smooth out these processes. You could also choose to appoint a customs broker to help you.
You should also think about the impact the TCA may be having in other parts of your business. There may be extra costs to plan for, changes you want to make to your supply chain, or opportunities to find new customers and boost sales.
It’s also a good idea to monitor your business and the industry sector you’re in, to stay alert to any strengths or weaknesses that may arise as a result of the new EU trading relationship. This can help you to identify problems before they occur, while also allowing you to take advantage of any opportunities that emerge.
Tariffs and taxes
The TCA preserves many of the import and export arrangements that were in place before the end of the transition period. Crucially, both parties have agreed there will be no tariffs or quotas applied to the movement of goods produced in the UK and the EU.
But if you import from or export to the EU, you should be aware of caveats that apply. Rules of origin, for example, specify that goods will only be subject to zero tariffs and quotas if they originate within the UK or EU and not from other countries, or if they meet other qualifying criteria.
This means that if you import a steel widget made in France and the steel came from elsewhere in the EU too, there will likely be no tariffs to pay. But if the steel from which the widget is made originally came from outside the EU, you may now need to pay import tariffs.
Likewise, there are new rules relating to VAT. This is now due on all goods imported into the UK, including those from the EU, although payments can be deferred until you file your next VAT return. No UK VAT is due when goods are sold for export, but import VAT could be due on them when they reach their destination country. And it is important to decide in advance whether you or your importer pays this – and to be aware that there could be additional costs and administration involved if you are responsible for the payments.
Any business moving goods between Britain, Northern Ireland and the EU must now make customs declarations. These need to include information such as the type of item, amount being moved, the commodity codes (also known as HS codes) and the shipment’s departure point and destination.
Responsibility for making customs declarations can fall with either the buyer or seller of goods. This is typically set out in the Incoterms, which is short for international commercial terms. These outline the agreement between a buyer and seller as to who is responsible for making declarations and covering costs such as insurance.
You can read more about how to make import declarations and export declarations on the UK government website. You’ll need to obtain a GB EORI number, and if you’re moving certain types of items – including animals and plants or products derived from them – you may also need to supply specific documentation and follow additional procedures.
Trade with Northern Ireland
Specific rules apply to the flow of goods into and out of Northern Ireland. Most items moved from Northern Ireland to Britain do not need to be declared at customs – and those traded between Northern Ireland and the EU are also not subject to declarations.
However, if you are shipping goods between Britain and Northern Ireland you will need an EORI number beginning with XI.
In addition to this, you will need to make a customs declaration and may need to pay EU tariffs if the goods are deemed ‘at risk’ of being moved into the EU’s single market.
However, you won’t pay any duty if you are authorised under the UK Trader Scheme and have declared your goods as ‘not at risk’. There are two ways this can apply
- The applicable EU tariff is zero (including goods which originate in the UK where you’re able to claim a preferential rate of duty under the TCA)
- The goods are for the final use of consumers in the UK and have been brought into Northern Ireland by a business authorised under the UK Trader Scheme
You may also be able to claim a waiver for goods that would otherwise be deemed ‘at risk’.
If you trade between Britain and Northern Ireland, you can sign up for the government’s free-to-use Trader Support Service. It provides guidance on the import and export process, and can also complete customs declarations on your behalf.
Product markings and regulations
The UK’s exit from the European Union means that certain product marking requirements have changed. Goods sold in Britain that previously required the CE mark are largely now subject to the new UKCA (UK Conformity Assessed) marking. The technical requirements that must be met to obtain this are largely the same as under the CE regime. In most cases, CE marking can continue to be used until 1 January 2022.
Products being sold in the EU still require the CE marking. Goods being sold in Northern Ireland also require this – the UKCA marking can't be used. If a UK-based body has been used to carry out the conformity assessment on goods sold in Northern Ireland, a UKNI marking must be applied alongside the CE one.
Certain goods may be subject to further marketing or labelling requirements. It is important to check which of these, if any, apply to your business before exporting to or importing from the EU.
Use of data
If your business has a presence in the EU, you will need to comply with data protection laws both there and in the UK. You must also comply with the EU data protection regime if your business is based in the UK but provides goods or services to individuals in the EEA.
In most cases, you will need to appoint someone to act as a representative in the EEA. You can find more on this from the Information Commissioner’s Office.
Data is currently able to flow freely between the UK and EU under a ‘bridging mechanism’ put in place at the end of the transition period. This gave the EU time to decide whether UK law provides enough protection of personal data – known as data adequacy.
The EU has now concluded that this is the case, so data can continue to flow uninterrupted between the UK and EU.
Employing workers from the EU
A new immigration system now applies for anyone moving to the UK to work. You have several routes to consider if you’re looking to recruit people from outside the UK, but if you want to do so you will usually need to obtain a sponsor licence.
Employees moving to the UK to work will need to get a visa in advance, although these rules do not apply to Irish citizens who are free to live and work in the UK as part of the Common Travel Area.
You should also take steps to ensure that any professionally qualified EU staff have their qualifications recognised by the relevant regulatory or professional body in the UK. This is necessary for overseas employees working in a profession that is regulated in the UK.
Working in the EU
If you want to travel to the EU, Switzerland, Norway, Iceland or Liechtenstein for business meetings or for short-term studies or training, you can do so without a visa for up to 90 days in any 180-day period.
To stay for longer, or to conduct any other type of work or business travel, you are likely to need a visa or a work permit. You should check the requirements of your destination country before planning your trip.
If you're planning to provide regulated professional services in the EU, Norway, Switzerland, Iceland or Liechtenstein, you will need to have your UK professional qualification officially recognised in each country you intend to work in. More details are available from the European Commission’s regulated professions database.
How Barclays can help
However your business develops in the future, we’re here to help. Whether you’re looking for investment to take advantage of new opportunities that emerge for your business, or require support to meet short-term financial needs, we have a range of borrowing solutions that could meet your needs, subject to application, financial circumstances and borrowing history.
If you want to know more about trading with the EU in the post-Brexit era, or want to find out about financial options that are available to you, speak to your local relationship team.