Should VAT-registered businesses prepare for Brexit trading changes?

In short, yes. HMRC has written to all VAT-registered businesses in the UK who are trading with the EU and/or the rest of the world, highlighting how they should prepare for the UK’s exit from the EU at the end of the year.  

To ensure VAT-registered businesses continue to trade from 1st January 2021, HMRC has pointed out actions that need to be taken regardless of the outcome of the government’s current negotiations with the EU.  

From 1 January 2021, the UK will operate a full, external border with the EU. This means that there will be controls placed on the movement of goods between Great Britain and the EU. 

What does this mean?  

Businesses need to submit declarations when importing and exporting goods that are categorised as ‘controlled,’ from the 1st January 2021. Import processes for non-controlled goods will be introduced in January, April, and July. 

Companies will need to make sure they have a UK economic operator registration and identification (EORI) number, a process in place detailing how they will make customs declarations, and a process in place checking if their imported goods are eligible for staged import controls.  

Most traders with a good compliance record will be able to defer import declarations on most goods for up to six months after 1 January 2021. 

From 1 January 2021, businesses will be able to use postponed VAT accounting to account for import VAT on their VAT return for goods imported from anywhere in the world. 

Import VAT will not be due at the border if goods in a consignment do not exceed £135 in value. The only exceptions will be excise goods and gifts. 

There will be new rates of customs duty for imports – called the UK global tariff. 

The free Trader Support Service (TSS) will handle the new processes arising under the Northern Ireland Protocol for from 1 January 2021. The TSS is not available for goods moved between Great Britain and the EU.  

The letter states HMRC will provide more guidance on changes to trade with the EU over the coming months, as the negotiations progress. To keep up-to-date on this information from the UK government visit and select ‘Sign up to help and support emails from HMRC’.