During this global pandemic, it’s very easy to forget all about Brexit, and that from 11pm on 31 January 2020, Great Britain (i.e. England, Scotland and Wales) is no longer part of the EU. 

Great Britain is now in an implementation period during which we continue to be subject to EU law.  However, the red letter date for exports from the UK to the EU is 1 January 2021.

Remember, remember 1 January 2021

From that date, the process for exporting goods from the UK will change.  Businesses in Great Britain will need to undertake a number of actions in order to continue exporting to EU countries from 1 January 2021.  A business exporting food and drink to the EU therefore needs to get prepared now.

As of that date, a business will need to make a customs declarations when exporting goods to the EU.  These are the rules which currently apply to exporting goods to the rest of the world, including Switzerland, Norway, Iceland and Liechtenstein. 

A business can make the declarations themselves or hire someone else such as a courier, freight forwarder or customs agent.  Therefore, businesses will need to get an agent and consider their future options (and the associated costs) now.  There are two ways a business can engage an agent – directly or indirectly:

Hiring an agent directly

A business will only be liable for keeping records, the accuracy of any information provided on customs declarations and any Customs Duties or import VAT due.  But, this is only if a business gives clear instructions.  If the agent makes a deliberate or unreasonable error, they may become jointly and severally liable.

Therefore, if a business is considering using this method, they will need to ensure that they are developing clear processes (now) around giving instructions to customs agents in order to ensure they can share liability for any errors.  These processes should be in place well before 1 January.

Hiring someone indirectly

Alternatively, a business can find someone to act in their own name.  This means the agent is:

  • equally responsible for making sure information is accurate; and
  • jointly and severally liable for any Customs Duties or import VAT due.

However, an agent cannot act for a business indirectly if the business is declaring goods for:-

  • inward processing;
  • outward processing;
  • temporary admission;
  • end use relief; or
  • for private customs warehousing.

UK establishments only

Whatever a business decides do, from 1 January 2021, if a business hires someone to deal with customs procedures for them, that agent will need to be established in the UK.

Therefore, all businesses which currently hire a customs agent need to check now that their agent is established in the UK, and get a new one if not!

Visit our Brexit Hub for more information and advice on your preparations.

This briefing was written on the basis of current UK tax law, practice and interpretation as at 19 October 2020, and may change.