With the possibility of a No Deal Brexit becoming ever more likely by the day, and the new Prime Minister apparently seeing ‘No Deal’ in a different light from his predecessor, businesses do need to seriously consider what 1 November 2019 may mean for them if they have not already prepared.
Currently, trade with the 27 other European Union member states is frictionless; the single market provides for free trade so that selling to Berlin is no different from selling to Basingstoke, Rome is the same as Romford (trading wise at least), and there is nothing extra that a trader must do to trade in those marketplaces, except consider the logistics of physical stock. Since 1993, there have not even been checks on consignments moving across EU borders, as Intrastat reporting feeds the trade statistics system, and EC sales lists support intra-EU VAT transactions. However, with the advent of a No Deal Brexit, those systems would cease to operate, and the UK’s trading with the EU would need to be handled differently.
HMRC is working to ensure as frictionless trade with the EU as possible in order to support businesses who rely on the EU market for either sales or supplies, with proposed measures in place to ensure that changes consequent upon exit from the single market, such as the imposition of Import VAT on purchases from the EU, do not negatively affect trading capital. However, once the UK has left the single market, the mechanics and documentation required to import and export with the remaining member states will, by necessity, need to change, as the UK will become, to those states, a third party nation.
This means UK businesses need to start planning for those changes now, and making applications for any registrations they may require. One of the key registrations is for an Economic Operator Registration and Identification Number, more commonly referred to as an EORI number, and these are issued by the British government on application. EORIs are tied to a trader’s VAT number where a trader is registered for VAT, and the VAT details must be supplied when making the application.
Exporters in particular will find trade difficult if they do not have an EORI number in the event of a No Deal Brexit, as all shipments to the EU will need to have an EORI shown. Businesses that currently export to, or import from, countries outside the EU should already have an EORI number, but those whose overseas trade is currently only with other EU member states should make an application for one well in advance of the 31 October Brexit date.