What are the big misconceptions that still persist around the Brexit process, and what business myths need to be busted? Baker Tilly’s tax experts sort the fact from fiction.
Despite years of blanket coverage of the Brexit machinations, Britain is just a few days away from the end of the transition period with no clarity — yet — as to whether it will leave on a deal.
And according to Baker Tilly trade experts in three of the countries most affected, that has left business confused about what the various scenarios could mean for their ability to trade after January 1.
Northern Ireland will trade with both Europe and Great Britain under a specific set of rules set out in the Northern Ireland protocol, agreed in October 2019 and confirmed this month by UK Cabinet Office Minister Michael Gove.
The rules will mean Northern Ireland can trade easily with Ireland, and thus the rest of EU, but can expect goods heading from Great Britain to be subject to greater checks. Without this, UK firms could continue to access European Single Market via NI and Ireland.
Post January 1 for a UK business to trade into Europe or vice versa, they must have what is known as an Economic Operator Registration and Identification or EORI number. Ms Hut, who is working to ensure companies comply, says there is still a lingering belief that the rules that have governed trade for the past three decades will continue on if a deal between the UK and EU is signed.
Although a deal would likely mean tariffs would not be applied to goods being imported and exported, it would be what is being called a ‘thin deal’ at best. That might put Britain on roughly the same standing as Canada, although with added benefits that appear unlikely to secure EU approval.
Even before the UK exited the EU, back when the UK Prime Minister was still calling the deal oven-ready, there was no suggestion that the UK would agree to something during the transition period that would see a seamless departure under near-equal terms.
As Baker Tilly experts have discussed previously, the steps needed to transit goods after Brexit introduce layers of complexity that are absent under the previous EU membership arrangements, from the need to complete customs declarations, to the possibility of paying import VAT, to the use of multiple new computer systems, some of which have not yet been released.
But there is also a looming change that comes with the end of the UK’s protection under the EU eCommerce Directive, which presently allows online businesses to be bound only by those laws that are in place in the country in which the business operates.
As the UK is the third biggest online marketplace in the world, big ecommerce hitters like Shopify are warning businesses to prepare for that change, and determine what additional rules they must observe.
At the same time, European businesses that sell online to the UK will also need to register for UK VAT, with the end of low-value consignment relief for goods.
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