All businesses have faced unexpected challenges over the last year. Brexit coupled with national lockdowns has increased the complexity of a constantly changing trading environment.
Businesses have had to respond to the impact of Brexit in different ways according to the nature of their trade and structure, with some looking at domestic measures and others looking at restructuring overseas.
Chris Mould, Corporate Partner in the Cheltenham office of Crowe, a national audit, tax, advisory and risk firm, looks at the effects after Brexit on trade.
VAT and Customs Duties have been key for the majority of businesses, including the additional costs associated with new obligations, processes, and paperwork. Many domestic businesses now see setting up operations outside the UK as a key part of their plan. Crowe’s national VAT team has been working intensively since January this year with our partners at Crowe Global to help businesses set up operations in other territories.
As well as looking at overseas measures, businesses should consider domestic solutions. The UK Government announced the creation of eight English Freeports as part of the spring Budget. These Freeports are sited at East Midlands Airport, Felixstowe, Harwich, Humberside, Liverpool City, Plymouth, Solent and Teesside.
The likely tax benefits will be that Freeports are treated in much the same way as a customs warehouse. Although located in the UK, they are outside of the VAT and customs area. As a result, goods can be moved in and out of Freeports, to and from locations around the world, free of any import obligations (i.e., import VAT, duties and associated paperwork). We would expect items sold while within a Freeport to also be free of VAT.
Although Freeports are indeed topical, businesses should also consider other ways they can cost-effectively manage their new obligations and achieve Duty savings.
Crowe offers Brexit health checks to business clients, which provide a bespoke review of their financial situation.
This can help identify whether unexpected costs or liabilities have crept in during Quarter 1 of 2021, while all eyes were focussed on understanding and adapting to the new rules. For most, it should be possible to mitigate or minimise issues arising, enabling trading to get back close to pre-Brexit/pandemic. Where that is not possible, setting up new structures or supply chains is the next stage in the process.
SMEs with less than 500 employees and annual turnover of less than £100 million can apply to HMRC for grants of up to £2,000 to help understand the implications of Brexit further or seek professional guidance. Applications will close on 30 June 2021 but may end earlier if all the funding set aside by HMRC has been allocated.
Full details of the grants can be found at: www.gov.uk/guidance/grants-to-help-small-and-medium-sized-businesses-new-to-importing-or-exporting
We are living in times of constant change, with new and difficult challenges arising from Brexit. Discarding commercial opportunities because of the paperwork involved is not a practical option. We are here to help; focussed on ensuring business clients benefit from opportunities and incentives already available – and those to come.
If things have not been running as smoothly as expected, or you still have unanswered questions as to how your organisation should be dealing with supplies in a post-Brexit world, we would be happy to discuss them with you.
For advice and guidance on international trade issues, including VAT and Customs, please contact Chris Mould, Partner at Crowe in Cheltenham on 01242 234421 or by email to firstname.lastname@example.org