The beginning of January 2021 saw a new dynamic to trade between the UK and the EU. The transitional arrangement had come to an end and a new UK and EU Trade and Cooperation Agreement (”TCA”) came into effect.
Goods
Suddenly goods have had to negotiate external borders between the UK and the EU as well as an internal border between the UK and Northern Ireland. The Rule of Origin came in to force where exports have to meet certain levels in order to take advantage of the TCA. Furthermore, all the necessary documentation must be complete and available in order to clear Customs for onward transportation to clients.
We are assisting clients in understanding their goods’ origin, import duties, the impact of VAT on imports and exports as well as revising VAT recoveries, helping with filings and revising special partial exemption methods.
The first quarter of this year is more or less a honeymoon period, with Customs and Excise intending to be much stricter from 1 April 2021.
Many companies are looking at their import / export processes and the challenges they now face. They are taking this opportunity to examine their supply chain with a view to improving efficiency and certainty.
Services
Financial services organisations, on the other hand, were left out of the TCA. All the permissions that enabled the provision of cross border services (such as passporting) disappeared. As a consequence, businesses have had to make their own arrangements in order to provide cross border services to their EU clients.
Often, they have established a regulated entity in the EU with a branch in the UK. Significant business functions and value-added work continue to be performed in the UK.
We have assisted many groups in developing their EU/UK structures and operational procedures, helping to protect their supply chains. We provide corporate tax and VAT planning advice, and advise on employment tax matters and the taxation of globally mobile employees.
Other areas of immediate change in law include:
- Changes to competition law
- Mandatory filing where there is a proposed change of control to a company in a government-determined ‘sensitive sector’
- Increased penalties for sanctions breaches
- Repeal of significant areas of UK tax legislation such as DAC6
Using our Brexit experience, industry knowledge and technical expertise we continue to help clients manage the impact of the Brexit change and mitigate corporation tax and VAT leakage. Our aim is to ensure that your business is prepared for the challenges ahead.
