Trading goods with the EU from 1 January 2021

With the UK formally leaving the EU on 31 December 2020 it is important that you have conducted an analysis to determine the additional customs procedures you are required to follow, and that you understand the import and export procedures for trading with the EU under the new trade agreement. The UK intends to phase-in its new processes over six months but the changes take effect from 1 January 2021 and the EU has no reciprocal phasing arrangements. 

We have provided the headline import and export considerations below (expand to read full details):

  • Companies importing into and exporting from the UK will need to obtain a European Union registration and identification (EORI) number, which starts with a GB followed by your VAT number. For businesses established in the EU who also import into and export from the EU will need an EU EORI number. If you do not have one, you may have increased costs and delays. You can apply for an EORI at 
  • Identify whether customs administration will be handled internally or by an external agent. If internally, identify whether existing IT facilities/software within your company will be sufficient to process customs declarations or whether you need to invest in new systems. These declarations are complex and require specialist knowledge to complete so if you are not confident that you have these capabilities internally, we would recommend making contact with external agents now.
  • While the trade agreement allows for tariff free trade, there are important exceptions.  Tariffs apply if the country of origin of the goods is outside the UK. This means if goods are shipped into free circulation into the UK from the rest of the world and then shipped to the EU it is likely Customs tariffs will apply. If import duties are payable, you will need to decide whether you are going to pay the import duty on arrival. 
  • You must retain proof that the goods have been physically moved to another county and this must be kept for six years. 
  • Where you have proof of export, and goods are exported within three months, the sale of the goods is zero rated. The proof of export must show the physical movement of the goods. 
  • You will no longer be required to complete an EC Sales list.  
  • Intrastat declarations will still be required.  
  • As with exports, you must apply for an EORI number that starts with GB in order to import goods. You can apply for an EORI at 
  • As with export declarations, you will need to identify whether there is the required skillset within your organisation to process formal import declarations. Alternatively, you may need to invest in training existing staff or appointing an agent who will clear the goods into the UK. The customs declarations are complex and require specialist knowledge to complete, so we would recommend appointing an external agent to assist if you do not have existing expertise. 
  • While the trade agreement allows for tariff free trade between the UK and EU there are important exceptions. Tariffs notably apply if the country of origin of the goods is outside the EU. If import duties are payable you will need to decide whether you are going to pay the import duty on arrival or set up a duty deferment account. The duty deferment account allows goods to clear into the UK seamlessly, then a payment for the import duty due is collected by direct debit on the 15th day of the following month. Normally, the deferment account requires a bank guarantee which is costly, however, this is only likely to be required for the duty element of the import taxes.
  • Import VAT will not be payable on arrival. HMRC have introduced postponed VAT accounting for goods imported from the EU to enable businesses to account for import VAT (paying it and claiming it) in the same period. Postponed VAT accounting is available for all imports from 1 January 2021, not just for goods brought in from the EU.

A key point to assess when considering EU trade is establishment. Freedom of establishment applies to EU companies irrespective of the regime applied in their country of incorporation. However, from 1 January 2021, UK companies will become third country companies for the purposes of EU law. 

As a consequence, a UK company may therefore be unable to act as the importer of record (IOR) into the EU without an EU establishment from 1 January 2021, and vice versa. An importer of record is the entity or individual who is responsible for all entry documents required by Customs and for the product classification and payment of duties, as well as any other import obligations.

A solution is either to create a relevant establishment or identify some form of representation in the UK/EU. This may be in the form of a direct/indirect representative or a fiscal representative. So, if exporting from the UK to the EU, you may either need to set up a registered office in the EU with the human and technical resources necessary to file the relevant paperwork and accounting records (see details above) or, more likely, you would need to pay an official distributor or a customs and freight forwarding agent in the EU to bear the risk that new paperwork and payment obligations are met. 

The alternative is to shift the responsibility of the import onto the customer (who is located in the jurisdiction where the goods are to be sent) but this may not be possible for any number of reasons, for example, if an end customer has not been identified pre-shipment or does not want to assume the reporting obligations..

Moving goods in and/or out of Northern Ireland

For VAT purposes, Northern Ireland will be treated as the UK from Great Britain’s perspective. However, the movement of goods between Northern Ireland and Great Britain will typically be treated as exports/imports for Customs purposes. There is more nuance here and we recommend any business working with goods moving in and/or out of Northern Ireland seek further advice.

The next step

If you would like to speak to one of our dedicated VAT experts to discuss the main areas of risk and opportunity, or you would like to discuss how we can help you plan for the new border formalities, please speak to you usual UHY Hacker Young contact, get in touch with one of our experts listed below, or complete the contact form.

Let's talk! Send an enquiry to your local UHY expert.