Some changes have already happened from 1 February 2020, but most effects are still uncertain and will depend on the outcome of the negotiations for UK/EU trade after the end of the Transition Period. If this ends without a negotiated trade deal (so a “hard-Brexit” where trade is on WTO rules going forward), then the following will happen. The UK will become a ‘third country’ in terms of its trading status with the EU. Import and export licences issued by the UK will no longer be valid in the EU, and vice versa.
Border Crossings
Border crossings may become more time consuming, with a potential for delays, especially if those crossing do not have the correct documentation. Be conscious of other “non-tariff barriers” – such as product standards, safety regulations and rules pertaining to your particular industry – such as sanitary checks on food and animals for example.
Tariffs and duties
Duty-free trade between the UK and the EU will end and World Trade Organisation rules will apply, meaning that, under the principle of most-favoured-nation, the EU should charge the same rate of duty to the UK as it does to every other country with which it hasn’t got a separate trade deal, and vice versa. The Government has published a new temporary UK customs tariff (which will be in place for up to 12 months post Brexit). It is estimated that this will reduce duty on 87% of UK imports to nil (compared to 80% pre-Brexit), but some “sensitive” sectors will still be subject to import tariffs such as farming and automotive.
Customs and VAT
The Government has advised that in the event of a hard Brexit, with no agreement on customs and VAT, the rules on customs and VAT currently applicable to trade with non-EU countries will apply to EU countries. Therefore customs declarations and safety/security declarations will be required. Authorities may require guarantees for potential or existing customer debts. Rules will change in relation to declaring and paying VAT for suppliers of electronic services as well as cross-border VAT refunds.