How to navigate lockdown easing and Brexit as a business

Navigating Brexit and lockdown easing may be a challenge for a lot of businesses, especially small businesses, over the next few months.

The roadmap to easing lockdown restrictions

On February 22nd 2021, the Prime Minister set out the roadmap for easing lockdown restrictions across England.
The roadmap outlines four steps for easing restrictions. At each step, the government will evaluate the data to assess the impact of previous steps.

Businesses are advised to bear in mind that the easing of restrictions is subject to change, dependent on whether the vaccine deployment programme continues successfully. Evidence shows vaccines are sufficiently effective in reducing hospitalisations and deaths in those vaccinated, and infection rates do not risk a surge in hospitalisations which would put unsustainable pressure on the NHS. The current assessment of the risks is not fundamentally changed by new Variants of Concern.

Step 1 from March 8th and March 29th:

• From March 8th all children and students will return to face to face education in schools and colleges. The Stay at Home requirement will remain, but people can leave home for recreation outdoors such as a coffee or picnic with their household or support bubble, or with one person outside their household.
• From March 29th outdoor gatherings of either 6 people or 2 households will be allowed, providing greater flexibility for families to see each other. This includes private gardens. Outdoor sports facilities, such as tennis and basketball courts, will be allowed to reopen, and people can take part in informally organised outdoor sports. At this point, the Stay at Home order will end, although many lockdown restrictions will remain. People however should continue to work from home where possible, and overseas travel remains mostly banned.

Step 2, no earlier than 12th April:

• Non-essential retail, personal care premises, such as hairdressers and nail salons, and public buildings, such as libraries and community centres, will reopen.
• Most outdoor attractions and settings, including zoos, and theme parks, will also reopen although wider social contact rules will apply in these settings to prevent indoor mixing between different households. Drive-in cinemas and drive-in performances will also be permitted.
• Indoor leisure facilities, such as gyms and swimming pools, will also reopen – but only for use by people on their own or with their household.
• Hospitality venues can serve people outdoors only. There will be no need for customers to order a substantial meal with alcohol, and no curfew – although customers must order, eat and drink while seated.
• Self-contained accommodation, such as holiday lets, where indoor facilities are not shared with other households, can also reopen.
• Funerals can continue with up to 30 people, and the numbers able to attend weddings, receptions and commemorative events such as wakes will rise to 15 (from 6).

Step 3, no earlier than 17th May:

• Outdoors, most social contact rules will be lifted – although gatherings of over 30 people will remain illegal.
• Outdoor performances such as outdoor cinemas and outdoor theatres can reopen. Indoors, the rule of 6 or 2 households will apply – although we will keep under review whether it is safe to increase this.
• Indoor hospitality, entertainment venues such as cinemas and soft play areas, the rest of the accommodation sector, and indoor adult group sports and exercise classes will also reopen.
• Larger performances and sporting events in indoor venues with a capacity of 1,000 people or half-full (whichever is lower) will also be allowed, as will those in outdoor venues with a capacity of 4,000 people or half-full (whichever is lower).
• In the largest outdoor seated venues where crowds can spread out, up to 10,000 people will be able to attend (or a quarter-full, whichever is lower).
• Up to 30 people will be able to attend weddings, receptions and wakes, as well as funerals. Other life events that will be permitted include bar mitzvahs and christenings.

Step 4, no earlier than 21st June:

• It is hoped all legal limits on social contact can be removed.
• The government hopes to reopen nightclubs and lift restrictions on large events and performances that apply in Step 3.
• This will also guide decisions on whether potentially all limits can be removed on weddings and other life events.

The roadmap can be found in full here. For more information about the easing of lockdown visit https://www.gov.uk/government/news/prime-minister-sets-out-roadmap-to-cautiously-ease-lockdown-restrictions

Face to face businesses especially should start taking bookings and reservations now for April 12th onwards, advising customers that bookings are not set in stone and subject to change. The Government will provide a further week’s notice to individuals and businesses before making changes.

Export and VAT challenges of Brexit

Now that the Brexit transition period has ended, businesses need to be aware of new trade rules and taxes. As of 1 January 2021, the UK government has changed how it collects VAT (Value Added Tax) as well as additional import duties on all overseas goods.
If you rely on European and non-European trade as part of your business, we recommend you to reach out to us at info@acuaccounts.com or call us directly on 0203 907 9027 for a Brexit consultation for small businesses to avoid an unexpected tax bill.

How will Brexit affect your business?

The UK-EU trade deal indicates companies can no longer trade freely under the previous EU VAT and customs agreements. New taxes and rules apply.

This might affect your business if you:

• import/export goods or services from/to the EU
• send items through the post
• sell online goods that cost £135 and under

Import charges in the UK – what has changed?

The UK now operates under different import charges from EU tariffs. Charges vary depending on the goods you’re importing and can be found on gov.uk.

New VAT rules

If your business imports goods from the European Union, speak to your supply chain and make sure all suppliers are set up accurately for UK tax.

Under the new VAT rules, EU sellers should be charging UK VAT at the point of sale, rather than HMRC collecting tax when the goods are imported into the country.

EU businesses aspiring to trade with the UK need to be registered with HMRC. However, some companies have been choosing to avoid the additional admin, which is causing surprise tax bills at the point of delivery.

• for goods up to £135 – the VAT rate ranges between 0 and 20 per cent depending on the item
• for goods over £135 – goods are subject to a 0 to 25 per cent import duty, plus UK VAT (usually 20 per cent), which again should be charged when you’re buying the item

The VAT costs can be passed on to the end-user (your customer) as a reverse charge when you buy from a seller in the EU. This applies exclusively to goods bought to be sold in the UK, rather than to equipment or items needed to run your business for example.

To use the VAT reverse charge:

• your business needs to be VAT registered
• your supplier in the  EU needs to be registered with HMRC
• you have to communicate your VAT number to the EU seller when you buy the goods

Extra paperwork and courier fees

If your business has been trading with Europe, additional paperwork and fees apply when importing and exporting goods:

EORI number – businesses moving goods between Great Britain and the EU need an EORI number that starts with GB. To export or import goods to Northern Ireland, your business will need a number that starts with XI. Businesses can apply for an EORI number with HMRC online.

Courier fees – couriers may charge additional fees to businesses buying from EU retailers to cover the additional admin efforts when VAT isn’t applied by the seller. Royal Mail is currently charging £8, UPS is charging £11.50, and Mastercard has increased fees for credit and debit cards.

Licences and certificates – rules apply around importing certain goods needing a certificate, for example, a £150 health certificate for food deliveries.

Sending items through the post – businesses need to fill out customs declaration forms if they’re sending goods to customers outside the UK.

Delaying customs duty on imports

To help businesses adapt to the recent changes, the government allows delaying customs payments until 30 June 2021.

Businesses that regularly import goods as part of their operation, can choose to pay customs charges monthly by applying for a duty deferment account on the government website.

And what about customs duty on exports?

In addition to VAT, businesses need to pay customs duty on items sent outside of the UK. The courier company will provide the details when delivery is arranged.

How to register for VAT

Businesses can register for VAT in the UK online via the government website. If your company is exporting goods to countries within the EU, you may need to register for VAT in every country on your export list. More information is available on the European Commission website.

Do you have questions about VAT, customs and reopening? Have a look at our services and feel free to get in touch with us to book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.