Welsh firms which sell to EU countries face hefty fines and disruption to their operations unless they get their business affairs in order now, according to one of Wales’ leading independent accountancy and financial planning firms.
Bevan Buckland LLP is warning that now the Brexit transition period has come to an end, most UK and EU sellers will have to apply for additional VAT numbers to continue selling in 2021, if they don’t want to face fines.
More than 60 percent of Welsh exports go to the EU and this figure is far higher in key Welsh industries, such as farming and fishing. Around 40 percent of Welsh lamb is exported, with 92 percent of those exports going to EU countries, so it is vital that companies of all types have a very clear picture of this and other new requirements for selling their goods to the EU.
Harri Lloyd Davies, Partner at Bevan Buckland LLP, said: “We are now in a changed landscape and if companies haven’t done enough to prepare, they will need to work quickly if they don’t want to see their exporting business undermined. While the new trade agreement places no tariffs or quotas on goods traded between the UK and EU from 1 January 2021, it may come with additional costs and bureaucracy as the UK is no longer part of the single market and customs union. There is potential for businesses to branch out to new markets outside the EU, but that comes with a new set of rules and procedures to navigate now the transition period has ended.
“One very important point to be aware of is that sellers with non-business customers around the EU may need to VAT register in those countries, whereas in the past they may have been able to take advantage of the distance selling threshold simplification. So, many sellers have been able to sell to each EU state, charging and reporting the VAT via their home-country VAT registration. Sellers can no longer take advantage of these thresholds. Instead, they must VAT register in each target country, or face triggering immediate fines or the stoppage of goods.”
EU customs authorities will also challenge firms now if they are not supplying an EU VAT number when importing goods. Harri adds: “In order to move goods between the UK and other countries, businesses need an economic operator registration and identification (EORI) number. You can apply for one on the Government’s website. Another important thing to consider is how you plan to deal with customs declarations. These need to be made whenever you import or export goods between the UK and other countries.
“According to the ONS (Office for National Statistics), UK companies exported around £689 billion in goods and services in 2019, and it is clear that many firms are focusing sharply upon the future – whether this involves trade with the EU or not. If you foresee your business going international over the next few years, there are steps you must take to prepare above and beyond your usual market research. You will need to get to grips with the process involved in selling in different countries. These processes can be complex, and it is very important that you seek professional guidance, so you know you have dotted every i and crossed every t.”
Harri says: “We know exporters’ priorities have shifted as a result of Brexit, and according to research from the Federation of Small Businesses, the US is the most important individual country for UK SMEs to trade with over the next three years, with 46 percent of small exporters choosing it as a priority. The UK also signed a new free-trade agreement with Japan in October, which is expected to boost UK-Japan trade by £15 billion, with potential opportunities for UK companies in technology, energy, life sciences and more. The Government’s aim is to secure free-trade agreements with countries covering 80 percent of UK trade by 2022. However, the EU is expected to remain the most important trading bloc for UK SMEs. To find out which rules apply to the country you’re exporting to, you can use the Department for International Trade’s digital tool – ‘Check duties and customs procedures for exporting goods’. I would urge business owners to do this now.”
Bevan Buckland LLP is the largest independent accountancy firm in Wales providing practical support and strategic accounting, tax and financial planning advice for small to medium sized businesses. Headquartered in Swansea, the firm has offices in Carmarthen, Pembroke Dock, Haverfordwest and St David’s.
For more information visit: www.bevanbuckland.co.uk
(Lead image: Chanaka / Pexels.com)