40 Brexit Frequently Asked Questions – 2023 Update

The UK left the EU on 31st January 2020 with a 12 month withdrawal agreement which concluded on 1st January 2021. From October to December 2020, on behalf of LEO Mayo I engaged with 40 owner-managers about the potential impact of Brexit on their business and how they are preparing for the UK’s exit from the European Union. At that time, I wrote this blogpost to answer 40 FAQs about Brexit.

March 2023 Update – I am revisiting this post to provide an update on the key issues of Trading with the UK from Ireland as a small business. Revised answers have been posted for the first 27 Questions some of which have been reworded for clarity.

Brexit created Uncertainty

As the end of 2020 approached the big word associated with Brexit was Uncertainty from both the EU and the UK Authorities (great guide for EU businesses on trading with the UK).

The consensus in Ireland was that it would have a big impact and that it was important to create a plan to prepare for Brexit. Here are the first 27 FAQs with answers updated early March 2023.

BREXIT FAQ

1 Was a Trade Deal agreed between the EU and the UK?

Yes. The Trade and Cooperation Agreement between the European Union (EU) and the United Kingdom (UK) came into effect from 1 January 2021. Following consent by the European Parliament, the Agreement entered into force on 1 May 2021.

The EU-UK Trade and Cooperation Agreement concluded between the EU and the UK sets out preferential arrangements in areas such as trade in goods and in services, digital trade, intellectual property, public procurement, aviation and road transport, energy, fisheries, social security coordination, law enforcement and judicial cooperation in criminal matters, thematic cooperation and participation in Union programmes. It is underpinned by provisions ensuring a level playing field and respect for fundamental rights. While it will by no means match the level of economic integration that existed while the UK was an EU Member State, the Trade and Cooperation Agreement goes beyond traditional free trade agreements and provides a solid basis for preserving our longstanding friendship and cooperation.

Source: commission.europa.eu

2 Does the Government have a plan or overall strategy for Brexit?

Yes - they published a Brexit Readiness Action Plan in September 2020. @BrexitReadyIRL is the main government Twitter account for the latest Brexit news

 

3. Is there Customs charges on Goods and Services between Ireland (EU States) and England (UK) and what are for specific sectors or categories of goods? (2022 Q)

There are no Customs on Services- only for Goods. And, Yes, there are Customs Charges on some Goods purchased in the UK and delivered to Ireland. There is a very detailed article on this topic 'Customs Charges from UK to Ireland' on the Money Guide Ireland.com website. It states that:

The EU/UK trade deal only applies to products coming into Ireland from the UK that are made in the UK. This means that goods originally made outside the UK, for instance in another EU country, exported into the UK, and then sold on to Ireland (or another EU country) may be subject to import duty.

  The article lists examples of goods sold from the UK that can be imported duty-free into Ireland regardless of the country of origin. This includes:

• Mobile phones
• Books
• Kids bikes
• Wooden furniture
• Whey Protein

plus many many more. The article explains how their list was generated - they consulted the EU Access to Markets website. The article then lists the Customs charges for a range of popular items:

• Gold /silver Jewellery 2% Import Duty
• Guitars and Drums  3.2%
• Fishing Rods  3.7%
• Baby clothes (cotton) 10.5%
• Bed Linen  12%
• Clothing mostly 12%
• Televisions 14%
• Sports Shoes (non leather) 16.9

Obviously, there are thousands of possible items – the article just listed a small selection, adding that:

It is important to remember that even on those goods where import duty applies – Only orders with an intrinsic value over €150 will be liable to Irish customs duty. (Intrinsic Value is the value before delivery charges, handling and insurance.)

The article cites some examples providing the calculation of Customs duty on a Microwave oven made in China bought online in the UK for delivery to Ireland. The conclusion is that Irish consumers need to switch to Irish based eCommerce sites!

4. Can I find out the tariff that applies to my product or good – for both import and export?

Yes. For the latest information on current classification codes, quotas, and limitations please consult with Revenue and HMRC.

The Irish Revenue site will direct you to use TARIC to classify your goods- the integrated Tariff of the European Union.

You can also check out the EU Market Access database on tariffs.

5. What is the difference between duty and tariffs?

While the terms are often used interchangeably they are different. The most important distinction between the two types of tax is that a duty is charged to the consumer for specific commodities, whether they are domestically produced or imported goods. When one refers to duties, the normal ones are excise duties.  These are imposed principally on alcohol, cigarettes and petrol/diesel, regardless of whether such products are imported or produced domestically. Tariffs, on the other hand, are only charged on imports in order to protect domestic production and restrict trade from a particular country (to include quotas), as well as generate revenue for the government. There is no cost to the exporter as the tariff is paid by the importer of record. Incidentally, VAT is imposed on the customs duty and insurance/freight – if something costs €1000 including customs duty and freight charges, the VAT is on the full €1,000.

6. What is the 'Canada style' deal that Boris is talking about? (2020 question)

According to the BBC, UK Prime Minister Boris Johnson has said when it comes to trade with the EU after Brexit: "We want a comprehensive free trade agreement, similar to Canada's".

The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is the trade agreement that applies between the EU and Canada. It cuts tariffs and makes it easier to export goods and services, benefitting people and businesses in both the EU and Canada. CETA entered into force provisionally on 21 September 2017, meaning most of the agreement now applies. It is interesting to note that the agreement process was initiated ten years earlier with an agreement in principle reached in October 2013 - so these trade deals take a long time to finalise.

7. What are non-tariff barriers?

Non-tariff barriers include things like product standards, packaging and labelling, safety regulations and sanitary checks on food and animals.

The Gov.uk/eubusiness website has links for further information for agri-food producers on: exporting animals and animal products to Great Britain must comply with new Sanitary and Phytosanitary requirements from 1 January 2021.

• imports of animal and animal products from Great Britain to the EU must comply with new Sanitary and Phytosanitary requirements.
• EU exports of plants, fruit and vegetables to Great Britain must comply with new Phytosanitary requirements, including phytosanitary certificates plus check if your plants require laboratory testing of samples to ensure they are free from pests and diseases or inspections during the growing season.
• Trading timber

8. Where do I go to find out about the standards and certification of products?

Product manufacturers will need to review product marking, labelling, and packaging to ensure compliance with end-market regulations both UK and EU.

• The NSAI Brexit Unit is specifically focused on examining and communicating the impacts of Brexit on the Standards and Certification of products and services.
• If you use a UK notified body for conformity assessment you will need to transfer to an EU notified body. A list of EU notified bodies is available on the EU Commission's NANDO database. This process can be both expensive and time consuming. In 2020, I was talking to a company in Mayo in the marine sector who were quoted several thousand by a notified body in Holland.
• I was also talking to an Architect and he is a member of RIAI. He will now need to register as an Architect in the UK to provide services there - this is automatic as he is a member of RIAI.

9. Is an International Road Haulage Operator License valid in Britain or is a separate UK opertor license needed? (2022 Question)

No, a separate UK license is not needed. If a business operates vehicles with a gross vehicle weight rating above 2.5 tonnes on international journeys, to carry their own goods, and other people's goods, the business must hold an International Road Haulage Operator Licence - this is valid for all journeys both in the Ireland/EU and on international journeys to include within the UK.

BTW, there was a lot of uncertainty regarding what might happen within Aviation post Brexit. The EU-UK Trade and Cooperation Agreement contains sections on air services and aviation safety with a primary objective being the continuation of air traffic services between the UK and the EU.

10. Where can I find out about Food standards, certification and labelling for Food products - both import and export?

The Food Safety Authority of Ireland Brexit website explains that Irish businesses that wish to sell any food product in the UK will need to adhere to the rules and requirements for exporting outside the Single Market, as well as to UK import requirements.

There is a specific page on food product labelling that explains that, from 1 January 2021, if the food supplier is not established in the EU, the name and address of the importer into the EU market must be indicated on the label.

For food labelling purposes, under the terms of the Protocol on Ireland and Northern Ireland at the end of the transition period, the address of a food business operator established in Northern Ireland will continue to be accepted as an EU address.

11. Will Brexit impact Intellectual property rights in the UK?

There is a very interesting article on the EI website by Joe Doyle on the topic of how brexit will impact on Intellectual property. Enterprise Ireland also hosted a special lunchtime seminar that can be replayed.

Trade Marks - Joe writes that according to the draft Withdrawal Agreement, the negotiating parties have agreed that owners of EU TMs and RCDs, granted before the end of the transition period in 2020, will automatically get an equivalent right in the UK. Patents - will not be affected because the European Patent Office is not an EU institution.

Update 2023

This excellent Intellectual Property webpage on Gov.uk confirms the situation with regard to Trade Marks and Patents.

The other big change within the R&D landscape is that the UK is no longer of Horizon Europe.

12. What happens when buying goods for personal use from the UK - buying online? (2022 Question)

If you are buying goods online (or by mail order), the buyer is ultimately responsible for the accuracy of the customs declaration and to pay any duty and tax to Revenue.  This is the situation at present if you purchase goods online from countries outside the EU like the US. Unfortunately, some websites do not include details of duty and VAT in their prices so figuring out the final price can be challenging.

If the order is sent by post by the supplier, their postal provider or courier will require them to complete a form for the customs declaration. When it arrives in Ireland, An Post or your courier will calculate the VAT and duty owed and facilitate payment on collection - payment must be made before or on delivery [make sure to factor in VAT when comparing prices available in Ireland]. There will be a Customs docket with the delivery to prove that the customs declaration was made.

A fee of 1% of the value of the packet or parcel, with a minimum charge of €10, is charged by An Post for customs clearance of parcels imported from countries outside the EU. This fee is in addition to any duty or VAT payable.

Post Brexit, Goods purchased in the UK could be subject to Customs. The UK is now outside the EU. If you buy goods online from a UK website as an Irish resident this is considered an import. An EU/UK trade and cooperation agreement means that products coming into the EU from the UK that are made in the UK are not subject to customs. But goods originating outside the UK, to include those originally made in an EU country and exported to the UK, and then sold on to Ireland (or another EU country) may also be subject to import duty.

• Import duty is not charged on any purchases to Ireland from the UK that are valued at under €150. The €150 limit excluding UK VAT (approx. £130 depending on exchange rates) is per package/order, NOT per item. If you plan on ordering 2 or more items with a combined value of more than €150 (excluding delivery charges, insurance and handling charges), you could avoid any worries about import duty by ordering them separately.
• When an order from the UK has a value of more than €150, the rate of import duty will vary according to the category of product. Many products have a zero rate of duty. Gold/silver jewellery has 2% Import Duty and Leather soled shoes 17% as per EU Access to Markets website [as stated above if the product’s country of origin is the UK – then there will be NO customs/import duty].
• Online marketplaces and platforms (like Amazon) as the deemed supplier will account for VAT and customs for all parties involved. They can register in one country and remit all VAT on sales across the EU thereby reducing their administration.

If buying an item in the UK for dispatch to Ireland, the UK retailer is supposed to include Irish VAT rates, generally 23% as per the category of the product, in the total which they forward to Revenue in Ireland. If it is not charged, An Post or the courier company will collect the VAT and an admin fee when they are calculating the Import duties. Some UK retailers continue to charge the UK rate as their systems cannot deal with Irish vat – in this case you will be charged the full 23% Irish VAT rate before final delivery, which could work out very expensive.

PARCEL MOTEL UPDATE:

13. What will happen when buying goods for commercial use from the UK? (2022 Question)

All goods imported into Ireland must be declared to Revenue in advance of arrival. Among other things, customs officers make sure that any goods declared for import are moving legally and are not prohibited or restricted. All interaction with Revenue for customs purposes is done electronically. For instance each customs import declaration is submitted electronically using Revenue’s Automated Import System (AIS).

In December 2022, Revenue published ‘A Guide to Customs Import Procedures’ to outline and explain the procedures and customs formalities involved in importing goods to Ireland. When you import goods from outside the EU VAT area, VAT must be declared and paid based on Irish vat rates. The EU VAT area includes Northern Ireland but excludes Great Britain (GB).The VAT due on the goods is calculated on the total cost of the goods. This includes transport costs, insurance costs and any applicable Customs Duty.

Customs duty rates on goods being imported into the EU can be checked on TARIC, the integrated tariff of the EU

In general, VAT is payable at the point of importation into Ireland or Northern Ireland. However if you are approved to use the deferred payment system, VAT will not be due at this time. The deferred payment system allows you to defer payment of certain import charges. These import charges include Customs Duty and VAT. The payment of these charges can be deferred until the 15th of the month after importation. Imported goods are liable to VAT at the same rate that applies to those goods when sold in Ireland.

If you are a VAT registered trader, you are generally entitled to take credit for VAT paid on goods imported for the purposes of your business. You must claim this credit in your return in the taxable VAT period concerned, subject to the normal restrictions.

BTW, if you are selling goods online (for example Clothes) in one or more other EU states e.g France, your business can register with the Irish One Stop Shop portal and charge Irish VAT, until total sales in those EU countries reach the EU threshold of €10,000 at which time you have to charge the VAT rate in each of those countries but you will continue to use the Irish One Stop Shop to declare and pay the VAT due.   For more see: https://taxation-customs.ec.europa.eu/where-tax_en

How the import process is generally managed depends on the volume, frequency and value of the import trade.

A. Large scale importer

Large scale importer will probably have internal staff and systems for importing. They will have registered with Customs /Revenue and use the prescribed software to declare imports electronically using the new AIS system (for more see Q.15).

These businesses will probably avail of the 'Ready for Customs' Grant from Enterprise Ireland which provides up to €9,000 per employee working on Customs Clearance. They may also avail of Skillnet Ireland's Clear Customs online training which is described as being ideal for those trading regularly with the UK.

B. Less frequent importer or smaller business

A smaller business or one which imports less frequently will probably work with a Customs Agent to arrange import clearance. I had a great conversation with Ed Campion of Campion Freight, a freight forwarder which has been offering Customs Clearance services in Mayo for over 20 years, working with global clients importing and exporting beyond the EU to China, the US and Canada. Campion Freight charges a customs clearance fee of EUR 65 for import clearance and EUR 45 for export clearance. The sector is expecting to be very busy as a result of Brexit.

C. Direct Importers using Couriers and An Post.

The procedure for importing and the documentation involved in importing goods using the postal system and couriers depends on the value of the goods/ consignment. Your supplier will complete the customs declarations (see Post Office UK website for details) which will be attached to the outside of the package.

To conclude, under international postal agreements all packages received from outside of the EU require a customs declaration  

14. Will the new customs requirements create a barrier to trade with the UK?

There are media reports that there will huge delays in shipments to the UK to include the landbridge to Europe. I spoke to a small bespoke engineering solution company in Mayo who said that the inability to order parts in very small order quantities on a 2-3 day turn around from the UK would impact on their ability to provide top-quality service to their customers. It would be near impossible to keep in stock all the possible required parts given the range of parts that they use across their projects.

There are no direct fees levied by Revenue for dealing with Customs in Ireland. The additional costs will arise from compliance costs as per the options outlined in Q13.

I was talking to a company involved in fashion production who have an extensive catalogue with many products made to order which result in small orders to input suppliers based in the UK. The sustainability of their extensive product lines is now called into question unless they increase their stock range.

It is anticipated that there will be an increase in agents and intermediaries who will import in bulk replacing smaller direct orders from microenterprise with specialist suppliers in the UK. This will add a layer of cost to the supply chain and affect the competitiveness of some sectors particularly engineering.

15. Is there an online system for import declarations?

You are legally obliged, as an importer of goods from GB, to submit an electronic import declaration to Irish customs. Full detail on electronic customs systems and information on the technical requirements for customs is available on the Revenue website.

Revenue will implement a new national import system on Monday, 23 November 2020 at 9:00 am. This new Automated Import System (AIS) has been introduced to comply with the provisions of the Union Customs Code (UCC). AIS will ensure that businesses can import goods legally from outside the EU using the most efficient process possible. This will replace the Automated Entry Processing (AEP) system. Revenue operates a helpline for queries on the system. It is intended that the AIS will integrate fully with ROS the Revenue Online Service.  

16. How are import duties paid to Customs and what is a Comprehensive Guarantee?

Payment of duties is via ROS (Revenue Online Service). Payment can be by credit and debit card, or bank transfer and direct debit.

Revenue also offers a deferred payment method which allows payment of import charges to be made on the 15th day of the month following import.

If you wish to avail of this facility, you will have to apply for authorisation from Revenue and have been approved for a comprehensive guarantee from your bank. A comprehensive guarantee is a guarantee issued by a bank or financial institution, undertaking to Revenue to pay duty owed by a business up to a prescribed limit, in the event that the business defaults on payment.

The Customs Guarantee is discussed in the EI Customs Online Course (see Q.32)

17. What will happen when exporting goods to the UK? (2022 Question)

The Irish Exporters Association IEA is a great source of information, links and important contact details to help your businesses prepare to trade with the UK. Similar to Q.13 regarding imports the options will be to manage export administration internally, to use an agent, or to rely on the postal system and couriers.

In Mayo, I was talking to a kitchen manufacturer who sells a lot of premium kitchens in the UK particularly in London. He has an installer based in London. He arranges delivery using a local company who load up 3 van loads per kitchen to deliver to London. The likelihood is that the kitchen manufacturer will work with a Customs Agent to ensure that the current arrangement can continue - along with potential shipment delays, the big concern is currency fluctuations.

In April 2022, Revenue published ‘A Guide to Customs Export Procedures’. The 43 page pdf  is for anybody who plans to send goods from Ireland out of the European Union (EU). At present there are 27 Member States of the EU as follows: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

There are no export taxes, duties or levies in force on goods exported from the EU on the basis that import duties will have to be paid in the country of destination. The business must ensure that the goods have left the EU and have evidence of export. Each export is declared (by the business or their Agent) to Revenue using a customs export declaration submitted electronically using Revenue’s Automated Entry Processing (AEP) System. If you are a trader who imports or exports goods (excludes services) into or out of the European Union you will need an EORI number.

To import to the UK, Irish based businesses will need a second Economic Operator Registration and Identification (EORI) number: a UK EORI is available from HM Revenue and Customs separate to the EU EORI obtained from Irish Revenue. Used on customs declarations, an EORI number uniquely identifies the exporter in customs procedures and documentation.

Licences are required to export certain types of goods from the EU - some goods are prohibited or restricted to include live or dead animals, fish birds or plants and certain foodstuffs, mainly milk, fish or products thereof. A license, permit or authorisation will be required to import or export such goods. See Revenue for full list of prohibited and restricted goods    

18. What is the 6-month derogation for delaying declarations for EU goods from January 1st 2021 in the UK?

The UK Revenue & Customs will allow importers into the UK to delay production of post-Brexit customs declarations and tariff payment between 1 January and 30 June 2021. All records will be kept by the company and passed onto HMRC along with payment in July 2021.  This is relevant for companies, including Irish businesses based in the UK, who import into the UK that are approved to use simplified declarations by HMRC. It is not anticipated that this arrangement will be reciprocated by the EU.

19. How will goods in transit via the UK to and from Europe be affected?

This is relevant if you intend to continue to use the infamous landbridge that the UK has become for goods to and from Ireland. This is a situation where a freight forwarder or customs agent is the best option. You do need to be careful in completing the paperwork to ensure that you are not charged VAT on the goods in transit.

Your Agent (or internal expert) will utilise the Transit Procedure, a customs procedure that allows goods to be moved across international borders under customs control a customs procedure that allows goods to be moved across international borders under customs control. A comprehensive guarantee as per Q16 is required to secure all charges on the goods.

20. Is there an online system for export declarations?

Exports will continue to be managed through the AEP system until 2023. The Automated Entry Processing (AEP) system handles the validation, processing, duty accounting and clearance of customs declarations.

21. What is EORI - customs registration number - and how does your business get one?

If you are a trader who imports or exports goods into or out of the EU you will need an Economic Operators Registration and Identification (EORI) number. Yes, every business needs to get an EORI if they intend to trade with the UK - no exceptions. This number is valid throughout the EU. It is used as a common reference number for interactions with the customs authorities in any Member State. Consult with the Revenue website to find out more and to register for your EORI number.

BTW, there are also separate UK EORI and Northern Ireland EORI numbers. The UK EORI is needed to move goods between the UK and non-EU countries while from 1 January 2021 you’ll need an EORI number that starts with XI to move goods between Northern Ireland and non-EU countries.  

22. What are Incoterms?

Incoterm an abbreviation of “International Commercial Terms” defines a transaction between importer and exporter, so that both parties understand the tasks, costs, risks and responsibilities, as well as the logistics and transportation of a product from one country to another. The following are examples:

• Ex Works (EXW) – The seller makes the goods available at a designated location, and the buyer must cover the transport costs.
• Free on Board (FOB) –The seller must load the goods on board of the ship, nominated by the buyer at which point all liability transfers to the buyer.
• Free Alongside Ship (FAS) – The seller must place the goods alongside the ship at the named port, the risk of loss or damage to the goods passes when the goods are alongside the ship, and the buyer bears all the costs from that moment on.

The fine print of a contract dictates which party is the importer and exporter of record ie who is responsible for making the export declarations and ensuring the accuracy of the information.  

23. What about VAT on goods from the UK? (2023 Question)

Prior to Brexit, an Irish VAT registered business importing either goods or services from a VAT registered UK business you would not be charged VAT. The Irish company would have accounted for VAT using what is known as a reverse charge mechanism. The Irish VAT charge is applied in their next VAT return and a simultaneous credit is taken for it as if a reclaim had been made. This situation has now changed.

VAT is now charged on all services delivered in Ireland by UK based businesses at Irish rates. The UK business will have to register for VAT in Ireland. Their business customers can reclaim VAT as appropriate.

As explained in the answer to Q.13 all goods imported into Ireland must be declared to Revenue. Customs charges may apply if the consignment value is over €150 depending on the country of origin details and category of good.

VAT is now charged on all Goods delivered to Ireland by UK based businesses at Irish rates. The UK business will have to register for VAT in Ireland. Their business customers can reclaim VAT as appropriate. The Irish business can also opt to act as the importer of record for consignments valued over €150 and thereby take responsibility for paying the relevant import VAT and any duties. Postponed accounting for VAT facilitates VAT registered Traders as they do not have to pay VAT at the time of importation.

CONSUMERS

This December 2020 Irish Times article explains that online purchases after Brexit could see 40% price hikes for online shoppers. This RTE article stated that Irish consumers at that time made 70% of their online purchases from the UK. 

Irish consumers importing from a UK business will not be charged UK VAT rather they will pay the equivalent VAT applied in Ireland when the product is delivered generally 23%.  VAT is charged on the value of the item plus the transport, delivery and insurance fee.

If buying an item in the UK for dispatch to Ireland, the UK retailer is supposed to include Irish VAT rates, generally 23% as per the category of the product, in the total which they forward to Revenue in Ireland. If it is not charged, An Post or the courier company will collect the VAT and an admin fee when they are calculating the Import duties. Some UK retailers continue to charge the UK rate as their systems cannot deal with Irish vat – in this case you will also be charged the full 23% Irish VAT rate before final delivery, which could work out very expensive.

24. Should VAT be charged on goods supplied to UK customers? (2023 Question)

The next Question, #25 will deal with eCommerce businesses selling to UK Consumers. Irish businesses selling directly to UK end consumers, probably using An Post, will need to be VAT registered  in the UK from your first sale.

Exporting Goods to UK

Goods sold to UK businesses will now be considered as exports of goods from Ireland. The 0% rate of Irish VAT should continue to apply to such exports, assuming goods are transported to mainland UK and the UK customer is responsible for the goods on point of entry into the UK (paymen of VAT and any import duties). The UK business would need to provide a valid UK VAT number.

Alternatively, the Irish business could opt to charge their UK business customer the UK VAT rate and include the transaction in its VAT return to HM Revenue & Customs. As per Q.26, VAT will be charged by all Irish businesses on all services to UK and NI based customers both consumers and business - the reverse charge mechanism has been removed as referenced in Q.23.

25. How will eCommerce businesses be affected? (2022 Question)

If you are selling to consumers in the UK, mostly likely via an eCommerce site such as Shopify, you will need to be VAT registered from your first sale.

• VAT is charged on all goods sent from outside the UK to Great Britain at UK rates, generally 20%. Irish VAT is not charged in this instance.
• The exception - VAT is not charged on goods that are gifts worth £39 or less. Specific rules apply to gifts.
• If your customer is a Business with a Vat number, they can reclaim the VAT as normal from HRMC.
• The Irish business will do a VAT return in the UK every quarter. There is no threshold so every business will have to register. The alternative is to decide not to sell online to UK based consumers.
• The UK consumer will have to do a Customs declaration. This is managed on their behalf by the courier or postal service. The Irish operator fills in a form provided by courier or postage service that accompanies the package.
• With regard to Customs, a Zero Customs rate may apply depending on ‘rules of origin’ if the product is sourced from Ireland.
• The consignment value is also important as no Customs charges apply where the consignment value is under £135.
• Customs Duty is charged on all goods sent from outside the UK that are excise goods or worth more than £135. It is charged on both the price paid for the goods and postage, packaging and insurance.
• Merchant using an Online Marketplace (OMP) like Amazon to supply imported goods with a value below £135 to UK customers, the VAT liability will be shifted to the OMP.

Your customer will ultimately be liable for payment of UK VAT and any customs. The customer will be contacted by Royal Mail or the courier company with details of VAT, duty or delivery charges (‘handling fees’) to receive their goods. Details of all charges should be provided with the Irish delivery docket (customs declaration) to avoid any further charges being levied on your UK customer. Please note that your UK customer (B2C) will also be responsible for paying Customs Clearance fees. A google search finds this Parcelforce page which explains that the customs fee is £12 for all import parcels below a contents value of £873 (equivalent to €1000) and £25.00 where the parcel is valued over €1000/£873.

So what to do:

1. Talk to your accountant to register for VAT in the UK or do it yourself. Or look at a service like https://simplyvat.com/ in the UK. [You don't need to set up a company in the UK]
2. Talk to An Post or courier. DPD have a great website: https://dpd.ie/Shipping/Brexit-Update-For-Shippers
3. Look at an eCommerce fulfilment service like RWB Connect.com
4. Talk to your web developer to have a plan to segregrate consumers from the UK depending on whether the basket purchase is above or below the £135 threshold. The system will need to account for Pricing/VAT, and logistics to include customs declarations.

Online Marketplaces (OMP)

Post Brexit, the UK Government introduced a new model for the VAT treatment of goods arriving into Great Britain from outside of the UK. One significant change applies to Online Marketplaces (OMPs) like Wish, Amazon and Etsy.

Where an Irish merchant uses an Online Marketplace (OMP) to supply imported goods with a value below £135 to UK customers, the OMP will pay the import VAT, which they can later reclaim, and also levy UK VAT on all products sold to its customers and pass this to HRMC.

My understanding from this Gov.uk Guide to Changes to VAT treatment of overseas goods sold to customers from 1 January 2021 is that where the consignment value is over £135 that the Irish Trader will pay the import VAT which they can later reclaim. The OMP will continue to levy UK VAT and customs duty on all products sold to its customers and pass this to HRMC, so there is no change in user experience for the end customer.

26. How will professional services be affected? (2022 Question)

If you are an Irish business selling in the UK, you have to register for VAT in the UK with HRMC for both services and goods. No threshold applies. You won’t be charging VAT from Ireland so no need to declare to Revenue in Ireland. UK Consumers will pay the full amount including VAT at the applicable UK rate.  Your business customer can then reclaim the VAT as normal from HRMC if they are registered for VAT. Professional services are not affected by WTO Tariffs and Customs procedures.

• I spoke to a software company who have now moved their UK clients to Amazon servers in the UK with all other clients hosted from HQ in Mayo using EU based amazon servers. This is to comply with Data regulation to include GDPR (which will no longer apply in the UK).
• It must be acknowledged that UK customers want to deal with Irish companies who are committed to the market. It is advisable to register a UK business if you want to sell professional services. I spoke to an Architect and a Lean Consultant who both sell on a subcontract basis to one customer in the UK. They would not need to register a company in the UK in this instance but would find it difficult to expand the business on this basis.
• I also spoke to a kitchen installer. If they send staff to install in the UK they would need to do a customs declaration on the equipment that they use to allow it to be transported into and back out of the UK.
• I also spoke to a company who sell Statistical analysis consultancy to UK customers - I highlighted the issue of data transfer as a potential issue. The key recommendation is to talk to your customer as ultimately it is an issue that they must manage.
• The Law Society has an extensive FAQ on Brexit in terms of recognition of qualifications and provision of legal service.

The other issue for service businesses arises when employees are based more permanently in the UK. This will require registering as a business and an employer in the UK. But Irish people won't need to apply for a Visa*.

*The UK's immigration system will now apply to EU, EEA and EU citizens. For visits under 6 months, EU, EEA and Swiss citizens will be able to enter the UK without applying for a visa. They may participate in business-related activities, such as meetings, events and conferences. If you require EU, EEA or Swiss citizens to go to the UK to work for longer than 6 months, you’ll need to check the UK’s immigration laws. The new rules do not apply to Irish citizens because of the Common Travel Area arrangement.  Under the long standing CTA, British and Irish citizens can move freely and reside in either jurisdiction and enjoy associated rights and privileges, including the right to work, study and vote in certain elections, as well as to access social welfare benefits and health services.

27. What about trade between Northern Ireland and the Republic of Ireland in terms of VAT, Customs and Tariffs?

Provisions relating to Northern Ireland are covered by the revised Protocol to the Withdrawal Agreement effective from 1 January 2021 and the Windsor Framework agreed on 28th February 2023. Northern Ireland:

• legally remains part of the customs territory of the UK
• Effectively remains within the EU Single Market for the movement of goods only.Northern Ireland EORI numbers have been updated with a new country code 'XI'. XI EORI numbers are accepted on the Irish customs clearance systems.
• EU VAT rules on services no longer apply to Northern Ireland. If an Irish based business provides services to a NI based company, UK VAT will be due on the services.
The intention of the EU-UK Trade and Cooperation Agreement and the NI Protocol is to facilitate frictionless trade North/South in terms of Customs controls/documentation.

PREPARING FOR BREXIT

The next series of questions relates to creating a plan for Brexit including supports from the State Agencies – are presented as originally written at the end of 2020.

28. What should Irish microenterprise do to prepare for Brexit?

The Local Enterprise Office has prepared a fantastic document called ‘Simple Steps to prepare and protect your Small Business for Brexit‘. The 16-page pdf is really good. It presents a 5 step process – in a very accessible format. Step 1 is Risk Analysis as presented below.

The remaining 4 steps are:

2. Manage the Business Financials

3. Consider sales opportunities & diversification into new markets

4. Review/update Business Systems & Processes

5. Consider legal documentation, compliance & contracts.

29. What does my small business need to do to plan for Brexit?

Unfortunately, microenterprise could struggle with Brexit more than large businesses who will have the resources to manage the change. But we don’t have a choice and we are all in the same boat. Ultimately preparing for Brexit is about accessing the right information and interpreting it for your own business. Having reviewed the majority of state agency websites over the last few weeks there is a lot of information available. I particularly liked the 6 page Brexit Readiness pdf prepared by Revenue for LEO clients available from the LEO Mayo Brexit page which includes the following model:

Preparing for Brexit involves asking a series of questions and creating a plan on foot of the answers. I would suggest that the first step is to contact your Local Enterprise Office even if you have never contacted them before. They will be able to provide mentoring as the first step in creating a plan by asking the following questions:

1. Do you have an EORI number?
   Every business should apply for an EORI number from Revenue. For more see Q.19
2. Have you talked to your suppliers?
   1. Talk to existing Irish suppliers to see that they are prepared for Brexit.
   2. Communicate with UK based suppliers to see that they are prepared. As per Q.13, they will need to furnish you with certain information to facilitate Customs declarations. They may decide to now use an intermediary such as a distributor in Ireland. While this might have a cost implication it would simplify the logistics and administration of customs and VAT for their Irish and EU customers.
   3. Look at replacing UK based suppliers with Irish or Northern Ireland based suppliers.
   4. Assess delivery timeframes – the current 2-day turnaround from the UK for small deliveries is probably not feasible.
3. Do you need to upskill on customs for importing & exporting
   I would suggest attending the LEO Customs training programmes to upskill on customs. But the first step is to talk to your Courier, Customs Clearance Agent or Freight Forwarder to see what they can do for you when importing and exporting. It is vital to get your tariff classification correct. Hopefully, they will manage everything for you.
4. Check Certification and Standards – as per Q.8 and Q.10
5. Talk to your Accountant
   1. Look at finance implications – will the cost of your products increase, will demand be affected and will cash flow be impacted?
   2. Do you need to register for VAT in the UK?
6. Talk to your Bank
   1. Funding options
   2. Do you need a Comprehensive guarantee? See Q16 which addresses how import duty is paid to Customs and the requirement for a comprehensive guarantee from your bank to avail of the Revenue’s deferred payment facility for Customs duty

Prepare for Brexit.com lists 12 Brexit Essentials with links for further information on each issue. There is a good overlap but the guide does highlight the issue of ‘country of origin’

In customs terms, there are two main categories of origin . Goods that are “wholly obtained” e.g. strawberries grown, processed and packed in Ireland and goods that have been “sufficient processed” with materials from more than one country. Determining origin especially for manufactured goods can be complex as origin is determined by the country in which the last “substantial processing” took place.

30. What Brexit supports are available for business in Ireland?

The primary supports available depend on your State Agency as outlined on the prepare for Brexit website which lists supports from EI, LEO, Microfinance Ireland, NSAI, HSA, Skillnet and Strategic Banking Corporation of Ireland (SBCI).

A- ENTERPRISE IRELAND

Enterprise Ireland has made 3 new supports available to their client base as a result of Brexit. The prepareforbrexit.com website is the definitive guide on:

1. The Ready for Customs Grant will assist your business to increase its capacity to manage the customs process after 1st January 2021.

• Up to €9,000 is available for each new full-time employee engaged in customs work.
• This grant contributes to recruitment costs, employee costs and provision of IT infrastructure.

If you employ a new person to deal with customs on a part-time basis a grant of up to €4,500 is available.

2. The Brexit Act On programme delivered throughout two half-day sessions with an independent consultant focuses on assisting clients of EI to decide on specific actions to respond to Brexit under three areas (1) Financial and Currency Management (2) Strategic Sourcing and (3) Customs and Logistics.

B- LOCAL ENTERPRISE OFFICE

The full list of Brexit supports available to LEO clients is listed on the national Local Enterprise Office website.

It has a page devoted to financial supports which lists of Brexit support available to LEO clients

This lists the standard financial supports offered subject to application and meeting criteria to include Feasibility, Priming, Business Expansion, TOV, and TAME.

Local Enterprise Offices work with clients on their applications to Microfinance Ireland (MFI) for small business loans of between €2,000 and €25,000 (unsecured). Loans for commercially viable proposals can be used to help fund start-up costs, working capital or business expansion. By applying for an MFI small business loan through a Local Enterprise Office, clients can avail of a 1% reduction in the interest rate charged.

The Brexit Loan Scheme, which was announced in the 2018 budget, will provide affordable financing to businesses that are either currently impacted by Brexit or will be in the future. The Scheme, which is delivered by the Strategic Banking Corporation of Ireland (SBCI) through commercial lenders will make €300 million available to eligible businesses with up to 499 employees at an interest rate of 4% or less.

I have been asked on many occasions if there is a specific Brexit Grant from LEO. The answer is No.

The key is to take the time to prepare your business for the potential impact. If your business is diversifying, entering new markets, engaging in R&D, or taking on people to service demand in existing markets to include the UK then the range of LEO supports will be relevant. As a mentor with both LEOs in Mayo and Galway, I would suggest that the soft support of mentoring is the first support to seek. There are specialist Brexit mentors as well as experts in all areas of business from finance, strategy, marketing, HR and compliance across all sectors and industries.

The Enterprise Europe Network (EEN) is also available to LEO clients to provide expert advice on internationalisation, sourcing technology and to identify trusted business partners. When talking about EEN I always refer to the brilliant support offered to Achill Oysters (Hugh O’Malley) as outlined in this youtube video.

The LEOs have devoted significant effort and attention to Covid-19 supports along with Brexit in 2020 so it is worth checking out their Covid 19 financial supports on the national website.

The Department of Business, Enterprise and Innovation have a super-comprehensive list of supports for Covid 19 impacted businesses to include financial, sector-specific supports and skills and training.

C- INTERTRADE IRELAND

InterTrade Ireland based in Newry has specific Brexit supports for companies trading North/South.

Brexit Planning Voucher provides 100% financial support up to £2,000/€2,250 (inclusive of VAT) towards professional advice to help businesses to identify Brexit exposure and to plan. The Voucher can be used by the cross-border trader to complete a supply chain analysis of the business, map trade flows, review suppliers and explore the impact of the future trading environment. The Voucher can also be used to support other areas, for example, customs training.

There was a second voucher – a Brexit Implementation voucher – to provide financial support up to £5,000, with InterTradeIreland paying 50 per cent to allow businesses to implement critical changes identified in the stage one process; making them better prepared to deal with a new trading relationship. But this no longer seems to be available.

31. Are there soft supports like training and mentoring available on Brexit from LEO?

Yes. Your local LEO will be able to offer both training and mentoring on Brexit and Customs. There are also Brexit themed events organised. Most of these are virtual so you can attend an event outside your county.

Local Enterprise Offices are running one Day ‘Prepare Your Business for Customs’ workshops throughout the year and they’re open to ALL businesses, across ALL sectors and ALL industries. Course outline and dates available from the LEO national website.

32. EI have a Free Customs Course delivered online?

Yes the Customs Insights Course is free – sign up via PrepareforBrexit.com – it says that it takes about 40 minutes but I spent probably 2 hours and it was time well spent. This is how the programme is described on the website:

33. Enterprise Ireland has a self-assessment tool to assist companies to prepare for Brexit?

There are two tools on the PrepareforBrexit.com website and both are worth using.

1- BREXIT READINESS CHECKER

The Brexit Readiness checker asks a series of great questions and send you a personalised report with recommendations. I got back a 19 page report with recommendations.

I would describe the Brexit Readiness Checker as a very practical document to identify actions that your business needs to take.

2- BREXIT SCORECARD

The Brexit Scorecard also asks a series of questions but it has a different emphasis and could probably be described as more strategic. The website explains that This self-assessment tool is designed to be completed by members of a company’s management team that have oversight of all operations – e.g. CEO, CFO, COO etc. It takes approximately 15-20 minutes to complete.
I got back a 12-page pdf which addressed six specific areas:

1. Business Strategy
2. Operations
3. Innovation
4. Marketing
5. Finance
6. People & Management

AIB have an interesting chatbot type tool also on their website. I was wondering a little about some of the questions but the report that was subsequently emailed was very beneficial. So I would recommend spending the few minutes that it takes to complete.

34. Should I be talking to my bank?

Absolutely. Your bank has trained Brexit specialists who can talk directly to you about Brexit and have also published guides on every aspect of Brexit.

• The Bank of Ireland has a clear guide on the steps involved in applying to Revenue for a Comprehensive Guarantee (as mentioned in Q6 and Q29)
• Opening Sterling Bank accounts and managing Sterling transactions. BOI has an 8-page pdf on managing currency risk (more on this topic in next question)
• Loan Finance particularly the various Strategic Banking Corporation of Ireland (SBCI) loan schemes for both Brexit and Covid. For instance this page outlines how AIB has partnered with SBCI to provide customers with access to the SBCI Brexit Loan.

35. What is going to happen to the Euro/Sterling exchange rate?

In 2019, the Department of Business, Enterprise and Innovation published a guide to ‘Currency Risk Management for Irish SMEs‘ to highlight and provide guidance on how to manage exposure to foreign currencies. In the run-up to the referendum in 2016, the Pound was worth 1.32 Euros falling to €1.11 by the October following the vote. While Sterling gained 4.3% against the euro in 2017, it lost 1.8% in 2018.

This up/down fluctuation continued in 2019 with Sterling gaining 6% against the Euro while September 2020 saw a dramatic fall to €1.08 in line with stalling post Brexit negotiations and the continued impact of Covid in Britain.

The continuing uncertain picture makes the key point of the currency risk management guide even more salient – it is worth examining currency hedging for your business.

So no prediction on the value of sterling in this answer. Most commentators agree that economic growth in the U.K. and Bank of England (BOE) monetary policy decisions will ultimately determine the GBP’s value in a post-Brexit Europe.

36. What does the Currency Impact Calculator on Prepare for Brexit.com do?

The Prepare for Brexit website explains that the model is currently set to show the impact of a drop from today’s £/€ exchange rate to a parity scenario, i.e. a scenario whereby £1 = €1. These inputs can be changed in the relevant cells.

37. What impact will Brexit have on food businesses?

IBEC and the SFA’s superb document, ‘Brexit: a guide for your business’ states that two-way trade with the UK is estimated to directly support 400,000 Irish jobs.  It highlights the trade exposure of Food in the figure below which is presented on page 10.

According to the recently published 2019 EU Trade Policy Review (WTO), the sector with the highest average tariffs is the dairy sector (32.3%), followed by sugar and confectionery (27.0%), meat (19.0%), cereals and preparations (17.2%) and fruit and vegetables (13.0%). Concerning non-agricultural products, fish and fishery products (11.8% on simple average) and clothing (11.6%) are the sectors with the highest tariff protection.

The Food sector also faces non-tariff barriers as discussed in Q7. If you trade in Agricultural goods, and particularly those goods are of animal origin, then additional veterinary checks and certs will be required along with additional timeframes for notifying customs of imports. You will also need to ensure to be registered with DAFM and comply with new UK import requirements.

This Irish government webpage on the Agri-Food sector provides a great starting point to avoid serious disruption to your business while the Bord Bia website has a Brexit Hub which includes a webinar recording of an event entitled, ‘Brexit Actions to take: Less than 100 days to go‘ which includes presentations from Bord Bia, BDO and the Bank of Ireland covering customer relationships, supply chain, customs and controls, financial resilience, business continuity and market diversification.

38. Will the UK continue to be covered under mobile phone roaming?

No but hopefully yes. This issue is addressed under the National Brexit Readiness action plan under Connectivity, Transport and Travel

At the end of the transition period, access for Irish consumers to Roam-Like-At-Home in the European Union will no longer apply in relation to travel to the UK. Mobile operators will as a result be able to apply a surcharge on roaming customers. This will include in relation to travel by Irish consumers to Northern Ireland. The majority of telecommunication operators have indicated their intention to continue with the present regime after December 2020, this however could be subject to change over time.

39. How will driver licenses and car insurance cover be affected by Brexit ?

This issue is also addressed under the National Brexit Readiness action plan under Connectivity, Transport and Travel. After the end of the transition period, UK driving licences will no longer be valid for persons living in Ireland – they can be easily exchanged. Driving licenses will be valid for short term trips in both jurisdictions.

40. Is there a list of agencies to contact regarding Brexit?

The Department of Enterprise, Trade & Employment has published a very useful 3 page Brexit Readiness Checklist to include contact details for organisations to contact with regard to preparing for Brexit.

Your first stop is to find your local enterprise office here…