Business Readiness Bulletin – Brexit: New rules are here – 18 January 2021

Issue 68: 18 January 2021

The UK has left the EU, and the Brexit transition period has ended. There are new rules for businesses doing business with the EU from 1 January, and you need to take action now. All information on Brexit can be found at www.gov.uk/transition. This bulletin is issued by the Department for Business, Energy and Industrial Strategy and provides the latest information for businesses.

  • Act now to keep your business moving in 2021
  • New: How to keep your business moving – on-demand videos launched
  • Trade
  • Importing and Exporting
  • Moving goods
  • Northern Ireland
  • Intellectual Property
  • Business Support Helpline
  • Sector specific guidance
  • Webinars

Read more: Business Readiness Bulletin 18 January 2021

Latest Government update relating to UK borders following the end of the transition period

Latest Government update relating to UK borders following the end of the transition period.

Contents:

  • Daily All Stakeholder Call
  • Top Issues
  • New or updated guidance
  • Helpline Numbers & Online Forums
  • BPDG Enquiries Mailbox

Read more: UK Borders update 15 01 2021

Rules of origin: urgent information for businesses looking to use the UK-EU Trade and Cooperation Agreement

Following up on the rules of origin guidance BEIS has previously shared (see message copied below), they are proving some clarification on the impact of the UK leaving the EU customs union on the tariff treatment of different goods. They have received reports of the following issues impacting distribution business models in particular and wanted to ensure that the rules are clear, and that the options that are available can be shared with companies looking to navigate these changes. Here are links to additional resources to help you understand the basics: Rules of Origin webinar slides 14 01 2021 and Rules of Origin FAQs.

Rest of World (RoW)-origin goods that are released into free circulation (i.e. customs cleared) in the EU or UK, if they are then sent to the other party without further processing that would meet the product-specific rules of origin in the UK-EU Trade and Cooperation Agreement (TCA), will have tariffs applied to them no matter what length of time they spend in one territory, unless they are kept under customs supervision while there. To avoid paying duties on the initial import, the first option that would be available if a company is holding on to the goods in the UK or EU for any significant length of time ahead of re-exporting them, would be to apply to either run a customs warehouse yourself or store the goods in another’s customs warehouse and use the Transit procedure on shipping goods to it, so the goods would effectively never clear customs in the first place.

Where there is a preferential trading arrangement in place between the EU or the UK and the third country where the RoW good originates from (e.g. Japan), businesses could check the ‘Direct Transport’ or ‘Non-Alteration’ clause of the relevant agreement to determine the conditions under which RoW-origin goods could transit through the UK or the EU and still be imported tariff-free into the final destination. However, these clauses often stipulate that the goods must remain under customs supervision in the middle country in the chain.

EU-origin goods that are released into free circulation (i.e. customs cleared) in the UK that are then sent back to the EU without any significant processing (see below for definitions of what is not enough), will have tariffs applied to them as well. This is also the case for EU-origin goods which are being moved from Great Britain to Northern Ireland and are considered ‘at risk’ of entering the EU.

To be eligible for zero tariff trade using the UK-EU TCA, there would need to have been some processing in the UK before exporting to the EU, or vice versa. The processing that must take place must be more significant than the following operations (which are taken from Article ORIG-7 of the UK-EU TCA [on page 30], with the agricultural and textiles-specific examples stripped out):

  • preserving operations such as drying, freezing, keeping in brine and other similar operations where their sole purpose is to ensure that the products remain in good condition during transport and storage;
  • breaking-up or assembly of packages;
  • washing, cleaning; removal of dust, oxide, oil, paint or other coverings;
  • simple painting and polishing operations;
  • sharpening, simple grinding or simple cutting;
  • sifting, screening, sorting, classifying, grading, matching including the making-up of sets of articles;
  • simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;
  • affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;
  • simple mixing of products, whether or not of different kinds; mixing of sugar with any material;
  • simple addition of water or dilution with water or another substance that does not materially alter the characteristics of the product, or dehydration or denaturation of products;
  • simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;

(Operations shall be considered simple if neither special skills nor machines, apparatus or equipment especially produced or installed are needed for carrying out those operations.)

If you are distributing EU-origin goods back to the EU and you have not carried out significant processing on them in the UK, the thing to check is whether the person importing the goods back into the EU could use Returned Goods Relief to avoid paying a tariff. Procedures for using this Relief differ across EU Member States (though the underlying rules are the same) but I have included the Irish guidance here as an example. The goods must be re-imported in an unaltered state, apart from any work that may have been carried out to maintain the goods in working order, and the goods cannot have been upgraded to increase their value.

Act now to keep your business moving in 2021, Business Minister urges

Business Minister Paul Scully is urging businesses who have not yet taken steps to prepare for the UK’s new start to act now.

  • Firms urged to ensure they have ticked off checklist of 6 key actions, as UK begins its new start outside of the EU
  • Business Minister warns “Business is changing: you must not delay any further”
  • Department launches series of on demand videos – on subjects ranging from trade to data – to help companies understand the new rules

Read more: Act now to keep your business moving in 2021

Billions of pounds of support helps businesses up and down the country

Businesses in all regions and nations of the UK have benefitted from billions of pounds in government-backed loans, according to new figures released today, 18 January.

More than 1.4 million loans have supported businesses and protected jobs across all sectors. The figures show that the retail and construction sectors have benefitted the most, demonstrating how government support is helping those impacted hardest by the pandemic.

Support has been spread across the country, with regions receiving loans proportionately to the amount of businesses located there. This shows that government support is helping those who need it. These loans are in addition to furlough, the self-employment income support scheme and business grants, as part of the government’s unprecedented £280 billion support package to protect jobs during the pandemic.

Read more: Billions of pounds of support helps businesses up and down the country

FAQs: Tariffs and Rules of Origin (RoO) in the UK-EU Trade and Cooperation Agreement

1) Can I export tariff free under the new UK-EU trade deal?

As of 1 January 2021, goods exported to the EU are eligible for zero tariffs if the goods meet the Rules of Origin requirements set out in the Agreement and have the right documentation. If not, the goods may be subject to EU tariffs.

The same applies for imports to the UK from the EU.

2) What are Rules of Origin?

Rules of Origin determine the ‘economic nationality’ of a good. They are a standard part of free trade agreements (FTAs).

Rules of Origin ensure that only goods produced in the countries party to the FTA (the UK or the EU) benefit from zero tariffs  

3) How do I comply with Rules of Origin?

First, traders need to understand whether their good meets the applicable rules. To do this they need to classify the good to find its Harmonized System Code and then consider the relevant rules for that good. Traders can do this using this online tool: https://www.gov.uk/check-duties-customs-exporting

Second, traders need to understand how to demonstrate origin to the customs authorities and what paperwork they need to include with the good when exported. Traders can self-declare goods meet the rules by making out a statement on origin. Alternatively, the importer can use importer’s knowledge, and traders may need to provide other information. Traders should look at the origin procedures in the text of the Agreement: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/948119/EU-UK_Trade_and_Cooperation_Agreement_24.12.2020.pdf

4) What if I am importing goods into GB and then (re-)exporting them to the EU? 

The UK is no longer part of the EU Customs Union. This means that goods imported into GB cannot move freely between GB and EU Member States or vice versa. To be eligible for zero tariff export to the EU, these goods still need to comply with Rules of Origin. This means there must be some production in the UK. This applies to EU origin goods as well as to goods from the rest of world.

If traders move goods through GB from one EU Member State to another without the goods entering UK customs territory (i.e. without entering free circulation in GB), the goods may not need to meet Rules of Origin. 

6) Can I use a customs agent to help me with Rules of Origin?  

Yes. There is guidance available on how to find a customs agent: https://www.gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf

Compliance remains ultimately the responsibility of the exporter.

7) Do I need a declaration from my supplier? 

If the goods you are exporting incorporate originating materials from a supplier, you may need a declaration from your supplier to meet Rules of Origin requirements.

Until 31 December 2021, exporters may make out statements on origin based on supplier’s declarations even if they do not have all the relevant supplier’s declarations in hand at the time they make the statement on origin. Exporters must be confident that the exported goods meet the Rules of Origin requirements and may be asked to retrospectively provide a supplier’s declaration after this date. 

8) Where can I go for more information?

For full Rules of Origin guidance on trading with the EU, go to: https://www.gov.uk/government/publications/rules-of-origin-for-goods-moving-between-the-uk-and-eu-

Trade with Vietnam from 1 January 2021

How you import from and export to Vietnam will change from 1 January 2021.

The UK has signed a trade agreement with Vietnam which will take effect from 1 January 2021.

From 1 January 2021 until the end of February 2021, preferences will be applied retrospectively for goods imported to Vietnam from the UK. This means goods entering Vietnam from the UK will initially be subject to MFN tariffs for a short period. However, businesses will be able to claim back any additional tariffs paid in this temporary period from the Government of Vietnam. Information on reimbursements will be available from the Vietnamese government. This page will be updated as soon as possible.

This guidance provides information on aspects of trade that will change as soon as the UK-Vietnam agreement takes effect. It is for UK businesses trading with Vietnam.

Read more: Trade with Vietnam

Trade with Singapore from 1 January 2021

How you import from and export to Singapore will change from 1 January 2021.

The UK has signed a trade agreement with Singapore which will take effect from 1 January 2021.

This guidance provides information on aspects of trade that will change as soon as the UK-Singapore agreement takes effect. It is for UK businesses trading with Singapore.

Read more: Trade with Singapore

UK trade agreements with non-EU countries

Find out about the trade agreements the UK has concluded that are in effect and the progress of our discussions with other countries.

Read more: UK trade agreements with non-EU countries

Business Secretary’s letter to the manufacturing sector

Extracts from the Business Secretary’s letter to the manufacturing sector on 11 January 2021:

“As the new Business Secretary, I would like to take this opportunity to restate the
Government position, which is that firms and tradespeople in manufacturing,
including supply chains, should continue to operate during this national lockdown. I
would also like to make it clear that where it is essential to travel or to stay in
accommodation, whether to get to your work or for the purposes of carrying out your
work, those in the industry are able to do so.

It is vital that manufacturing continues and I want to reassure you that the
Government values the contribution your sector is making. Your work in areas such
as aerospace, chemicals, automotive, rail, metals and steel, defence, shipbuilding
and repair, pharmaceuticals, plastics, and many other manufacturing sectors as well
as in delivering vital services, products or materials are critical elements of the
economic recovery we are building and the fight against Covid-19. ”

Read more: Extracts from the Business Secretary’s letter to the manufacturing sector