Tax authority advises companies trading with UK prepare for no-deal Brexit ({{commentsTotal}})

EU and UK flags.
EU and UK flags. Source: Alberto Pezzali/NurPhoto/ZUMA Press/Scanpix

The Estonian Tax and Customs Board (MTA) recommends companies start to assess the impact Brexit, reiterating what it has already said on the matter, and in particular considering a no-deal withdrawal of the United Kingdom from the European Union.

Brexit is likely have an especially significant impact on companies currently only trading in the European single market, not least if the UK withdraws in a no-deal scenario and reverts to World Trade Organisation (WTO) rules.

Previously, hopes had been that a deal would be struck, including on trade terms between the UK and the EU, and a no-deal Brexit was often called unlikely. However, with the decisive rejection in the House of Commons of UK Prime Minister Theresa May's deal struck with the EU, and the fading likelihood of any concessions with the EU being met which might get through a parliamentary vote, a no-deal scenario is increasingly plausible.

The EU operates external tariffs at varying rates, which the UK would then be subject to, as well as the many other ramifications of a no-deal, such as air travel now falling outside of the  European Aviation Safety Agency (EASA) jurisdiction, duty free regulations when traveling to or from the UK via air, not to mention the border question between Northern Ireland, part of the UK, and the EU nation of the Republic of Ireland.

UK international trade would be governed by WTO

The MTA said those Estonian companies planning to trade with the UK in the future need to look at customs formalities obligatory for trade with third (ie. non-EU, non-European Economic Area (EEA) countries, and others such as Canda which have negotiated at trade deal with the EU).

The UK would find itself governed by WTO trade rules – countries can't simply trade under their own steam – which only a handful of countries such as North Korea do not subscribe to or at least ''observe''. The EU is a dual WTO member but imposes its own tariffs outside its trading bloc and generally conducts free-trade within its bounds.

The MTA recommends businesses getting acquainted with the kind of requirements that will be applied to goods imported from and exported to the EU, including Estonia, from or two third countries, which would include the UK in the event of no-deal.

Other considerations include ordering goods online, when purchasers should remember orders made from the UK will be subject to customs declaration and taxation as with any other goods purchased online from non-member states, ie. third countries, the MTA says.

A no-deal scenario is even more pertinent given that if it happens, no withdrawal period will apply and the UK would revert to being a third country on 30 March.

Sooner or later, rules will change

Provisions concerning the transition period, including the free movement of goods between the EU and UK, should run to December 31, 2020 if a deal were struck, though negotiations are on-going, making this a moving target whilst not being a guarantee that any kind of deal would arise.

During any transition period, the UK, from the perspective of customs formalisation will be treated as an EU member state and the free movement of goods between the EU and UK will continue until the end of the period, the authority said.

No deal would make customs formalisation an immediate priority, concerning the movement of any kind of goods between the UK and EU, the MTA says.

The MTA highlights that importers and exporters are responsible for declaring the goods at customs, either themselves or via a customs agency.

Customs formalities and control procedures to be carried out on the borders in the event of no-deal, or possibly, later, after the transitional period in the event of a deal, are likely to cause a significant delay in the movement of goods, the MTA says.

Furthermore in a no-deal situation, all the UK's excise duty permits will be deemed invalid and, starting from March 31, 2019, no electronic accompanying documents can be drawn up for the UK, according to the MTA.

In the eventuality of a deal, electronic accompanying documents for excise goods can be drawn up for the UK though to the end of the transition period in December 31, 2020, with acknowledgments of receipt continuing to May 31, 2021.

The UK is set to formally leave the EU on 29 March 2019.

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Editor: Andrew Whyte



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