We've put together our most frequently asked questions about Brexit including the changes to documents, VAT, trading and how those are affected in prof.ITplus.
What is a customs declaration?
A customs declaration is a standard form that provides key information about the goods being imported or exported. It is also referred to as a Single Administrative Document (SAD) form or form C88. This form is an internationally recognised form and tax document.
Will UK traders be required to make customs declarations if a Trade Agreement is reached between the UK & EU?
After the end of the transition period, (11pm on 31 December 2020), the UK will no longer be part of the Customs Union or Single Market. From 1 January 2021, customs declarations is required for all goods exported from the UK and on a phased approach for imported goods from the EU. A free trade agreement will only impact the duty tariff rates, which could reduce to zero or lower than World Trade Organisation (WTO) rates and quotas. The trade agreement applies to those goods that are wholly of UK origin and will not apply to goods supplied or sold by a UK company if the origin of the goods are of Chinese origin for example.
How much does it cost to make a customs declaration?
This varies dependent upon the freight forwarder or customs agent that you appoint to act and submit the declaration on your behalf. The average cost is £32.50 but can range from £15 to £56.
How can our business complete customs declarations?
Customs declarations are complicated. The consequences of non-compliance will result in fines, penalties, potentially imprisonment, bankruptcy and strike off. Businesses may feel more comfortable, plus the UK Government are advising, using an intermediary such as freight forwarders, brokers, customs agents or fast parcel operators to submit declarations on their behalf.
Is there a how to' guide for Importing and Exporting to the EU?
The most simplified guide, setting out the actions traders, hauliers and passengers need to take, can be found in the Border Operating Model, published by the UK Government. This guide provides information on the changes traders will need to implement to continue trading with the EU after the 31 December 2020, regardless of whether a trade agreement is reached with the EU.
When is the Customs Procedure Code (CPC) used?
The CPC identifies the reason for the import/export and the applicable customs regime. Box 37 of the SAD form requires you to enter the CPC. This will be reviewed by Customs, to ascertain how the goods should be processed and whether duties and taxes are payable, suspended or waived. If this is incorrectly inputted on the form, it could impact the way the goods are handled by Customs.
Who pays the duties and VAT on goods exported from the UK to the EU?
This will depend upon the Incoterms agreed with your customer. Incoterms make clear the responsibilities for each party along the shipment lifecycle from leaving origin to arrival at their destination. They determine who pays for each aspect of freight, insurance and duties and who handles customs procedures.
When are duties payable?
If you have deferred the customs declarations, you must first update your own import records for when you do complete the declarations, by 1 July 2021. You will need to complete the supplementary declaration or ask your customs intermediary to complete on your behalf. HMRC will debit the duties from your deferment account when your supplementary declaration is received. Your VAT can be declared in your VAT return via postponed accounting.
What rate of duty will businesses pay when importing into the UK?
The rate of duty will be determined by the commodity code selected for the product imported. The amount of duty is calculated depending upon the value and type of goods imported.
How long will it take to set up a Duty Deferment Account from submitting an application?
HMRC have advised they aim to process duty deferment accounts within 30 working days.
Is it essential for our business to have a Duty Deferment Account?
A Duty Deferment Account enables importers to defer payment of duties, (excise duty, customs duty and import VAT) for up to 45 days and pay through Direct Debit rather than on individual consignments, easing cash flow.
The payment of duties are usually made before goods are released from customs to the destination country. Some customs intermediaries will pay this on your behalf and invoice you. Your agent is likely to charge an admin fee of approximately £15 plus an advancement fee, around 2%. Thus, you could be required to meet extra costs, immediate payment, with potential for delays, should your intermediary's own duty deferment account have an insufficient credit balance at the time of import.
What effect will Brexit have on cards and payments?
Whilst it is not yet known what agreements on financial services will be reached during the transition negotiations, the European Payments Council (EPC) has confirmed that even in a no deal' scenario, the UK will maintain participation in the Single Euro Payments Area (SEPA) geographic scope. Extra rules are likely to be made applicable to transactions i.e. extra transaction details will need to be provided.
What impact will Brexit have on eCommerce?
UK eCommerce sellers of goods will now be subject to import VAT when selling to EU consumers. UK sellers will have to consider VAT registering in Europe. UK businesses with an EU VAT registration will require a Fiscal Representative in 19 of the 27 EU member states. Similarly, EU eCommerce sellers may now need to register immediately for UK VAT if they have been selling to UK consumers under the £70,000 VAT threshold.
Import VAT will be levied on all imports of goods valued over £135 from the EU following the same rates and structures that are applied to rest of the world imports. VAT registered traders will be able to account for import VAT on their VAT return by using postponed VAT accounting
Imported goods in consignments with a value up to £135 will not be collected at the point of importation, but required to charge and collect any VAT due at the time of sale. The VAT exemption of £15 in the UK will be scrapped from 1 January 2021.
What is the Trader Support Service and will it help me?
The Northern Ireland Protocol is in effect from 1 January 2021, involving changes to administrative processes required for traders. Northern Ireland will stay in the EU single market for goods after the end of the transition period. Goods exported from GB to Northern Ireland will be subject to new declarations and could be subject to duties if considered at risk' of moving through Northern Ireland, into the EU. Tariffs may need to be paid on goods at risk' and food and agricultural products will be subject to health certification and specified processes. Trade from Northern Ireland to GB, non-EU countries and EU member states will broadly continue as today.
The Trader Support Service (TSS) has been established to support traders exporting goods from GB to NI. TSS will provide educational support and guidance for traders with limited experience of customs procedures and facilitate declaration submission with a digital service. To use the service, you will need to register your business with the TSS.
Will I need a different EORI number for Northern Ireland?
To move goods to or from Northern Ireland from 1 January 2021, you need an EORI number that starts with XI. You will already require an EORI number that starts with GB. If a business already has a GB EORI number and HMRC considers it will require an XI EORI, HMRC will have automatically issued one in mid-December 2020.
What is Intrastat and will the business need to complete these reports?
Intrastat are monthly trade statistics reports collecting information and producing statistics on the trade in goods between European member states. If you are currently a registered Intrastat business or in the coming year your business exceeds the Intrastat exemption threshold, which is £1,500,000 for EU imports (arrivals) and/or £250,000 for EU exports (dispatches), the table below states when an Intrastat declaration must be submitted.
Will HMRC allow a grace period' for imports and exports?
HMRC recognise the challenge for businesses to adapt to the new trade system. The EU has imposed full customs controls on UK goods from January 2021 with no grace period offered for UK exports to the EU. Full export declarations shall be required. Supermarket exports from GB to Northern Ireland are an exception to this rule,.
Imports from the EU into the UK will be phased in, with all standard goods requiring basic customs declarations from 1 January 2021, and a record maintained for all imported goods (Entry in Declarant Records, EIDR). This information will capture your customs data, to enable you or your freight forwarder to complete the supplementary declarations before 1 July 2021.
From 1 April 2021, all sanitary and phytosanitary products, that is products of animal origin (POAO), regulated plants and plant products, will require pre-notification and health documentation. Physical checks will continue to take place at the point of destination, until 30 June 2021.
From 1 July 2021, full entry declarations shall be required on all imports.
Has there been any published clarification on the UK-EU cross-border process for returnable packaging that makes multiple trips between countries, either full or empty?
HMRC are working to prioritise an update to this guidance.
Do specific wooden pallets have to be used to export goods to the EU?
You will need to check your pallets conform with ISPM15 rules. The EU require all wood pallets to be heat-treated at 56‚ÑÉ to prevent the spread of pests and have specific markings to confirm they meet legal requirements. There is concern whether the UK will have a sufficient supply of ISPM15 pallets to continue exporting goods to the EU from 1 January 2021. Your packing service or freight forwarder must make sure any solid wood packaging used, meets the requirements. If you do not follow the rules your packaging could be rejected or destroyed.
Will there be changes to import VAT in the UK?
From 1 January 2021, import VAT is no longer be payable when goods enter the UK. Instead, postponed VAT accounting will apply to all goods imported by VAT registered importers to the UK, including those from the EU. Under postponed accounting, import VAT will be accounted for and paid via the VAT return which will lead to an improved cash flow position.
What is triangulation trade?
Triangulation is the term used to describe a chain of intra-EU supplies of goods involving three parties in three different member states, causing VAT to be neutral to all parties.
After the transition period, the VAT structure for triangulation simplification has not been agreed upon. A requirement of the scheme requires all parties must be VAT registered in different EU Member states. Non-EU vendors can be involved in triangulation transactions providing they are registered in the relevant EU member state. If a non-EU vendor is the intermediary supplier B', they can be VAT registered in any EU member state except the member state where A' and C' are registered.
In the absence of a trade agreement with the EU, UK business may be required to appoint a fiscal representative (joint and several liability), to deal with VAT compliance. This would essentially exercise the EU VAT Refund Mechanism however after the transition period the UK will no longer be covered by this scheme.
The Commodity Codes have printed on the Commercial Invoice but there are no Code Descriptions, how can I amend this?
The Commodity Code descriptions are setup in the Stock Reference Table under Setup Commodity Codes. A Server Admin User will need to amend permissions if this option is not available on your menu.
When posting a Manual Invoice or Credit Note, using Manual Lines for a customer with a VAT Indicator of Other, the system is asking for a Commodity Code, what shall I do?
We recommend to enter 00000000 as the Commodity Code for Rest of the World Invoices / Credits.
Previously, 00000000 prevented items printing on the Intrastat Report. Intrastat Reports are no longer required for Sales Ledger.
In the new Commodity Code Reference Table for recording Commodity Descriptions, is there a limit to the number of entries that can be held?
There is no limit to the number of Commodity Code Descriptions that can be held.
In the Invoice Parameters there is an option for Commodity Code Summary. Does the Summary print the Commodity Codes on UK Invoices?
No. The Commodity Code Summary will only appear on those Invoices for Customers marked as EC for the VAT Indicator.
Can Commodity Codes be printed on Depot Transfer Notes
No. A new version of the Depot Transfer program would need to the installed. Training on this new program is recommended. Please speak to your Account Manager if this is a requirement.
Where do I add Commodity Codes and Country of Origin?
There is a country of origin at stock code level and at batch level. Commodity Codes should be entered in the Commodity Code text box and Commodity Code suffix.
Do I need to record Commodity Codes against all stock codes?
The Commodity Code needs to be recorded against every item but you may want to consider focusing on the imported items first.
Do Commodity Codes also have to be printed on purchase orders?
Yes, it is good practice. The Commodity Code of any product should be known by the time the purchase order is placed, since customs costs and import regulations are set against specific commodity codes.
Are Commodity Codes and EORI numbers needed on purchase orders?
The supplier EORI number can be recorded on the supplier details screen.
Are Intrastat Reports still required for Purchase Ledger Imports?
Purchase Ledger Intrastat reports will still be required until the end of 2021.
Can declarations be completed via prof.ITplus?
No, this needs to be recorded outside of prof.ITplus.
When a Kit is made up from several components with different countries of origin, what origin does the Kit become?
Significant changes to items need to be made before the Origin can be classed as UK. It is suggested the Country of Origin is where the most components come from. Please seek further assistance from HMRC or Chamber of Commerce.
Is the new Packed Weight field on the Stock Screen calculated?
No. The item would be weighed without its outer packaging materials for item weight and inside its outer packaging for the packed weight. Weights would be in KG.
Can we enter more than one set of box dimensions?
At the point of dispatch, you can click the Multi' box to allow entering multiple box dimensions.
What are the key shipping documents required for export?
Are tariffs handled in prof.ITplus?
Tariffs are not currently handled in prof.ITplus unless customers are using the pre-brexit programs for existing shipping and landed cost functionality.
Will I need to make changes to our Carrier Integration Software?
You need to contact your carrier provider to confirm if changes will be required. Should Carrier changes be required from within prof.ITplus, please contact your account manager who can quote for the work. Please note our current lead times are 2-4 weeks.
What to do if net mass is less than 1KG?
Where a net mass is less than 1kg, it should be entered as 0' followed by up to a maximum of 6 decimal places. This could have an impact on duties, excise, and freight costs
All Declaration Categories:
Enter, up to 6 decimal places, the net mass in kilograms of the goods described in DE6/8 (Description of Goods). The net mass is the weight of the goods themselves without any packaging.Where a net mass greater than 1 kg includes a fraction of a unit (kg), it may be rounded off in the following manner:
From 0.001 to 0.499: rounding down to the nearest kg
From 0.5 to 0.999: rounding up to the nearest kg
A net mass of less than 1 kg should be entered as 0' followed by a number of decimals up to 6, discarding all 0' at the end of the quantity (for example, 0.123 for a package of 123 grams, 0.00304 for a package of 3 grams and 40 milligrams or 0.000654 for a package of 654 milligrams).
Can I use WMS Scanners for reading weights and Commodity Codes?
No changes have been made to WMS for handling weights or Commodity Codes, you will need to enter within prof.ITplus on the stock record.
Will EC Sales and / or Intrastat Report still be required?
For the export of goods or the supply of services made to EU businesses after 1 January 2021, you will not need to submit EC Sales Lists (ESLs). You will have until 21 January 2021 to submit ESLs for sales made before 1 January 2021. You will still need to submit ESLs if you sell goods from Northern Ireland to EU VAT-registered customers. For Intrastat reports, this will only be required in a few circumstances and only if you are a registered Intrastat Company. Please see the table above in the Trade with Northern Ireland section for more information.
Can a Supplier EORI number be stored in prof.ITplus?
The supplier EORI number can be recorded on the supplier details screen (R65).
How can we accomodate different countries of origin for the same item?
When you make customs declarations, you will need to accurately record where goods have come from. If you do not provide the correct information, you may be charged the wrong amount of tax or duty and you may have to pay a penalty.
Currently, only one country of origin can be defined for a stock code within prof.ITplus. You may receive an item with a specific country of origin but then at a later date receive more of that item with a different country of origin from a different supplier. In that instance, you will need to set up a new stock code for the item to reflect the differing country of origin.
Postponed VAT requires a Deferred Account to be setup, where does this sit in the Nominal Ledger?
This should be a question for your Accountant to confirm. Our suggestion would be next to the VAT Liability Account on Balance Sheet under Liabilities.
When a Purchase Invoice is received for Import VAT from the UK carrier, where does the VAT appear on the VAT Return?
The Purchase Ledger Invoice will be posted as VAT only for VAT Code 1 and will appear in Box 4 on the VAT Return.
Where do EC Purchases and VAT now appear on the VAT Return?
EC Purchase Goods will still appear in Box 7. EC Purchase VAT is no longer shown on the VAT Return.
Are VAT rates at the point of order, dispatch or invoice?
Any EU-UK supplies made on or before 31 December will be treated as intra-EU supplies until 31 March 2021. Consequently, they will follow the current intra-EU supplies VAT and duty treatment. However, it is possible that some goods may be stopped at Customs until the supplier is able to demonstrate that the dispatch of the goods took place before 1 January 2021.
What changes have been made to the VAT Return?
If I use Postponed VAT, how will I know the VAT figures to enter?
At the beginning of the month following receipt of goods, HMRC will send a Statement of Postponed VAT.
Details from this Statement can then be manually entered on prof.ITplus via the Nominal Ledger>Postponed VAT Accounting>Post/Display Postponed VAT.
I have arranged for my supplier to carry out a direct delivery of goods to my customer. Do I need to print a Commercial Invoice?
The Commercial Invoice is used to accompany the goods through Customs. As you are not despatching the actual goods, the system will not produce a Commercial Invoice.
Can Consolidated Sales Invoices be used with Commercial Invoices?
It is not our recommendation to use Consolidated Invoicing and Commercial Invoices. If this is still a requirement, please contact the Support Helpdesk for a possible ODBC Workaround.
Can a Commercial Invoice be generated for Northern Ireland customers?
The Customer account in Sales Ledger will need to have the CommInv indicator ticked and have a postcode starting with BT in order to produce a Commercial Invoice for Northern Ireland customers.
Which Commercial Invoice Layout should I use?
From <a href="/release-notes" target="_blank">Release 66, it is suggested Layout *CI03A for Portrait and *CI04A for Landscape are used.
An additional landscape layout including a statement of origin' will be available using *CI04B. Specific details can be added by adjusting the statement_of_origin document text entry via the Admin menu
Can Pound, Euro and Dollar symbols print on document
Unfortunately, this is not possible. The Currency Code or Currency Description, as setup in Company Details > Setup Currency Codes, can be print if required.
Will currency symbols show on our document layouts, such as Commercial Invoices?
Symbols can not be printed from prof.ITplus. The system will use either the Currency Code or Currency Description. (Depending on the print tag set on the document layout).
GBP does not require its own code. Additional tags are available where GBP must be printed. Please contact Software Support if you need to requesting changes to document layouts.
What documents do I need to store EORI on?
Since an EORI number is assigned to an individual legal entity, used to identify you and your shipments across all EU countries, it would be beneficial to use the EORI on all shipping documents.
Where can I record that a Commercial Invoice is required for NI Accounts?
The customer commercial indicator is currently for NI accounts only. For all other accounts, the commercial indicator is set by country code stated in the release notes, "after enabling the commercial invoices parameter, commercial invoices must be selected for each country required. This is done through the 'Add the Change' options in 'Set Up EC Country Codes & VAT Rates'.
What Commercial Invoice document should I use?
A commercial invoice can now be printed after the sales order invoice has been generated. The commercial invoice number is the same as the sales order invoice number
Within the Invoice/Credit Note Printing section of the Invoice Parameters window, a parameter is available to enable commercial invoices to be printed. Once selected, the default commercial invoice layout can be set :
Should you require any amendments to the default layouts, i.e. include logo's, amend table layouts etc a price on application can be provided via your Account Manager.
Can the EORI number appear on our eCommerce website and be imported when placing an order?
This is possible but program work will be required. Please contact your Account Manager for costings.
Does OGL have a direct link to HMRC's CHIEF system for declarations?
No. CHIEF is the Government Gateway to submit UK import and export declarations to get your goods through customs. Completing declarations can be complicated and could be high risk for OGL to adopt into their online platform. HMRC have a list of software developers, although it should be noted these are not necessarily approved by HMRC.
Now the Box Details have changed on the VAT Return (i.e. Box 2 from theoretical EC VAT to NI to EC Purchase VAT. Box 8 from EC Sale of Goods to Sale of Goods from NI to EC. Box 9 from EC Purchase Goods to Goods Purchased NI to EC.) will there be different forms in HMRC's MTD screen?
HMRC will be aware of the months that are being submitted and the correct information will be updated.
