Import and export business update – Preparing for January 1st, 2020

Whether you import goods to the UK or export from the UK to the EU, this post contains key updates you need to be aware of, and for many, take action on before the end of the year.

After the post-Brexit transition period comes to an end, there are specific changes that EU businesses not currently established in the UK will need to make when moving goods or offering services.

While the primary focus in this post is for overseas businesses who trade with the UK market, there is still pertinent data that UK-EU importers and exporters can benefit from knowing before the changes take effect on January 1st, 2020.

This update offers some practical steps you can take to make sure your business is ready

UK – EU Trade Agreement

As discussions are still ongoing, it is uncertain whether a trade agreement with the EU will be reached before January 1st, 2021. Regardless of whether or not a deal is in place, there will be changes to the following:

  • How businesses provide services within the EU Market
  • The way goods are exported and imported
  • The hiring process for those looking to hire people from the EU

While the government has already launched a major campaign to help businesses prepare for the forthcoming changes, there are still many who need to take immediate action to ensure their business can keep moving.

In the next section of this post will break down the specifics relating to exports, imports, and customs as they stand at present. These changes apply to importers and exporters who work in the EU trading with the UK, and those in the UK trading with the EU.

Customs Information

You will essentially be using the same export and import processes used for non-EU countries without a trading agreement with the EU or UK. In summary, when moving goods across the border, this will mean:

  • The carriers will need specific information to move your goods between territories
  • Import and export declarations are needed to enter or remove goods into or from the UK or EU customs territory

If you already have a UK trading partner, it will typically be the trading partner who makes the UK declaration. Still, the specifics of what you need to do will ultimately depend on the arrangements you have in place with any customs representatives, carriers, or trading partners. If you do not have any of these provisions in place, then you need to get a UK representative to act on your behalf to deal with customs for you.

For a more comprehensive overview of the specifics for those looking to buy or move goods from the UK after Brexit, the government has produced a PDF that can be accessed here.

Other customs-related resources that could be useful to you are linked below:

VAT Information

There will be changes to VAT IT systems and import VAT on parcels you need to be aware of. For organizations selling to UK buyers, you may also need to notify customers of any changes to charges before January 1st, 2021.

If you sell to UK buyers and are based outside of the UK, you will need to pay Import VAT.

  • For goods worth £135 or less, you are responsible for the Import VAT
  • For goods over the £135 threshold, the buyer will need to pay the Customs Duty, Import VAT, and if applicable, any Excise Duty

Aside from the above, key changes are being made to VAT IT systems.

  • A new digital service for the checking of UK VAT numbers will be introduced
  • There will be changes to how you claim VAT refunds for UK business expenses
  • If you sell digital services, there are key changes* to how you pay VAT on services you provide to customers in the UK.

Service-based Businesses

If you operate a service-based business, you will need to check how these services are now going to be regulated and how professional qualifications gained in the European Economic Area and Switzerland will be recognised in the UK after January 1st, 2021.

This is particularly important if any of the below apply to your business.

  • If you send your employees to the UK to do business on your behalf
  • If you are planning to merge with a UK-based business
  • If you have subsidiaries or branches in the UK
  • If your employees provide services within or as part of a regulated profession
  • If you operate within a service sector in the UK

If you employ UK nationals that need a professional qualification to practice in the EU, then you must ensure their qualification is still recognised by the relevant EU regulator.

For further reading and the most up to date guidance on the relevant recognition of professional qualifications, please refer to this section of the government website.

Selling Manufactured Goods

If you manufacture goods that are sent to the UK market, there are going to be key regulatory changes* to approvals, testing, and labelling that come into force on January 1st, 2021. Knowing which rules apply to you depends on the type of goods you manufacture.

*At present, these changes only apply to placing goods into the Scottish, Welsh, or English markets. For Northern Ireland, the guidance will likely be different. If you plan to place manufactured goods in the Northern Irish market from the EU, further guidance can be found here. If goods are coming from the GB region, further guidance can be found here.

 The legislative framework is comprehensive, and for some, rather difficult to follow in terms of knowing which regulatory framework is applicable to your business. If this is something you need clarity on, our company and commercial team here at OGR Stock Denton can help.

Changes to CE Markings

This is another major consideration for those selling manufactured goods to the UK market. As part of the preparations needed, you should also check whether or not you need to make changes to your conformity assessment or markings before or after January 1st, 2021.

Before this date, a Pi mark, wheel marking, or CE mark have always been used to place goods onto the UK market. Going forward, the UKCA mark is going to be the conformity assessment marking for most of the goods that today use the CE Mark.

Although for certain products, the CE mark is going to be accepted in the UK until January 1st, 2022, it is vital that your business readies itself as soon as possible to use UKCA markings. I can also confirm that at this point, it will be possible to use both the UKCA and CE marking, as long as you are completely compliant with both EU and UK regulations.

According to the latest government guidance, those businesses that need to use the UKCA mark immediately from January 1st, 2021, include those where all of the following applies:

  • If you are covered under legislation that requires UKCA marking
  • If a conformity assessment has been undertaken by an official body in the UK, and you have not transferred your CA files from the UK body to the EU equivalent prior to January 1st, 2021.
  • If you require a mandatory conformity assessment by a third-party

Understanding Your Changing Legal Responsibilities

For manufacturers, your legal obligations will largely remain unchanged from January 1st, 2021. However, your regulatory requirements, VAT, and customs processes will most likely be affected and require some key changes in order to remain compliant.

For UK suppliers and distributors, it is essential to confirm whether it will be your supplier or your business that will become an ‘importer’ from January 1st, 2021. If it is your business who will be bringing goods from outside of the UK and placing them into the GB market (the rules for NI are going to be slightly different), then you will become an ‘importer’. Here’s a quick summary of how your legal responsibilities could change, along with some of the practical steps you may need to take.

  • Ensure the right conformity assessment procedures have been undertaken and that all conformity markings are compliant under the new legislation.
  • Making sure that all labels for goods include your company name and address – it is possible to provide this information on accompanying documentation until December 31st, 2022.
  • Make sure your business has a system to store all conformity declarations for a period of ten years.
  • Ensure the manufacturer has produced the correct technical documentation for their goods and that all labelling is fully compliant.

Although we are already well into the final quarter of the year, I do expect there to be more changes. While I intend to keep you updated in the form of further posts, you can also sign-up to receive emails directly from the government site here.

If you would like to get guidance on whether or not your goods will be affected and confirm the steps you need to take in order to become compliant with the new regulations, please contact one of our commercial solicitors today for further advice. 

North London solicitor helps promote the launch of the Family Dispute Solutions group

Family consultant, Peter Martin has been heavily involved in helping form the ‘Family Dispute Solutions’ group, a group of specialist mediators, collaborative family lawyers, financial advisors, and arbitrators,  which aims to promote the resolution of family disputes using non-court options and presenting clients with real choice as to the best method for them of resolving their family dispute. 

Peter will be speaking about the launch at the resolution conference next month, together with other members of the group which include Rebekah Gershuny of Freemans and Evolve Family Mediation and Elizabeth Sulkin of LMK solicitors.

To find out more please visit the Resolution website or contact Peter Martin by email or on 020 8349 0321.

HMRC confirms first arrest in connection with furlough fraud

HM Revenue & Customs (HMRC) has revealed that a 57-year-old man from Solihull in the West Midlands was arrested on 8 July on suspicion of a £495,000 furlough fraud relating to claims from the Coronavirus Job Retention Scheme (CJRS).

HMRC says he is the first person to have been arrested in connection with fraudulent claims from the scheme.

As of 12 July, more than £28.7 billion had been claimed from the scheme by 1.2 million employers in respect of 9.4 million jobs.

HMRC says that the CJRS has four lines of defence against fraud, which it describes as:

  • Employees have to have been on a payroll on or before 19 March – preventing the use of fake employees
  • Claims are only accepted from employers known – and authenticated – by HMRC
  • All claims are assessed by a specialist team within a 72-hour window
  • Proportionate and reasonable interventions with customers after money has been paid.

Richard Las, the Acting Director at HMRC’s Fraud Investigation Service, said: “The CJRS is part of the collective national effort to protect jobs. The vast majority of employers will have used the CJRS responsibly, but we will not hesitate to act on reports of abuse of the scheme.

“This is taxpayers’ money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”

He called on people to report suspected furlough fraud via HMRC’s online fraud reporting page here.

Coronavirus apprenticeships guidance updated

Updated guidance from the Department for Education on apprenticeships during the Coronavirus crisis has been published and contains a number of announcements relating to employment arrangements for apprentices.

These updates include confirmation that:

  • Apprentices aged 19 and older can begin to resume on-site training;
  • Apprentices who are made redundant but continue their study element can claim Universal Credit if they meet all eligibility criteria;
  • A dedicated service for redundant apprentices will be launched shortly; and
  • Temporary flexibility suspending the requirement that level two apprentices study and attempt level two functional skills assessment has been extended until 31 December 2020.

Full details of these updates can be read here.

The announcements come shortly after the Chancellor announced additional funding for apprenticeships at the Summer Economic Update on Wednesday 8 July 2020.

The apprenticeships funding will provide £2,000 to employers in England for every apprentice hired under the age of 25 and £1,500 for each newly-hired apprentice aged 25 or older.

The new funding is in addition to schemes already in place to support employers in taking on apprentices.

Government publishes detailed guidance on SDLT holiday

During his Plan for Jobs announcement, Chancellor Rishi Sunak issued guidance for a temporary eight month cut in Stamp Duty Land Tax (SDLT) that ensures there is not a charge on ‘any’ residential property transactions with a value under £500,000.

The Government has achieved this by immediately lifting the lower SDLT nil rate band from £125,000 to £500,000, which it claims will mean that nine out of 10 main home buyers will not pay SDLT until the thresholds revert in March 2021 to their previous levels.

In its latest guidance, the Government has confirmed that the SDLT holiday only relates to residential property transactions up to £500,000 – above which the original rates continue to apply.

The guidance also confirms that the additional homes surcharge of three per cent will continue to be charged.

However, this applies across the newly outlined threshold meaning that those subject to the surcharge will now pay three per cent on the first £500,000, rather than the first £125,000, which represents a significant discount on the previous SDLT rate.

Companies also benefit from this increase to the threshold, including businesses that buy residential property of any value above £500,000 where they meet the relief conditions from the corporate 15 per cent SDLT charge.

The nil rate band which applies to the ‘net present value’ of any rents payable for residential property on new leasehold sales and transfers is also increased to £500,000.

To help you visualise what this change means, we have prepared a helpful table below:

SDLT Holiday – First Time Buyer Rates SDLT Holiday – Non-First Time Buyer Rates (no additional properties) SDLT Holiday – Additional Homes Buyer Rates
£0 – £500,000 – 0% £0 – £500,000 – 0% £0 – £500,000 – 3%
£500,001 –£925,000 – 5% £500,001 –£925,000 – 5% £500,001 –£925,000 – 8%
£925,001 – £1.5 million – 10% £925,001 – £1.5 million – 10% £925,001 – £1.5 million – 13%
£1.5m+ – 12% £1.5m+ – 12% £1.5m+ – 15%

On the 1 April 2021, the reduced rates shown in the above tables will revert to the normal rates of SDLT that were in place prior to 8 July 2020.

England to make face coverings compulsory in shops

From 24 July 2020 it will be a legal requirement to wear a face covering, such as a mask, in shops and supermarkets in England.

The move will be enforced by the police via fines of up to £100, which will be reduced to £50 if the fine is paid within 14 days.

The move also allows shops to refuse entry to a customer who is not complying with the requirement to wear a face covering.

Children under 11 and those with certain disabilities will be exempt from the new rule, however, members of the public of all ages have been advised to wear coverings in enclosed public spaces since May.

The move comes after data showed that the death rate of sales and retail assistants is 75 per cent higher amongst men and 60 per cent higher amongst women than in the general population.

While many employers in the retail sector have taken steps to protect employees, such as providing PPE, offering contactless payments and installing screens, it is thought that the new measures will offer additional safety and security to retail workers and customers.

At the moment, it is only compulsory to wear face coverings on public transport in England, but other nations such as Scotland, Spain and Germany already have rules on face coverings in shops.

Summer Economic Update

The Chancellor’s speech, billed as a ‘Summer Economic Update’, has outlined the second phase in the Government’s economic response to the crisis. Within his announcement Rishi Sunak revealed a number of new measures that would seek to protect, create and support jobs.

However, the impact of the Government’s latest measures are likely to have a far-wider impact on certain sectors as they attempt to rebuild and recover following months of restrictions and challenges.

To help you understand the impact of the Summer Economic update on your personal and businesses affairs we have prepared a helpful summary:

Stamp Duty Land Tax Holiday

The Chancellor has placed the property and construction sectors at the core of his measures designed to create jobs. To get these sectors moving again he has announced a temporary cut to Stamp Duty Land Tax (SDLT) by raising the nil-rate band from £125,000 to £500,000 from now until 31 March 2021.

The Treasury estimates that, as a consequence, around nine in 10 people buying a main residence will pay no SDLT.

Staying with the focus on housing, the Chancellor announced a £2 billion Green Homes Grant for homeowners and landlords, covering two-thirds of the cost, up to a cap of £5,000 per household, towards making homes more energy-efficient, with more for low-income households.

These measures came in addition to £5 billion of infrastructure spending announced a week earlier by the Prime Minister and came on top of various other measures targeted at the housing and construction sectors.

Coronavirus Job Retention Scheme and Job Retention Bonus

The Chancellor has confirmed that the Coronavirus Job Retention Scheme (CJRS) will close, as planned, at the end of October, arguing that “leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before”.

The scheme currently offers employers grants worth 80 per cent of a furloughed employee’s usual salary up to a cap of £2,500 a month plus the associated Employer National Insurance Contributions (NICs) and minimum automatic enrolment pension contributions.

Furloughed employees will be paid 80 per cent of their usual pay up to a cap of £2,500 a month until the end of the scheme in October and, since the beginning of July have been able to return to work part-time, with employers claiming a grant only in respect of usual hours not worked.

The Chancellor’s announcement confirms that grants from the scheme will cease to cover Employer National Insurance Contributions (NICs) and minimum automatic enrolment pension contributions from August. In September, the value of grants will fall to 70 per cent of usual wages up to £2,187.50 a month with employers making up 10 per cent.

Finally, in October, the grant will fall to 60 per cent of usual wages up to £1,875 a month, with employers expected to make up 20 per cent.

Many employers fear that they may need to make redundancies as a result of the changes to the CJRS. However, the Chancellor looked to cushion the blow with the announcement of a Job Retention Bonus. The new scheme will see the taxpayer give employers £1,000 for each previously furloughed employee they retain and keep in employment until January, as long as they are paid at least £520 a month. Further details of the scheme are expected later in July.

The current CJRS scheme and the Job Retention Bonus may require employers to review existing arrangements with their staff to ensure they are compliant.

Kickstart Scheme and measures to help people find work

The Chancellor has announced the Kickstart Scheme, which will provide £2 billion to support the creation of “high quality” six-month work placements for 16 to 24 year-olds on Universal Credit and at risk of long-term unemployment.

The Government will provide employers that offer the placements with funding equivalent to 100 per cent of the relevant level of the National Minimum Wage (NMW) for 25 hours a week. It will also cover the associated Employer NICs and minimum automatic enrolment pension contributions.

Outlining further plans to support people in finding jobs, the Chancellor confirmed 10 additional measures, including funding for traineeships and apprenticeships, as well as funding for several careers and job-finding programmes.

The apprenticeships funding will provide £2,000 to employers in England for every apprentice hired under the age of 25 and £1,500 for each newly hired apprentice aged 25 or older. This funding is in addition to schemes already in place to support employers in taking on apprentices.

Here to help

In light of the Government’s latest measures it is important that you review your current legal affairs so that you can take full advantage of what is on offer.

To find out how we can help you with these and other COVID-19 related matters, please speak to our team.

A full summary of the Government’s measures can be found at Plan for Jobs.

Webinar – Pensions and financial planning on divorce

OGR Stock Denton LLP would like to invite you to join our live webinar on Pensions and financial planning on divorce – the impact of COVID-19 

4.30pm, Tuesday 14th July 2020

Zoom webinars

This timely webinar considers the impact of the COVID-19 disruption on divorce settlements already reached, those that are being negotiated now, and what to look for in the new landscape when society returns to a new “normal”.

Chaired and co-hosted by Graeme Fraser, Head of Family and Partner at OGR Stock Denton LLP, this webinar combines analysis and application of legal principles against the backdrop of changing markets.

Guest speaker Mark Penston Bsc AFPS, Chartered Financial Planner with Bluesky and accredited specialist Resolution member sets out tips and potential pitfalls for pensions and financial planning at a time when trusted advice has never been needed more.

If you would like to join this webinar, please email Ali Kabani:

akabani@ogrstockdenton.com

 020 8349 5514