Brexit: Tariffs and how they may impact you

Brexit: Tariffs and how they may impact you

Wednesday, 18 November 2020

In the first of our series of Brexit blogs running parallel to our Brexit podcast series, we’re looking at the potential impact of Brexit on tariffs and VAT, focusing on actions businesses can be taking now to plan for and understand the potential impact in a cost effective manner.

Getting an EORI number

As a first step, any UK business trading internationally will require an EORI (Economic Operator Registration and Identification) number to be included on import/export declarations after 1 January 2021. It’s a relatively quick and easy process to obtain an EORI from HMRC, if you don’t already have one. More information on how to apply can be found here.

Understanding the supply chain

The next step for businesses will be to understand their international supply chain. In order to understand the potential impact of Brexit on the business, knowing what goods are coming into the UK and what goods are leaving the UK is going to be crucial in understanding what additional reporting obligations and costs need to be factored into the pricing models.

It should also be noted that it isn’t just intra-EU supplies which will be affected. As a result of leaving the EU, the UK will have its own tariffs which may impact importers/exporters of goods from the rest of the world too.


Historically, the UK has been party to EU tariffs on goods brought in from outside the bloc. These tariffs were set at an EU level to protect EU-wide trade. As a result of leaving the EU, the UK has been able to set its own tariffs, known as the UK Global Tariffs, to specifically support UK trade. This means that rates have been simplified or reduced to nil where certain products are not available in the UK to avoid UK businesses incurring an additional charge on goods which cannot be sourced within the UK.

The upshot of this is that goods coming into the UK from the EU may now be subject to an additional duty charge which has not previously applied. Goods coming in from the rest of the world may see a different rate of duty from that which currently applies under EU rules.

Furthermore, goods going into the EU from the UK may now be subject to a duty charge which hasn’t previously applied. Businesses exporting from the UK to the rest of the world will also need to consider whether the EU had a trade agreement resulting in favourable tariffs with that country, which the UK will no longer have access to.

The rate of duty applicable will depend on the nature of the goods and the commodity code applicable to those goods.

Therefore, as another step, businesses moving goods cross border should identify the commodity codes of the goods they are moving and consider what the new tariffs will be post 31 December to understand the potential additional duty cost which will need to be factored into the pricing structure.

Import VAT

Under current UK rules, import VAT due on goods coming into the UK from the rest of the world is payable prior to the goods being released into free circulation (or at least needs to be added to a duty deferment account for payment the following month) and then recovered through the VAT return as appropriate.

UK businesses trading with the EU have rightly identified that a need to pay import VAT and recover it (which is not how the system currently works for intra-EU transactions) would put a significant strain on their cashflow/borrowing capacity.

As a result, the Government has confirmed that most businesses will be able to sign up for Postponed Import VAT Accounting from 1 January 2021. This will allow businesses to process the VAT due to HMRC through their VAT return and then recover the VAT on the same return, effectively creating a nil net position on the VAT return and removing the cashflow impact. It may also present an opportunity for businesses currently importing from the rest of the world to free up some cashflow too.

Key actions

To summarise, these are the key actions for businesses:

  • Make sure the business has a UK EORI number.
  • Review the supply chain and identify the commodity codes for the goods moving cross border.
  • Check the commodity codes to the EU and UK tariffs to identify the additional duty cost payable as a result of Brexit.

If you have any concerns or need help preparing your business for Brexit, please get in touch with your usual Larking Gowen contact. You can find contact details on the Our People section of the Larking Gowen website. Alternatively, call 0330 024 0888 or email

Rob Skilton


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