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New HMRC Brexit guidance warns businesses to act now.

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New HMRC guidance on a no-deal Brexit has outlined steps British businesses need to take right now, as gridlock and chaos continues to consume Westminster.

The latest guidance follows on from guidance issued in September, also written by HMRC’s chief exec Jim Harra. That HMRC letter detailed the changes that would ensue in a no deal scenario. Harra called a no-deal Brexit “unlikely”, but that was then.

The PM has now scurried back to the EU seeking concessions, but this appears to be a quixotic mission. Donald Tusk, the EU council’s president, wrote on Twitter that “We will not renegotiate the deal”. He added, “As time is running out, we will also discuss our preparedness for a no-deal scenario”.

Now, it seems, HMRC is doing the same. Harra’s latest letter retains a patina of hopefulness, again labelling a no-deal Brexit “unlikely”. But the HMRC guidance quickly foregoes euphemism, noting that “you should continue to get ready for the possibility of no-deal”.

In essence, you need to act now. Businesses must register with HMRC before the Brexit date and it’s not possible to wait-and-see. If these steps aren’t taken, come 11pm on March 29, 2019, you will not be able to move goods in and out of the country.

According to this HMRC guidance, there are three steps UK businesses need to take now:

  1. Register for a UK Economic Operator Registration and Identification (EORI) number.  Businesses will need an EORI number to import or export goods with the EU in a no-deal scenario and before you can apply for authorisations that will make customs processes easier for you. There will be more info on this in early 2019, according to Harra’s letter.

  2. You need to decide if you want to hire an agent to make import and/or export declarations for them or if they want to make these declarations themselves via software.

  3. And finally, you should contact the organisation that moves your goods to find out if they will need to supply additional information in regards to the safety and security declarations for your goods, or whether you will need to submit these declarations yourself.

​The EORI number is the big one. According to RSM’s Andrew Hubbard, EORI registration is relatively straightforward for VAT registered businesses and “is driven by the existing VAT registration number”.

But non-VAT registered businesses that trade with the EU will also be required to obtain an EORI. “The process here is more complex,” Hubbard noted RSM’s latest tax brief.  “Companies will for example need to give HMRC details of the legal status of the business, including the date on which their company was incorporated, which may not always be readily available.”

Worryingly, for these non-VAT registered businesses, there’s no way to be alerted about the EORI requirement. “There is no straightforward way for HMRC to identify such businesses and there must be a risk that they will fall through the net and face a nasty surprise on 30 March when they are unable to make a customs declaration and move goods into and out of the EU,” according to Hubbard.

“HMRC are on the horns of a dilemma here. If they write to every UK business they would be accused of going over the top, because most of those businesses trade only in the UK. But by writing only to VAT-registered businesses they risk the message failing to get to the right people.”

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