Although things are still up in the air concerning what kind of Brexit we will be facing, when it comes to running a business, there can certainly be added complications depending on what type of deal is eventually decided with the EU.
In the event of a hard Brexit, there will be extra requirements for businesses that wish to continue working across borders - namely with imports from EU countries. The primary two things that these businesses need to look into include the Economic Operator Registration Identification (EORI) and the C79 certification - both of which pertain to EU imports to the UK.
What is EORI?
The EORI is a 12-digit identification number that was introduced in July 2009. Currently, the EORI number is necessary for your business if you import or export goods from non-EU countries.
The EORI number makes it easier and faster for HMRC to clear goods, potentially eliminating the requirement that you pay storage fees as well as other costs involved in processing imports or exports.
As the UK is currently included in the EU for trade purposes, the EORI number is not necessary for goods coming from or going to other EU countries. However, with a hard Brexit, a GB EORI number would be necessary for any business (no matter the size) moving goods into or out of the UK.
Note that if you’re moving goods between Ireland and Northern Ireland, it’s not necessary to use an EORI number.
What is a C79 certificate?
A C79 certificate serves as the proof of payment of import VAT. It’s issued monthly and is used to claim import VAT when you submit your VAT return. The certificate contains your EORI number, as well as details about import VAT payments and dates, and finally a VAT total at the end of the page.
When you import goods, you’ll receive the C79 and while it is not used in itself to claim back tax, it is your evidence that this VAT has been paid. The C79 certificate is generally sent to the EORI-registered individual on the import form.
If you’re importing, HMRC currently offers some guidelines on when to account for VAT on imports in the case of a no-deal Brexit. The main change that they have outlined is that the timing accounting for import VAT will change.
Previously, VAT registered businesses accounted for import VAT when the goods arrived or left the UK. However, this will change to accounting the import VAT on your VAT returns. HMRC have stated that this provides a number of benefits including: paying import VAT later on, as well as better being able to manage cash flow when it comes to EU goods.
Will you need an EORI and C79?
If your business works with importing or exporting goods and you currently have an EORI number, you will need to double check that it begins with ‘GB’. GB EORI numbers are a new requirement for businesses that previously only dealt with imports and exports in the EU.
The EORI is necessary in a no-deal Brexit because there will no longer be a free trade agreement with the EU. HMRC has been urging businesses to apply for an EORI if they currently import from or export to the EU in the event that no free-trade agreement is reached.
If you have an EORI number and are paying import VAT on goods, you will be issued a C79 certificate that should be used to claim input VAT when you file your return.
Accounting and a no-deal Brexit
While the EORI and C79 certificate are crucial if your business is working with imports/exports in the case of a hard Brexit, their impact on your accounting is the larger picture.
It’s no secret that a no-deal Brexit will cause more than just a few headaches for UK sole traders and small businesses, especially when it comes to adhering to accounting requirements and changes in tax filing (following the introduction of MTD for businesses with a taxable turnover above £85,000 in April of 2019).
If you already keep thorough records, then it’s one less thing you’ll need to worry about. If you’re looking for a better solution for your business accounts, online invoicing & accounting software like Debitoor gives you the tools you need to stay on top of your business from anywhere.
However, no accounting software is a replacement for a qualified accountant, rather it makes working with your accountant smoother, faster, and more efficient.