UK firms will be automatically enrolled into the customs system

Ahead of a potential no-deal Brexit, the Government has announced that it will start automatically enrolling UK firms in the customs system.

This should enable UK businesses to continue to trade with European Union (EU) members after the UK leaves the EU.

HM Revenue and Customs (HMRC) has confirmed that all VAT-registered firms in the UK who have not already signed up to the customs system will receive their Economic Operator Registration and Identification (EORI) number within the next two weeks.

An Economic Operator Registration and Identification (EORI) number is a unique ID code used to track and register customs information.

At present, a business only requires an EORI number if it sells goods outside the EU or imports goods from outside the EU. However, if there is a ‘No Deal’ Brexit, businesses will not be able to continue to trade in goods with the EU without an EORI number.

For importers, an EORI number is required to obtain evidence of importation, which could allow the recovery of VAT paid when the goods enter the country. For exporters, the number is needed for customs declarations.

So far, 72,000 companies have registered for an EORI number, meaning that as of 31 October once the UK has left the EU, these companies will be allowed to continue trading with customers and suppliers in the EU.

The government have said its auto-enrolment scheme would register 88,000 more businesses, allowing them to trade with EU member states after Brexit.

Chancellor, Sajid Javid said: “The move would help ease the flow of goods at border points and support businesses to trade and grow.”

Julian Borley, VAT Director at Milsted Langdon said: “Businesses that buy and sell goods from the EU should await their EORI number.

“From the announcement that Mr Javid has made it appears that HMRC will be applying auto-enrolment based on whether businesses have completed their VAT returns to show the movement of goods to and from the EU.

“However, there are several reasons why a business which requires an EORI number is missed from auto-enrolment, for example, is possible that there will be some businesses that have not been completing their VAT returns correctly. Another aspect to consider is that HMRC are a large bureaucracy, meaning they may miss some businesses who still require an EORI number from auto-enrolment.

“As well as this, if a business is starting out, or planning to trade with the EU for the first time, they may also be missed from auto-enrolment.

“If your business does not already have an EORI number but you intend on trading goods with the EU after 31 October, and you do not receive notification of your businesses auto-enrolment in the next two weeks, it is important you seek further guidance.”

For more information, contact our specialist VAT team on vat@milstedlangdon.co.uk

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