Transitioning your jewellery business in post Brexit Britain (update 2)
06 Jan 2021
Following the recent EU-UK Trade and Cooperation Agreement, UK jewellers are now faced with making sure their business operations are compliant to avoid unnecessary disruption.
For the most up to date advice, always visit NAJ's EU Exit hub or the government's transition guidance page.
NAJ's EU Exit Briefings
HM Government Brexit checker
Overview: The EU-UK deal
Following a national referendum in 2016, the UK left the EU on 31st January 2020. Throughout the rest of 2020, the UK was in a transition period and there were no changes in processes or procedures for trade between the UK and EU. That ended at 11pm on 31st December 2020 at which point the UK left the EU customs union and single market; trade between the UK and EU is now conducted on similar terms as trade with other countries. However, the UK and the EU have agreed a Trade and Co-operation Agreement (TCA), which allows certain goods to be traded between the countries without tariffs or quantitative restrictions.
The Agreement is structured into 7 Parts:
- Part 1 covers the common and institutional provisions in the Agreement;
- Part 2 covers trade and other economic aspects of the relationship, such as aviation, energy, road transport, and social security;
- Part 3 covers cooperation on law enforcement and criminal justice;
- Part 4 covers so-called “thematic” issues, notably health collaboration;
- Part 5 covers participation in EU Programmes, principally scientific collaboration through Horizon;
- Part 6 covers dispute settlement;
- Part 7 sets out final provisions.
Read the Government's full summary
Read the full EU-UK Trade and Cooperation Agreement
What's in this guide?
In this guide we cover:
- Customs and VAT inc. rules of origin
- Northen Ireland and goods regulation
- Hallmarking
- Accounting and company registration
- Frequently asked questions
Customs and VAT
In addition to this digital summary, to best support jewellers, the British Allied Trades Federation, the overarching structure of the National Association of Jewellers, has provided a customs planning transition guide, exclisively written by Customs Associates ltd to download.
Get all the guidance and more in a PDF BATF International Guide: Customs planning for the end of the EU transition period. Now available for download.
Within the BATF document: Customs planning for the end of the EU transition period.
- Introduction and first steps
- Exporting to the EU
- Exporting to the rest of the world & importing duty rates
- Anti-dumping duty & import VAT
- Import charges on small packages & import declarations
- Duty deferment account & Northern Ireland
- Frequently asked questions
Download the BATF International PDF guide*
*PDF guide only available to NAJ Members
Exporting to the EU
You need to arrange for your shipper to make an export declaration on your behalf to enable the goods to be exported from the UK. He will need your UK EORI number – Economic Operator Registration and Identification number and an invoice showing the sales price, the origin of the goods, the quantities and weight of the goods and the commodity (tariff) code. The export
declaration must be submitted to HMRC before the goods exit the UK.
The EU will treat goods imported from the UK as they currently treat goods from any other country outside the Customs Union. An import declaration will be required and, unless the goods qualify as being of UK origin import duties will be payable; import VAT may also be due.
Under the TCA, if your goods are of UK origin, they can enter the EU without payment of any duty. The goods must meet the detailed rules of origin which are in the Agreement. The rules vary depending on the tariff code that applies to the product. For example, if you make jewellery which has a tariff code starting 7117, the origin rule is that any imported materials you have used must have changed tariff heading. This means that, even if you have imported the metal and the gems (both of which will have been classified in different tariff headings) the jewellery will be of UK origin.
Download the BATF International PDF guide*
*PDF guide only available to NAJ Members
Exporting goods to the EU, Step by Step government guide
Rules of Origin
From 1 January, if your goods originate in the EU or UK, you may be able to claim a preferential rate of duty when imported into the respective countries and released to free circulation. This means they’ll be free of Customs Duty.
To claim preferential rates of duty, your product must originate in the EU or UK (as the exporting country) as set out in Chapter 2 of the Trade and Cooperation Agreement ‘rules of origin’ and the ‘Product Specific Rules of Origin’ contained in Annex ORIG-2.
The introductory notes to product specific rules of origin can be found in Annex ORIG-1.
You’ll need to know how to classify your goods when checking the product specific rules.
If your goods do not meet the rules of origin requirements (or if you cannot prove that the goods meet them) you’ll still need to pay Customs Duty. To find out the rate of duty, you’ll need to classify your goods correctly.
Proof of origin
To benefit from preferential tariffs when importing into the UK from the EU (or importing into the EU from the UK), the importer will be required to declare they hold proof that the goods comply with the rules of origin.
You’ll be entitled to claim the preferential rate of duty if you have either:
- a statement on origin that the product is originating made out by the exporter
- the importer’s knowledge that the product is originating
If you’re delaying your declarations for goods imported into the UK from the EU you only need to include the declare a proof of origin when you make your supplementary declaration.
Statement on origin
The text for a statement on origin is in Annex ORIG-4 of the Trade and Cooperation Agreement.
When exporting from the EU to the UK a statement on origin can be made out by any exporter where the value of the consignment is 6,000 euros (currently £5,700) or less. Above this amount the EU exporter must have a Registered Exporter (REX) number and include it in the statement.
When exporting to the EU you must include your EORI number in any statement you issue to your EU customer, regardless of the value.
The statement on origin must be provided on an invoice, or any other commercial document (excluding a bill of lading), describing the originating product in sufficient detail to enable its identification.
It will be valid for 2 years from the date it was made out on imports into the UK and 12 months for imports into the EU.
Importers knowledge
‘Importers knowledge’ allows the importer to claim preferential tariff treatment based on evidence they have obtained about the originating status of imported products. This evidence must be in the importer’s possession, be in form of supporting documents or records which may be provided by the exporter or producer and provide evidence that the product qualifies as originating.
As the importer is making a claim using their own knowledge, no statement on origin has to be provided by the exporter or producer.
Suppliers’ declarations
Until 31st December 2021, if you’re claiming preference on the basis of the importer’s knowledge or making out a statement on origin, you do not need to hold a supplier’s declaration at the time you’re claiming preference for goods imported from or to the EU.
But the importer must be confident that the goods meet the rules of origin. You must make every effort to obtain suppliers declarations retrospectively.
View how to claim a preferential rate of duty
If you’re importing goods into the UK, there’s a different way to claim the preferential rate of duty depending on which system you’re using to make your import declaration.
Download the BATF International PDF guide*
*PDF guide only available to NAJ Members
Exporting to the Rest of the World
The customs processes for exporting to the rest of the world (ROW) will not change. In fact, the same processes will apply to EU trade. However, a significant amount of UK trade with the ROW has been carried out under Free Trade Agreements (FTAs) that the EU has negotiated with other countries. This enables goods of UK (EU) origin to be imported into those countries at a reduced, often nil, rate of duty provided you supply a valid EUR1 or other documentary evidence of preferential origin.
View trade agreements with non-EU countries
Quicklinks:
Norway, Iceland and Liechtenstein: arrangements from 1 January 2021
Existing UK trade agreements with non-EU countries
Trading with developing nations
Trading under WTO rules
Importing: Duty Rates
The UK has introduced its own Global Tariff. These tariff rates will apply to imports from any developed country in the world, except those countries where we have a Free Trade Agreement (FTA). Under an FTA, goods which originate in the participating country will generally be imported duty free.
Under the EU-UK TCA, goods will enter the UK duty free from the EU provided they originate in the EU in accordance with the rules of origin detailed in the agreement. If you know that the goods originate in the EU you can claim the zero tariff. However, you may be asked by HMRC to provide evidence that the goods originate in the EU and therefore it is recommended that you obtain a statement of origin from your supplier.
Look up commodity codes, duty and VAT rates
The full list of rates is also available.
Import VAT
VAT is payable on all imported goods at the rate that normally applies, ie generally 20% but lower rates and zero rates apply to some goods. For consignments over £135, the Government has introduced a system known as Postponed Import VAT Accounting (PIVA) which enables traders to simply account for the import VAT on their VAT return rather than actually paying it at importation.
This applies to all imports, not just imports from the EU.
View VAT imports
UK's Generalised Scheme of Preferences (GSP)
The Department for International Trade and The Foreign Commonwealth Development office continue to host webinars to support British businesses to fulfil commercial opportunities via the UK's Generalised Scheme of Preferences (GSP).
Webinars are targeted for businesses and other organisations that have an interest in importing goods from countries that are classified as low income and least developed.
The next webinar will focus on the following:
- What is the UK's GSP
- GSP beneficiaries
- GSP ratios
- What has changed since the 1st January.
Date and time: Tuesday, January 12, 2021 2:00 pm
Register for UK Generalised Scheme of Preferences Webinar
Further resources
Customs, VAT and Excise EU Exit legislation and Customs notices that have the force of law applicable to UK transition.
Customs, VAT and Excise UK transition legislation from 1 January 2021
From 1 January reusable packaging will require an import or export declaration. You may be able to make a declaration at the border (known as a ‘declaration by conduct’) instead and provide information to HMRC on a quarterly basis.
Declaring reusable packaging for Great Britain imports and exports
Check if you can record goods in your own records and give HMRC the information up to 6 months later.
Delaying declarations for EU goods brought into Great Britain
How sellers deal with VAT for goods from overseas that they sell direct to customers in the UK.
VAT and overseas goods sold directly to customers in the UK
How online marketplaces will deal with VAT for goods from overseas that are sold to customers in the UK.
VAT and overseas goods sold to customers in the UK using online marketplaces
Find customs agents and fast parcel operators who can help submit customs declarations.
List of customs agents and fast parcel operators
What you need to do now that the eCommerce Directive no longer applies to the UK.
The eCommerce Directive after Brexit
Notices to be made under The Customs (Origin of Chargeable Goods: Trade Preference Scheme) (EU Exit) Regulations 2020
Download the BATF International PDF guide*
*PDF guide only available to NAJ Members
Northern Ireland, and Goods Regulations
On 10 December the Co-Chairs of the Withdrawal Agreement Joint Committee reached an agreement in principle to address the outstanding issues related to the implementation of the Withdrawal Agreement, in particular the Northern Ireland Protocol.
The Northern Ireland Protocol Command Paper outlines further details; as well as further information on the UK Government’s work to implement the Protocol and support businesses as it comes into force. This paper was laid in Parliament on 10 December.
The decisions contained in the Co-Chairs agreement in principle were agreed to at the Joint Committee meeting on 17 December.
There is also information available on Northern Ireland Executive owned sites where policy is devolved, for example, the NI Department for Agriculture, Environment and Rural affairs’ Landing Page.
Moving goods from Northern Ireland to Great Britain
From 1 January 2021, there will be no changes in how qualifying Northern Ireland goods move directly from Northern Ireland to Great Britain. There will be some changes for qualifying goods moved indirectly through Ireland.
This qualifying goods regime forms part of a phased approach to the implementation of ‘unfettered access’.
Bringing goods into Northern Ireland from Great Britain and from outside the EU
The Northern Ireland Protocol outlined that goods from Great Britain which are not deemed to be at risk of leaving the UK customs territory will not pay any tariffs. However, goods ‘at risk’ of entering the EU’s single market will pay EU tariffs.
From 1 January 2021, you will need to make declarations and may need to pay any tariffs due when bringing goods into Northern Ireland from Great Britain or from outside the EU.
There are a number of options available to avoid paying any tariffs when moving goods into Northern Ireland from Great Britain. Before moving your goods, you should consider which of these options is most suitable for your business.
When bringing goods into Northern Ireland from Great Britain, you will pay no duty if you are:
When bringing goods into Northern Ireland from outside the UK and the EU, you will pay the UK duty rate if your goods are not ‘at risk’ of onward movement to the EU.
View what to do before you move goods
Making declarations
Sending goods from Northern Ireland
If you’re a UK-based business sending goods from Northern Ireland, check what declarations may need to be made.
Bringing or receiving goods into Northern Ireland
If you’re a UK-based business bringing or receiving goods into Northern Ireland, check what declarations may need to be made.
Check the origin of your goods. This may allow an EU or UK preferential arrangement to apply.
Moving goods between Northern Ireland and the EU
Declarations are not needed for any goods.
However, if you’re liable to submit Intrastat Supplementary Declarations, you can continue to submit Intrastat declarations for goods you move between Northern Ireland and the EU.
Moving qualifying goods between Northern Ireland and Great Britain through Ireland
Check what you’ll need to do if you move qualifying Northern Ireland goods from Northern Ireland to Great Britain through Ireland.
More information:
Notices to be made under the Customs (Northern Ireland) (EU Exit) Regulations 2020
Moving goods into, out of, or through Northern Ireland from 1 January 2021
Sending parcels between Great Britain and Northern Ireland from 1 January 2021
Download the BATF International guide*
*PDF guide only available to NAJ Members
Hallmarking requirements
The British Hallmarking Council has updated its guidance on hallmarking requirements from 1 January 2021 following Government advice.
Obligations to recognise equivalent EU hallmarks will end in Great Britain. For the Northern Ireland market, EU hallmarks will continue to be recognised, by virtue of the European Union (Withdrawal) Act.
Any product already on the market before January 2021 will be legal, under the same legislation. The question of the length of time this will be effective has not yet been determined. It may be good practice to maintain records demonstrating that items being sold were on the market prior to 1 January 2021.
Any new stock entering the Great Britain market will require a UK national hallmark or an International Convention hallmark.
Any new stock exported to EU member states will require a mark recognised by those countries.
The BHC has stated it will share further updates on developments as they become available.
Download the BATF International guide*
*PDF guide only available to NAJ Members
Accounting and company registration
Changes to the UK’s corporate reporting regime
There have been changes to the UK’s corporate reporting regime which affect a small number of companies.
Preparing annual accounts
All companies need to use UK-adopted international accounting standards (IAS) instead of EU adopted IAS for financial years beginning on or after the 1 January 2021. Both sets of standards were the same on 1 January 2021.
You can continue to use EU adopted IAS when preparing your accounts for financial years beginning before 1 January 2021.
Some types of companies need to take further action.
UK incorporated parent companies
UK incorporated parent companies with a subsidiary in the European Economic Area (EEA) need to check the reporting requirements in the country where the subsidiary is based.
UK companies with a presence in the EEA
UK companies with a presence in an EEA country - for example, a branch - need to check the reporting requirements in that country.
More information:
Accounting for UK companies
Changing your company registration from 1 January 2021
Download the BATF International guide*
*PDF guide only available to NAJ Members
Frequently asked questions
Some of the more frequent questions received include:
Do I need an EU EORI?
You will only need an EU EORI if you are going to be the importer into or exporter from one of the EU27 countries, ie if you are making import or export declarations in the EU.
Are Intrastat declarations no longer required?
Intrastat declarations are needed at present to collect statistics on the UK’s trade with our European partners. But this information will in future be collected from the import and export declarations that are made for EU trade.
As exporters will be making customs declarations for goods sent to the EU from 1st January, there will be no need for Intrastat declarations for EU sales. But importers will still need to continue to make Intrastat declarations throughout 2021 for goods arriving from the EU.
Can I claim any duty relief on goods that are returned to me from EU customers?
Yes, you can claim Returned Goods Relief if you are re-importing goods that you originally exported. Normally, you would be required to provide evidence of the original export declaration but it is recognised that goods returning from the EU will not have had an export declaration if they have been sent out before 1st January 2021 and you simply need to hold other documentary evidence that the goods were originally exported from the UK.
Can I still use my current HMRC authorisations?
All current authorisations and approvals, granted under EU customs legislation, have automatically been deemed to be granted under the new UK customs legislation from 1st January. But any approvals that were granted for use across the EU will no longer be recognised by HMRC or the customs authorities in the EU. Any applications currently with HMRC will become UK approvals if issued after 1st January.
Any BTIs (binding tariff rulings) issued by HMRC will still be valid in the UK, but not in any other Member State. The UK has begun to issue its own Advanced Tariff Rulings (ATaRs).
Will rules of origin change?
The rules of origin have not changed but If you currently issue EU origin certificates or EUR 1 forms to your customers, these have now changed: the UK forms are available from your local Chambers of Commerce.
You do not need an EUR 1 to export to the EU.
Will it help me trade with the EU if I am an Authorised Economic Operator (AEO)?
The basic answer is “no” but, under the EU-UK trade agreement, both sides have agreed to recognise traders who have AEOS certification, which should facilitate the flow of goods in secure supply chains
Previously published by the National Association of Jewellers
Read Prepare your jewellery business for EU Exit (part 1)
Download the PDF guide*
*PDF guide only available to NAJ Members
Credit
- HM Government
- BATF International
- British Hallmarking Council
Source: British Allied Trades Federation