February 28, 2020

Brexit February 2020 Update

The United Kingdom (UK) left the European Union (EU) - bringing to an end 47 years of British membership of this economic and political partnership with 28 countries. UK's exit officially took effect on January 31, 2020, that is 3 1/2 years after the first vote to quit.

There is now a transition period in effect until December 31, 2020. The current rules on Value Added Tax (VAT), trade, travel, and business for the UK and EU will continue to apply during this transition period. The UK and EU are negotiating arrangements and new rules will take effect on January 1, 2021.

On February 10, 2020 the UK government confirmed their plans to introduce import controls on EU goods at the border starting next year. Michael Gove, The Chancellor of the Duchy of Lancaster, said:

“The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow.”

“As a result of that we will be in a stronger position, not just to make sure that our economy succeeds outside the European Union but that we are in a position to take advantage of new trading relationships with the rest of the world.”

He confirmed that all UK exports/imports will be treated equally. This means traders in the EU and Great Britain will have to submit customs declarations and be liable to checking goods. This approach does not apply to the flow of trade between Northern Ireland and Ireland, or between Northern Ireland and GB. Reasons for implementing controls include to:

• keep borders safe and monitor who’s coming in, how often and what they are bringing;
• treat all partners equally as they negotiate their new trading arrangements with; countries around the world
• collect the correct customs, VAT and excise duties.

What rules apply during the transitional period?
During the transitional period, EU law continues to apply with respect to agreements that the EU has concluded with third countries. This means there will be no changes when it comes to customs and VAT. There will be free movement of goods between the EU and the UK. Deliveries to/from the UK are still treated as intra-community supplies. During the transition, the UK will be considered as a full Member State.

The EU could take weeks to agree a formal negotiating mandate - all the remaining 27 member states and the European Parliament have to be in agreement. Despite that the UK government have ruled out any form of extension to the transition period. We will all witness the changes after Brexit in 2021.


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