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Brexit commodity code, tariffs and VAT calculations

  • Nov 30, 2020 | Richard Asquith

As full Brexit looms, businesses selling goods between the UK and EU are needing to get customs and VAT ready. The risks are new tax liabilities and delayed shipments. Avalara’s suite of automated cross-border managed tariff code classification, duty calculations and foreign VAT support can take one complex element of the Brexit hazards off businesses to-do list. Contact us to learn more.

Issues Challenges  
1 Lack of accurate commodity code ID delays shipments                                                                                             Means misdeclared goods, potentially causing delayed customs clearance and late deliveries. Importers often depend on unreliable exporter classifications. As the number of products offered, or number of countries shipped to, increases, the inefficiency of traditional manual solutions for assigning Harmonized System codes becomes yet another vulnerability during Brexit.   
2 Mistakes on tariff calculations mean tax penalties and shipment hold-ups                                                                                                       The EU and UK will not impost tariffs on goods movements following the Free Trade Agreement in December. Accurately identifying the item classification is just one half of the equation. Getting the tariff calculations correct is complex and prone to error on large stock ranges. This means overpaid taxes or penalties and stock hold-ups for under declarations.  
3 Import VAT liabilities, foreign VAT filing obligations risk compliance fines and cancelled customer contracts                                                                                                                                                                                                                                                       Import VAT on shipments to the EU or UK will be due for the first time on B2B movements from 2021. This will add over 20% onto the costs if not managed carefully. Some UK businesses are VAT registering in various EU countries to help clear the goods first before local sales or onward movements to the rest of the EU. This helps ensure continuing business with EU customers.  

How Avalara’s automated services take care of all of these challenges

  • Managed Tariff Code Classification - using machine learning to evaluate a product’s composition, its form, and its function, Avalara Managed Tariff Code Classification will assign a Harmonized System code for the applicable country. It is able to handle large master data assessments within hours, plus provide an update service.
  • Tariff Calculation - customs charges can then be determined for the HS Code. This supports exporters in their efforts to ship goods Delivered Duties Paid (DDP) and for importers to create customs entries. 
  • VAT Compliance and Fiscal Representation - with a full, low-cost VAT registration and ongoing automated returns service for businesses needing EU or UK VAT registrations for DDP clearance post-Brexit. This includes an integrated Fiscal Representation service in any country.

Explore more content like this in our Brexit hub

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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