Below is a selection of the UKFT Brexit FAQs. The full document is available to UKFT members.
Documents and Obligations (different EORI numbers and Intrastat)
Q: What is an EORI?
A: An EORI (Economic Operator Identification Number) is a unique number that identifies a trader with Customs. It is required on customs exit and entry documents to ensure goods can be processed – plus other Customs communications. Traders in the EU only need one to cover all 27 member states. Following Brexit, UK companies trading with the EU Customs Union after 31 December 2020 will retain their GB EORI (if they have one), but will need a second, EU number if importing into the EU as only EU EORIs can import into the EU. Furthermore, if companies are trading with Northern Ireland they may also need a separate XI EORI. Information at https://www.gov.uk/eori
Q: I am exporting fashion or textile products to the EU, what do I need to do?
A: From 1st January 2021, goods originating in the UK or the EU must be declared at the EU border if the Rules of Origin are met, they may pass free of duty/tariff. However, Import VAT will be payable on arrival in the EU and vice versa. If you are planning to export the goods yourself (i.e. you are undertaking to deliver into the EU because you are selling on a “Landed” (or Incoterms ® Delivered Duty Paid), you will need a UK EORI number to clear UK customs and you will need an EU27 EORI (effectively an importer of record) to clear the goods and pay duty and VAT when the goods arrive in the EU. On arrival at the EU border your goods must be labelled appropriately for the country they are sold to in the local language and to include the name and address of the brandowner/manufacturer and the details of your official EU27 importer. (See also under “Incoterms®” and “Labelling” for more details). Ask UKFT for more information on this.
Exporting to the EU (EORI, INCOTERMS®, ATA Carnets, VAT, Duty Rates, Customs Declarations, Export Logistics, Invoicing, Online Sales and Wholesale)
Q: What are Incoterms®?
A: Incoterms® or INternational COmmercial TERMS are a series of pre-defined commercial terms published and trademarked by the International Chamber of Commerce (ICC). Incoterms® are extremely important as they are universally used in the fashion and textile industry to establish the respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer. If you are exporting goods to the EU on a “Landed” or Incoterms ® Delivered Duty Paid [for example Dusseldorf] (DDP) basis, you will be responsible for making export and import declarations, paying duty and VAT in addition to the documentation, packaging and insurance of the goods to the named place. If, on the other hand, you are selling on an ExWorks [London] (EXW) basis, you will not be responsible for this but you will still need to have documentary proof such as a “Bill of Exit” that the goods physically left the UK if you are zero-rating the invoice for export. Other commonly used terms are Free on Board (FOB) [for example Harwich]/Free Carrier (FCA) [for example London Heathrow] would limit your responsibility to preparing customs declarations to enable the goods to leave the UK/GB (with your UK EORI) and delivering to the side of a ship or airplane. Your customer would then import the goods into the EU and bear responsibility from there. Most EU retailers are expected to prefer DDP in their local currency after Brexit. Some brands are looking to use DAP (Delivered at Place) to transfer responsibility for some parts of the customs procedures to their buyers or importers. Not all customers will want to accept this responsibility.
Importing from the EU (including EORI, INCOTERMS®, VAT, Duty Rates, Customs Declarations, Import Logistics, Harmonised Commodity Codes with 10 digits)
Q: I am importing fashion or textile products into the UK from the EU, what do I need to do?
A: From 1st January 2021, all goods shipped from to UK from the EU must be declared and only UK/EU manufactured goods will pass on a duty-free basis. All other goods will potentially be liable to duty. Import VAT will be payable. You will need an EU27 EORI (effectively an exporter of record) to clear the goods out of the EU and a UK EORI to import the goods into the UK and pay duty and VAT when the goods arrive. Your goods will also have to meet all UK labelling and standards.
Q: What are the new duty rates on goods from the EU and elsewhere into the UK?
A: Under the UK-EU FTA, UK/EU goods will attract 0% preferential duty, for all non-originating goods the new UK Global Tariff (UKGT) would apply. Under UKGT, most fashion goods would attract 12% duty, fabrics 8% and yarns 4% but there are some exceptions. Check the links in UKFT’s Brexit Guidance Toolkit for more details.
Northern Ireland Protocol
Q: What is the Northern Ireland Protocol?
A: The Northern Ireland Protocol sets out the special arrangements which apply to all goods entering and leaving Northern Ireland. Please See UKFT’s separate FAQs on the Northern Ireland Protocol.
Q: I am a UK company selling goods on a B2C basis into NI. Do I have to charge my customers UK VAT?
A: HMRC has confirmed that UK VAT-registered sellers should continue to charge UK VAT on goods sent to NI and report this on their UK VAT return in the usual way.
Free Trade Agreements
Q: Which are the main FTAs the UK government looks able to secure with relevance for the UK fashion and textile industry by 1st January 2021?
A: The main FTAs of interest to the industry are: EU, Japan, South Korea, Switzerland, Norway, Canada as well as Turkey and Vietnam for importers . Each FTA is bilateral and different.
Q: Which are the main FTAs the UK government is prioritising further down the line with relevance for the UK fashion and textile industry?
A: The main FTAs of interest to the industry which are currently the subject of ongoing negotiation are: Canada (expected), the USA, Australia, New Zealand, CPTPP (the “Trans-Pacific Partnership” of 13 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam). Each FTA will be different.
Importing/Exporting under the UK’s Free Trade Agreements
Q: How do I take advantage of the benefits of a Free Trade Agreement?
A: Most FTAs will require you to certify the origin of the goods with a Certificate of Origin as the agreements are based around where goods are made, some may have other stipulations. Some FTAs, like the UK/EU one, will only facilitate tariff-free trade for goods made in the two countries signing the deal. However, some other FTAs may give “preference” to goods made in third countries which also have FTAs with one of both of the FTA partners. This is known as “cumulation”.
Agent and distribution contracts
Q: I have an agency contract, legal contract or other agreement in the UK or the EU, is it still valid after Brexit?
A: Yes, but you will need to check how Brexit affects the contract. You are strongly advised to have the existing contract and arrangements checked by a qualified lawyer who understands the law around agents and distributors in the UK and the EU. UKFT can make introductions for members.
Labelling in the UK (including UKCA/CE/UKNI marking, UK Responsible Person)
Q: Do non-UK brands/manufacturers have to mark their goods with a registered agent or contact for the UK market?
A: Yes, effectively the UK requires non-UK goods to be marked with an importer contact to protect the UK consumer. This effectively mirrors the measures UK companies will have to bring into effect for goods they export to Germany, for example. See https://www.gov.uk/guidance/placing-manufactured-goods-on-the-market-in-great-britain-from-1-january-2021#appoint-an-authorised-or-responsible-person-in-the-uk for more details.
Labelling in the EU (including CE/UKNI marking, EU Responsible Person, differences between EU countries, languages, labelling requirements for UK online sellers)
Q: Is it a legal requirement for the “EU Responsible” details to be permanently fixed to a garment or can they be on the swing ticket?
A: From January until July 2021, this information should be included on the swing ticket for goods sold to all EU markets. However, from July 2021 onwards it will be a requirement for it to be permanently fixed to the garment or product. For some products, including footwear, the details can be printed on the packaging. Ask UKFT for more information.
Q: Is it a legal requirement for the “EU Responsible” details to be permanently fixed to fabrics on a roll?
A: No, these rules apply to finished products only, not textiles on the roll.
Changes to IP Protection laws between the UK and EU
Q: Are there any changes to IP protection in the UK?
A: Your pre-existing UK and EU trademarks should be intact but it is worth double checking this with your lawyer. Unregistered Community Designs will no longer be recognized by the UK but they can be covered by new UK Unregistered Designs. An IP lawyer can check these for you and most of the existing EU protections are being incorporated into UK law.
UK and EU VAT Issues
Q: Does Brexit mean than businesses now have to pay VAT at the border on goods either imported to the UK from the EU or exported to the EU from the UK?
A: Yes. Import VAT and duty (for non-originating products) will be paid at the UK/EU border into the UK or the EU. The exporter is expected to zero-rate the export as long as they can show the goods left their country. Different rules apply for goods below GBP 135/Eur 150. For all other goods, customs declarations are required and duty and local VAT at the prevailing rate will be paid by the person or business physically and legally importing the goods into the market. EU B2B customers can reclaim EU import VAT through their local tax office. B2C consumers are expected to pay VAT in their own country. The EU VAT rules for e-commerce will be changing in July 2021 and UK companies will be expected to collect and pay VAT at the EU country rate.
Inward and outward Processing
Q: Will there be changes to Inward and Outward processing across the UK/EU border as a result of Brexit?
A: Yes, tariffs and VAT will be chargeable at the UK/EU border upon entry in both directions. Goods manufactured in the UK/EU will still travel duty free but VAT will be payable. This will result in delays and additional costs to your supply chain and many of the Inward and Outward Processing flexibilities will no longer apply. Some companies will need to take a fresh look at whether their existing cross-border sourcing model will remain viable once duty and VAT are added.
Customer Returns and Repairs
Q: What are the new rules around sending back goods for repair? i.e. handles back to Italy?
A: Returns are possible through the UK/EU FTA. Further guidance is available in the UKFT Brexit Checklist. Companies will be able to reclaim any tariffs paid as long as the original import was correctly tracked. It is best to ask your repair company nearer the time if they have a mechanism (for example goods under £135/€150 or a way of tracking the return of the repair) to handle this.
Logistics and other issues (Trusted partners, GSP, selling “Landed” DDP)
Q: We have been told by our couriers that nett and gross weight will need to reported on the commercial invoice. Is this correct?
A: Yes, this is a standard requirement for exports and imports
Q: What tariff and VAT rules will apply to imports from non-EU markets such as India, China, Turkey?
A: The UK’s general external tariff will apply to imports from all countries where the UK does not have a preferential Free Trade Agreement or GSP agreement in place. Details and a link are in UKFT’s Brexit Guidance Toolkit and at https://www.gov.uk/government/news/uk-global-tariff-backs-uk-businesses-and-consumers
Other sources of information
UKFT accepts no responsibility for the accuracy of the information contained in these FAQs or for any errors or omissions. Companies are advised to double check all duty, VAT and tax issues with HMRC or a qualified tax advisor with experience of cross border operations. Companies with subsidiaries or other relationships outside the UK are recommended to take professional advice on their VAT and tax liabilities.
© UK Fashion & Textile Association 2021