The two most popular terms of trade used for EU/UK movement currently, will have profoundly different outcomes when the transition period ends
Incoterms rules determine who has fiscal and legal responsibility for security and customs declarations, which means the two most popular Incoterms used for EU/UK trade today, are likely to be the most unpopular when the transition period ends on the 31st December.
During the transition period, a business which imports goods from the EU will not have to worry about paying customs duties because the UK is still effectively within the EU Customs Union.
Liability to pay tariffs typically rests with the importer (the customer), unless the goods have been supplied on DDP (Delivery Duty Paid) terms or similar, in which case the supplier is responsible for paying tariffs imposed by the UK and carrying out the relevant customs formalities so that the goods are cleared for import.
Critically, if the transaction includes VAT the seller may also need to register for VAT in the UK. Similarly for exports to the EU on a DDP basis, you will be accountable for EU VAT which may well require fiscal representation at destination to ensure recovery of EU VAT outlay.
Goods crossing the Channel are likely to be subject to significant delays because of increased border checks, particularly initially, even with the Government taking a pragmatic approach to imports.
Transport costs are likely to increase and delays quickly result in additional costs and storage, rent or demurrage may also be incurred.
Ensure that your vendor can comply with and more critically, offer you the full customs support you will need to ensure you have a complete customs service. Will they offer the control and reporting records you require?
There is a potential complication that suppliers need to consider. Exports are zero rated for VAT and an export declaration is required to prove that the goods have left the Customs territory. Under EXW the export declaration is the responsibility of the buyer, which means that the supplier will have to rely on the buyer to discharge their VAT liability.
Contact your account manager for more details on UK postponed VAT account, European VAT registration and your obligations when it comes to recovery and charging of VAT to your European clients.