Borders controls in 2021 and package for customs intermediaries
Last week the government announced the approach to border controls on GB-EU trade in 2021 and it formally notified the EU that it will not accept or seek an extension to the Transition Period.
In recognition of the unprecedented impact that coronavirus has had on all aspects of life, border controls are being introduced in stages, to give businesses more time to prepare. The stages are:
- From January 2021: Traders importing standard goods will need to prepare for basic customs requirements and will have up to six months to complete customs declarations. Tariff payments can be deferred until the customs declaration has been made. Traders moving controlled goods such as tobacco and toxic chemicals will be required to complete a customs declaration. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination on all high-risk live animals and a proportion of low-risk live animals.
- From April 2021: All products of animal origin (POAO) and all regulated plants and plant products will also require pre-notification and the relevant health documentation.
- From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for Sanitary and Phytosanitary (SPS) commodities there will be an increase in physical checks and the taking of samples.
This approach does not apply to the flow of trade between Northern Ireland and Ireland, or between Northern Ireland and GB.
To support businesses with the new processes taking effect next year, the government has developed a new £50m package to boost the capacity of customs intermediaries – including customs brokers, freight forwarders and express parcel operators – providing businesses with further support. This funding will support intermediaries with recruitment, training and supplying IT equipment to help handle customs declarations.
Rules will also be changed to remove barriers for intermediaries taking on new clients. The government intends to remove the financial liability from intermediaries operating on behalf of their clients and allow parcel operators to continue declaring multiple consignments in a single customs declaration. This will help intermediaries increase their operations.
Additionally, the government has committed to building new border facilities in Great Britain for carrying out required checks, as well as providing targeted support to ports to build new infrastructure. They are consulting with ports across the UK to agree what infrastructure is required.
This announcement is another important step towards getting the country ready for the end of the Transition Period, but there is still more work to be done by both government and industry to ensure we are prepared for January 2021.
18 June 2020
The government has published The UK’s approach to the Northern Ireland Protocol
20 May 2020
The government has published its UK Global Tariff (UKGT) that replaces the EU’s Common External Tariff on 1 January 2021 at the end of the transition period. There are additional explanatory pages here and here.
19 May 2020
Update: VAT registration for EU businesses with ‘intending traders’ status preparing for ‘day one’ after the transition period ends
EU businesses that need to register for VAT in the UK to continue to trade on ‘day one’ after the end of the transition period can register for VAT using the Advance Notification facility, by registering online and requesting a voluntary registration from an advanced date of 1 January 2021. Please note that the advance notification can only take place within three months of the requested date of VAT registration.
In the ‘business activity’ section they should enter trade class/SIC code 99000 European Community. In the free text box they should describe accurately what the business does and ensure there is a positive amount entered in the ‘taxable turnover in the next 12 months’ box. If this is not done the application will be rejected. This information will enable the VAT Registration Team (VRT) to identify and actively manage any registration that is conditional on the UK leaving the EU without a deal.
If there is a change to the date of withdrawal from the EU, the VRT will amend the Advanced Notification date to match this new date. If the UK enters a transitional period or agrees a deal with the EU that allows current arrangements to continue then the registration will be cancelled. The approval of an Advanced Notification registration in these circumstances is only made as a contingency for the UK leaving the EU without a deal and the VAT number may not be used unless that happens. The business will receive an automated notification of an Advanced Notification VAT Registration and the VRT may follow this up with a manual letter to further explain the conditions and both.
With the UK having agreed an extension to the date of withdrawal from the EU, we would not expect businesses to use this facility until closer to the 1st November.
10 February 2020
The UK has left the European Union and is now in a transition period to 31 December 2020
While the UK is in a transition period, the rules for VAT, customs duty and excise duty remain as they were before the UK’s exit. There is a transition period webpage on gov.uk that sets out relevant guidance for taxpayers.
1 February 2020
VAT treatment of Partial Exemption Special Methods (PESMs) once the UK leaves the EU on 31 January 2020
The CIOT has received confirmation from HMRC of new regulation 102(2A) in VAT Regulations 1995 as follows:
“Following a Commencement Order made on 30 January, Reg 4(1) and 4(2) of the Value Added Tax (Miscellaneous Amendments, Revocation and Transitional Provisions (EU Exit) Regulations 2019 come into force today. This inserts new regulation 102(2A) into the VAT Regulations 1995.
The new regulation enables the current VAT recovery position – exempt from VAT and with no recovery available - for UK to UK supplies of financial services to be maintained within all Partial Exemption Special Methods (PESMs). By doing so, it removes the need for the PESM to be redrafted by the business and reapproved by HMRC with the associated administrative burden this would have created. No action by business is necessary as a result of these regulations as they retain the status quo.
The new regulation can be found here SI 2019513.”
31 January 2020
European Commission: Questions and Answers on the UK's withdrawal from the EU on 31 January 2020
The European Commission has published a questions and answers guide to the UK withdrawal on 31 January 2020 and the transition period to 31 December 2020.
24 January 2020
EU VAT Refund Claims
EU VAT refund claims for VAT incurred in the period from 1January to 31 December 2020 can be claimed via the portal GOV.UK which will be remaining open until 31 March 2021.
21 January 2020
EU VAT – the four ‘quick fixes’ are effective 1 January 2020
(updated with links to HMRC guidance published 20, 23 December 2019, and 24 January 2020)
The four VAT 'quick fixes' are effective from 1 January 2020 and are intended to simplify the VAT treatment for specific business to business EU cross-border transactions. The legislation for the quick fixes are Council Directive (EU) 2018/1910 and Council Implementing Regulation (EU) 2018/1912.
The four quick fixes (including links to HMRC guidance where published) are:
- Simplified treatment of call off stock
The simplification for suppliers not having to register locally where they hold call off stock, providing qualifying criteria is met, is extended to all member states. HMRC updated VAT notice 725 on 24 January 2020 (sections 4.4, 15.2, 17.10 and 17.11)
- Uniform rules to simplify chain transactions
There may be changes for the intermediary in a chain transaction where they arrange the transport.
- Mandatory VAT registration number to zero-rate intra-EU sales of goods
Suppliers must ensure that the customer provides an EU VAT number in order to secure zero-rating and so that an EC Sales List can be completed.
- Simplified proof of intra-EU supplies
The EU has set out a simplified list of documents applicable to all member states. Taxpayers require at least two acceptable forms of evidence which are not contradictory and which are issued by independent parties.
More in depth detail on each of the quick fixes is provided in this Tax Adviser article.
31 October 2019
The UK and EU New Protocol on Ireland/Northern Ireland and Political Declaration
The Government published its New Protocol on Ireland/Northern Ireland and Political Declaration, which sets out the revised terms of the UK’s exit from the EU, with changes to the Northern Ireland Protocol to remove the ‘backstop’ and replace it with revised arrangements.
The new Political Declaration sets out the framework for the future relationship between the EU and the UK.
17 October 2019
Transitional Simplified Procedures - auto enrolment of qualifying VAT registered businesses
HMRC contacted the CIOT with the information below in respect of the auto-enrolment of businesses onto Transitional Simplified Procedures (TSP), which allow easements for importers. In a similar position to the auto-enrolment of businesses for an EORI, it is not possible to automatically enrol businesses who import goods but who are not already registered for VAT. Businesses without a VAT registration number must take proactive action to enrol for an EORI and TSP. Update: On 28 October, HMRC announced that there is a cancellation facility for TSP if a taxpayer has been auto-enrolled but did not wish to be, is no longer eligible to use TSP or no longer wants to be registered.
We are contacting you as a key partner in helping UK businesses prepare for Brexit.
HMRC has announced simplified import procedures called Transitional Simplified Procedures (TSP) that will come into effect when the UK leaves the EU on 31 October. For businesses new to customs processes this is the best option for them.
As you may be aware, on 15 October 2019 we announced we are in the process of writing to around ninety five thousand VAT registered businesses to notify them that they have been registered for TSP.
This population have been sent a letter (a copy is available via the link) to let them know that we have registered them for TSP.
TSP will allow them to import goods from the EU to the UK without having to make full customs declarations at the border or pay import duties they owe straight away.
To move goods from the EU into the UK using TSP they will need to:
- be established in the UK and meet the eligibility criteria
- keep records of their imports, and be prepared to make monthly supplementary declarations to HMRC
- check the tariff rates on imports to find out if there will be any customs duties to be paid
- apply for a Duty Deferment Account, which will allow them to pay duties owed on goods monthly rather than as soon as the goods enter the UK.
For more information about TSP and record keeping, go to www.gov.uk/hmrc/eu-simple-importing
If businesses are not VAT registered and they import goods, we recommend they apply for TSP.
Please share this opportunity with your networks. In particular we would appreciate your support in reaching smaller, non VAT registered businesses who may benefit from this scheme.”
17 October 2019
HM Government publish ‘EORI Mythbuster’ guidance
The Government has published further guidance about EORI (Economic Operator Registration and Identification) numbers. The guidance provides more information for UK and EU businesses including:
- How to apply for an EORI
- Whether you need just a GB EORI or both a GB and EU EORI
- Guidance for unregistered businesses, those with an existing EU EORI and newly registered businesses
- Trading between Northern Ireland and Ireland (including controlled and licensed goods)
9 September 2019
Legal Opinion on Joint Instrument and Unilateral Declaration concerning the Withdrawal Agreement
The Attorney General wrote to the Prime Minister setting out his legal opinion on the Joint Instrument and Unilateral Declaration concerning the Withdrawal Agreement.
12 March 2019