The changes below will be relevant to some businesses involved in import and export businesses following the new HMRC guidance

The post Brexit transition period ended on 31 December 2020. HMRC has issued guidance for both Exporting & Importing goods

Customs

Businesses from 1 January 2021 will need to make decisions on how they export goods into Great Britain (GB) and which Customs routes they will follow. These rules do not apply to Northern Ireland (NI) as it continues to operate as part of the EU for VAT purposes.

All businesses, regardless of the goods exported or the route chosen, will need to do the following:

·         Check VAT guidance for what VAT responsibilities will apply.

·         Obtain an EORI (Economic Operators Registration and Identification) number. Apply on GOV.UK. This can take between 5 and 10 minutes to complete.

·         Businesses trading moving goods to/from NI (but not through to the Republic of Ireland) will require a second EORI number. This will start with XI.

·         HMRC has been automatically issuing both types of EORI where it believes it is required.

·         Check what import licences or certificates you may need depending on the goods exported (food, livestock etc.).

·         Keep records for six years.

The business will need to decide whether it will be responsible for its own declarations or whether to will use a Customs Intermediary (CI) to complete the declarations for them. The business must provide the CI with the EORI number and any other information required to complete the relevant declarations.

Completing the declarations within the business will mean:

·         Training for a member of staff on how to complete the declarations and maybe acquiring specialist software.

·         Registering to use the National Export System (NES) and applying for a CHIEF (Customs Handling of Import and Export Freight) Badge (this is one application). CHIEF is the computerised entry processing system and will be replaced with a new system, the Customs Declaration Service (CDS), within the next two years.

·         An export declaration must be completed before export, using NES. This provides a unique reference number (URN).

The processes involved in exporting goods then depends on how the goods will be exported:

·         Standard Export procedures: the export declaration URN is required to allow the goods to cross the border. The business must make sure that the EU importer has done all that is needed to ensure the importation, including having an EU EORI, obtaining licences and certificates where required and completing an import declaration.

·         Transit: can be used when goods are moving across multiple territories or if the business would like to complete customs procedures away from the border.

o    The business or the CI may apply for ‘authorised consignor’ status, which allows the goods to start movement (and move in to Transit) from an authorised location belonging to the CI or business and not the designated Office of Departure (OD).

o    If completing its own declarations, the business must register for the New Computerised Transit System (NCTS).

o    A guarantee must be provided before the movement of goods can start. It should be arranged with a bank or financial institution and must be authorised by HMRC.

o    Before export, as well as an export declaration, a Transit declaration must be completed on NCTS. This provides another URN.

o    The person moving the goods must have the Transit Accompanying Document (TAD) (required in paper form throughout the journey) provided by the authorised consignor if being used. Alternatively, they must take the URN from NCTS to the OD in return for a TAD.

Goods temporarily being moved out of GB can avoid paying customs and tax if using ‘temporary admissions’ procedures; either ATA Carnets or the Duplicate List.

VAT

Going forward, EU countries will be treated the same as non-EU countries. Goods leaving GB for the EU were called ‘removals’ but will now be ‘exports’. If certain conditions are met, the export of goods can be zero-rated for VAT purposed. Records will need to be kept to prove this. The conditions are:

·         Official or commercial evidence (for example from a customs system or certificates of shipment) prove the entitlement to zero-rating.

·         The goods must be exported from GB (and evidence obtained) within the specified time limits. Depending on the goods exported, this is either three or six months.

If the conditions are not met or there is not sufficient evidence then the supply will be treated as standard rated (if normally standard-rated if supplied in the UK).

Zero-rated supplies must still be accounted for even though there is no VAT liability.

There will no longer be any requirement to adhere to distance selling regulations. There will no longer be a requirement to verify the VAT status of the recipient.

Northern Ireland

VAT: Northern Ireland (NI) will continue to operate as part of the EU VAT area and the rules on exporting to the EU will not change. NI is also part of the UK VAT system. VAT must be applied to supplies of goods as it is in the rest of the UK. If the supply of goods is moved through NI to the EU, this will be a zero-rated supply as noted above.

Customs: The Northern Ireland Protocol confirmed that sending goods from GB to NI will not be subject to tariffs, provided it remains in the UK’s customs territory. If the goods are at risk of entering the EU then tariffs will be due. To prove that this is not the case, it will be necessary to be authorised for the UK Trader Scheme. Declarations will, however, be required.

The post Brexit transition period ends on 31 December 2020. HMRC has issued guidance for importing goods. Is your business ready? Have all of the relevant applications been made in order to continue trading smoothly?

Customs

Businesses from 1 January 2021 will need to make decisions on how they import goods into Great Britain (GB) and which Customs routes they will follow. These rules do not apply to Northern Ireland (NI) as it continues to operate as part of the EU for VAT purposes.

All businesses, regardless of the goods imported or the route chosen, will need to do the following:

·         Check VAT guidance for what VAT responsibilities will apply.

·         Obtain an EORI (Economic Operators Registration and Identification) number. Apply on GOV.UK. This can take between 5 and 10 minutes to complete.

·         Businesses trading moving goods to/from NI (but not through to the Republic of Ireland) will require a second EORI number. This will start with XI.

·         HMRC has been automatically issuing both types of EORI where it believes it is required.

·         Check what import licences or certificates you may need depending on the goods imported (food, livestock etc.).

·         Check the UK Global Tariff for the correct duties to be paid.

·         Apply for a Duty Deferment Account to allow the business to pay for duties by monthly direct debit. Otherwise, duty will need to be paid upon entry of the goods into GB.

The business will need to decide whether it will be responsible for its own declarations or whether it will use a Customs Intermediary (CI) to complete the declarations for them. The business must provide the CI with the EORI number and any other information required to complete the relevant declarations. Even if using a CI, the business should record the imports for their own records.

Completing the declarations within the business means acquiring specialist software and training for a member of staff on how to complete the declarations. The business will also need to apply for a CHIEF (Customs Handling of Import and Export Freight) Badge to allow the business to input data into the computerised entry processing system. CHIEF will be replaced with a new system, the Customs Declaration Service (CDS), within the next two years.

The processes involved in importing goods then depends on the type of goods and the preference of the business:

·         Deferred declarations; when importing standard goods (non-controlled items), the customs declaration and payable duties can be delayed by up to six months provided contemporaneous records are kept. A supplementary declaration is made upon import.

·         Standard Import procedures; full customs declaration is completed upon import. Inputting of the commodity code and customs procedure code will give a Unique Reference Number. Duties can be paid immediately or deferred using a Duty Deferment Account.

·         Simplified Declaration procedure; if importing standard goods or some controlled goods this procedure can be used, but authorisation must be applied for. A simplified frontier declaration must be completed on CHIEF before importation. A supplementary declaration is required by the fourth working day of the month following import.

·         Transit; can be used when goods are moving across multiple territories or if the business would like to complete customs procedures away from the border.

o    The EU exporter submits the export declaration and a Transit declaration.

o    The goods must arrive via an Office of Transit (OT) in GB. The process at this point depends on the point of entry.

o    The goods then proceed to an Office of Destination (OD) to end the Transit movement.

o    The business can apply to be an authorised consignee. Temporary storage authorisation must be applied for at the same time plus access to the New Computerised Transit System. If authorisation is obtained the goods can go to the business’ authorised location instead of an OD.

o    The goods will exit Transit when moved to another Customs procedure. The options are Deferred Declarations (present EORI at OD) or Simplified Declaration/Standard Import (present Movement Reference Number from CHIEF at OD).

There may be further processes required, depending on the point of entry location. This is particularly relevant for goods using the Transit system.

As part of the import process, before the goods are moved cross-border, the business must ensure that the EU exporter (‘declarant’) has done everything required to enable the goods to pass through EU Customs. This will include obtaining an EU EORI number, having the correct licences and certificates and completing the correct export declarations.

Customs duties will be paid by monthly direct debit when using a Duty Deferment Account (required for Deferred Declarations and Simplified Declarations). Payment is immediate where completing a full Customs Declaration unless a Duty Deferment Account is applied for, along with Excise duty (unless goods placed into excise duty suspension).

Intrastat

Any businesses registered for Intrastat must continue to submit Intrastat returns.

VAT

Going forward, EU countries will be treated the same as non-EU countries. Goods from/to the EU will be referred to as imports and exports (previously acquisitions and dispatches).

·         Import VAT will be due for goods imported but can be reclaimed as input VAT where imported for use in the business.

·         For VAT registered businesses, a new system called ‘Postponed VAT’ will operate, allowing the import VAT to be accounted for and reclaimed as Input VAT (where appropriate) on the same VAT return. This avoids a negative cash flow effect caused by accounting for import VAT on one return and reclaiming on the next. These new rules are similar to the reverse charge rules that operated whilst part of the EU.

·         The business’ VAT registration should be entered onto the customs declaration.

If the business is VAT registered:

·         You must account for postponed import VAT on the return for the accounting period which covers the date you imported the goods. If you do not have the exact amount from the online monthly statement, the amount should be estimated.

·         Details of the customs entries will be needed for the return.

·         The business will receive a monthly statement showing import VAT postponed from the previous month.

·         Select that you are accounting for VAT on your return when completing the Deferred Declaration. The next monthly statement will show the import VAT due.

·         Adjust the estimated VAT if used and account for the difference on the next return.

·         Reclaimed input tax on the import should be calculated under normal rules and entered on the same return as the import VAT due.

If the business is not registered for VAT, the import VAT will be due at the same time as the customs duties.

Northern Ireland

VAT: Northern Ireland (NI) will continue to operate as part of the EU VAT area and so will not account for import VAT on goods arriving from the EU. Postponed accounting can be used by NI businesses when importing goods from non-EU countries. There will be no change in the treatment of goods moving from NI to GB.

Customs: When moving goods from NI to GB there will be no changes or new customs procedures (unless moving indirectly from the EU). There will be some changes for qualifying goods moving indirectly from NI through Ireland to GB. This is part of the Unfettered Access phased approach.

Disclaimer Notice

The information contained in this  article is for general information purposes only and does not constitute advice, Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose. We recommend that professional advise should be taken from a suitably qualified expert before undertaking any action.

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