New Customs and Trade Acts

New UK Taxation (Cross-Border Trade) Act

The core EU customs code is based on EU wide directly applicable regulations. The EU has exclusive competence in relation to customs. The UK Taxation (Cross-Border Trade) Act provides legislation to replace the EU customs legislation and framework. It is intended to be put in force on Brexit Day.

There was no remaining UK customs legislation prior to this Act, other than in respect of enforcement and domestic matters. The Customs and Excise Management Act was the principal UK domestic legislation on customs, dealing mainly with the administration of customs by HMRC in accordance with EU law.

The legislation does not propose any particular outcome to the UK – EU negotiations. The purpose is to put in place a new stand-alone customs law to replace EU customs law, which now governs UK’s customs position.

It is designed to give sufficient flexibility to deal with a range of outcomes to negotiations with the UK’s European partners. This includes a transitional / implementation period and a new customs regime in the event that there is no negotiated settlement. The Act allows the UK to enter a transitional period by ensuring the existing treatment of traders and goods under EU law and continue under UK law.

The Act provides for trade remedies equivalent to those now available to the EU to deal with anti-dumping and subsidies safeguards as permitted under the WTO Safeguards Agreement.

Main Features

The legislation allows UK to charge customs duty on goods, imported into the UK, including from the EU. It provides for the definition of how goods are classified. It establishes a new tariff to set out the various rates of customs duty. It can vary or suspend duties. It can implement arrangements to establish a  customs union between the UK and another territory.

The legislation will impact upon and be affected by the UK’s future international trade policy in so far as it relates to customs duties. The legislation provides for trade remedies, whereby on foot of complaints breach of agreements with third countries, additional customs duties can be imposed.

Most regulations which may be made under the legislation are subject to a negative procedure in the House of Commons. A regulation results in an increase in the amount of import duty subject to an affirmative procedure in the House of Commons, to be approved within 28 days.

The legislation allows for unilateral trade preferences, where permissible under WTO rules. The complementary Trade Act allows the UK to implement the nontariff aspects of agreements. See separately in relation to the Trade Act.

Customs Procedures

Where goods are declared for free circulation or a suspension procedure is discharged, they become domestic goods.When goods are subject to a temporary procedure, liability arises when the procedure is discharged. Liability may later arise where goods have been released subject to or under a particular procedure or conditions and them cease to qualify or where there is a breach of requirements.

The main customs procedures to which goods on which duty is not immediately paid may be put are as follows

  • a storage procedure allowing goods to be held in storage in a  customs warehouse or free zone with duty suspended until removal.
  • transit procedures allowing goods to move between places without incurring duty. This includes goods passing through the country, from the third countries such as, in particular, Irish goods, travelling across the UK (land bridge)
  • processing procedures allowing goods to be imported processed and exported without incurring an import duty subject to conditions.
  • authorised use procedures involving a lower or zero rate of import duty subject to conditions for particular goods, for a particular use.
  • temporary admission procedures allowing for full or partial suspension for specific purposes such as use in an exhibition with subsequent export.


At present VAT  distinguishes between exports outside the EU and internal EU movements. When the UK  ceases to be part of the European Union, the VAT system will operate on the basis that EU sales are exports and purchases are imports rather than intra-EU supplies and acquisitions.

The legislation also allows for the possibility of the continued equivalence of value-added tax equivalent with the existing EU basis for an implementation period and/or in the event of a longer-term agreement in relation to VAT  being entered between the UK and the EU.

New Trade Act

The new Trade Act allows the UK to implement procurement obligations arising from independent membership of the World Trade Organisation, in particular, the Agreement on Government Procurement. It seeks to facilitate the implementation of agreements with partner countries corresponding to the EU’s Free Trade Agreements. It includes powers for the government to implement changes to domestic law necessary to meet obligations thereby arising.

The Act provides for the establishment of a Trade Remedies Authority to deliver the UK’s trade remedies framework. The Act allows the Authority to provide advice, support and assistance to the Secretary of State in connection with the conduct of international disputes relating to trade.  It gives HMRC (Revenue) powers to collect data, for trade statistics purpose and allows for data sharing between HMRC and other certain other public bodies.

The UK government has confirmed its commitment to provide continuity in relation to the UK’s existing trade and investment relationships with third countries who are in trade agreements with the EU after Brexit.

The Act provides powers for the implementation of provisions in trade agreements between the UK and partner countries. There is an equivalent provision in the Taxation (Cross-Border Trade) Bill in relation to setting preferential duties pursuant to new agreements. The Trade Bill facilitates implementation of the non-tariff provision of any such agreements.

The Act allows for trade agreements to be implemented through secondary legislation. This may include procedures to ensure regulatory alignment.

The Act is applicable to the whole of the UK and precludes the devolved legislatures’ competence.

Procurement and Non-Tariff Matters

At present, the UK through the EU is party to the Agreement on Government Procurement. The GPA sets out a high-level framework of rules to ensure fair open and transparent competition for government procurement covered by it. The Agreement protects supplies against discriminatory treatment in participating in procurement.

Market access offered by state parties is set out in its annexes which list the entities and types of procurement covered. There are thresholds applicable. States may in effect agree on the goods and services and the thresholds to which the Agreement applies.

The Act allows the UK to make regulations to implement non-tariff obligations in an international trade agreement which the  UK reaches with partner countries, provided that they have signed a corresponding agreement with the EU before Brexit. The UK is party to many such agreements through its membership of the EU. The Act seeks to facilitate establishing a UK agreement with each partner country, based as closely as possible on the corresponding agreement that the country has with the EU.

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