Overview
The UK Government’s approach to negotiations means that the UK will be leaving the EU’s Single Market and Customs Union. As such, there is already considerable clarity on what businesses need to do to prepare for the end of the transition period.
After the transition period, the UK Government will operationalise import controls on goods moving from the EU to GB, in a manner similar to the UK’s current treatment of Rest of World (RoW) goods. These controls will be introduced in three stages: January, April, and July. It is expected that the EU will also operationalise full import controls on goods moving from GB to the EU from 1 January 2021.
As a result, there will be significant changes to the process for moving goods between GB and the EU. All businesses moving goods across the GB-EU border will need to take account of these and adapt accordingly – the actions needed to prepare are discussed in Preparing for the Future.
The Core Model
Some changes will affect all goods movements, which this document refers to as the Core Model for importing and exporting goods. These elements will be introduced in stages between 1 January and 1 July 2021. These changes are listed on the following page.
The principles of the Core Model will apply to all goods movements between GB and the EU, regardless of the mode of transport of the movement. However, there may be some differences in processes by location. The primary variation in process will be the requirement for pre-lodgement of customs declarations at some ports and not others (which will provide temporary storage facilities). This is a commercial decision that border locations will take in due course.
Core Process Timing
Customs Declarations (Exports & Imports)
Importers and exporters will have to complete UK and EU customs declarations after the end of the transition period. Some locations will require pre-lodgement of customs declarations prior to the movement of goods, which will particularly affect ‘roll on-roll off’ (RoRo) movements.
1 January 2021 but can be deferred up to six months after import in certain circumstances.
IMPORTS SECTIONS 1&3.1.3 EXPORTS SECTION 4.1.3
Customs Duties (Imports)
Importers will need to ensure that any customs duties applicable to their goods under the new UK Global Tariff are paid. In order to do this, importers will need to determine the origin, classification and customs value of their goods. There are options available to defer any payment that is due. 1 January 2021 but there are options to defer payment.
IMPORTS SECTION 1.1.4
VAT (Imports)
VAT will be levied on imports of goods from the EU, following the same rates and structures as are applied to RoW imports. VAT registered importers will be able to use postponed VAT accounting, however unless they are eligible to defer their supplementary declarations, will not be compelled to do so. Non-VAT registered importers have the same options available to report and pay import VAT as they do for customs duties. VAT treatment of goods imported in consignments not exceeding £135 in value will be treated differently to those goods in consignments exceeding £135. 1 January 2021 but there are options to defer payment.
IMPORTS SECTION 1.1.4
Safety & Security Declarations (Exports & Imports)
In order to maintain safety and security standards, the UK Government will collect more information on goods moving into GB from the EU. This ensures we know who’s coming in and how often, what they are bringing in, and why. By default, this will include Safety & Security declarations. 1 January 2021 (Exports)1 July 2021 (Imports)
IMPORTS SECTION 3.1.5 EXPORTS SECTION 4.1.4
Additional Requirements
Other changes will affect only specific goods movements (e.g. foodstuffs), which this document refers to as the additional requirements for importing and exporting goods. These include the need for special certifications, entering the country via specific locations, and undergoing additional checks at the border. Some of these requirements will occur before the core import and export processes, and some will occur after. These elements will be introduced in stages, depending on the type of goods being moved:
Good Type Timing
Goods covered by International Conventions / Commitments
e.g. Endangered Species of Wild Fauna and Flora (CITES); Rough Diamonds (Kimberley); Temporary import of non-perishables (ATA Carnets).
1 January 2021 Introduced in 1 stage. IMPORTS SECTION 1.2.2 EXPORTS SECTION 4.2.2
Goods subject to Sanitary and Phytosanitary controls
e.g. Animal products (Products of Animal Origin and Animal By- Products); Fish, shellfish and their products; High-Risk Food and Feed Not of Animal Origin (HRFNAO); Live animals and germinal products; Equines; Plants and Plant Products. 1 January 2021 1 April 2021 1 July 2021
Introduced in 3 stages.
IMPORTS SECTIONS 1-3.2.3
EXPORTS SECTION 4.2.3
Goods with Additional Customs Requirements
e.g. Excise goods. 1 January 2021 Introduced in 1 stage. IMPORTS SECTION 1.2.4 EXPORTS SECTION 4.2.4
Other Goods including Strategic Exports
e.g. Bottled Water; Drug precursors; Explosives Precursors; Firearms; Market Surveillance; Veterinary Medicines containing controlled drugs; Waste; Medicines containing controlled drugs; Medical Isotopes; Clinical Trial Supplies; Controlled Drugs; Substances of Human Origin; Strategic Export Controls. 1 January 2021 Introduced in 1 stage. IMPORTS SECTION 1.2.5 EXPORTS SECTION 4.2.5
Controlled Goods
The importation of a limited range of goods requires import licences as their import is controlled. Import licensing controls can be in place against imports from specific countries or from any country. The full list of goods classified as controlled by the UK Government can be found at ANNEX C.
Prohibited Goods
“Prohibited goods” refers to goods that cannot be imported. In some cases, there may be limited circumstances, known as “derogations” where prohibited goods can be imported. Any derogations from a prohibition will be listed in the UK tariff. More information on what to do if an item is seized can be found here.
Preparing for the Future
Actions to Take
All traders will need to have considered these actions before they move goods. The UK’s negotiations with the European Union will have no impact on the need to take these actions. There are various actions traders should take to prepare for the staged introduction of customs controls. The UK Government is not seeking anything in negotiations with the EU that will change the necessity of the following requirements.
When some of these actions need to be taken will depend on whether traders are deferring their customs declarations during Stage 1 (January to July 2021). More details on the requirements for each stage are set out in the relevant parts of this document.
Apply for a GB EORI number
This is required for all businesses moving goods into or out of GB, including those deferring their import declarations. Further information, including a link to apply for an EORI number, is available here. It can take up to a week to get one, and around 5-10 minutes to apply. VAT registered businesses with EU trade were previously enrolled with an EORI number, so should check whether they already have a number before applying.
Get a Customs Intermediary
Customs declarations are complicated. The majority of businesses that currently trade outside the EU use an intermediary, such as customs agents, Fast Parcel Operators (FPOs), Freight Forwarders (FFs) or brokers, to help them meet requirements.
Intermediaries can help traders find the information needed to complete formalities and submit the required declarations. This simplifies the declaration processes for traders. Further information can be found here. The UK Government has announced a grant scheme to support intermediaries and those businesses who want to make declarations themselves.
If business decide not to use an intermediary, they will need to make declarations themselves. To do this they will need to get access to HMRC systems and to purchase software.
Apply for a Duty Deferment Account
Traders who import goods regularly may benefit from having a duty deferment account (DDA). This enables customs charges including customs duty, excise duty, and import VAT to be paid once a month through Direct Debit instead of being paid on individual consignments. VAT registered traders can instead account for import VAT on their VAT return using postponed VAT accounting, as detailed below.
To set up a DDA, traders, or their representatives, apply for a deferment account number (DAN) and will need to be authorised by HMRC. New rules are being introduced which will allow most traders to use duty deferment without a Customs Comprehensive Guarantee (CCG).
Prepare to Pay or Account for VAT on Imported Goods
VAT registered traders will be able to account for import VAT on their VAT return by using postponed VAT accounting from 1 January 2021. Unless they are eligible to defer their supplementary declarations, they will not be compelled to use postponed VAT accounting.
Non-VAT registered traders (and any VAT registered traders not using postponed VAT accounting) will need to report and pay import VAT through the customs processes. Within this context, VAT payments can be deferred using a DDA as outlined above. VAT on imports of goods in consignments not exceeding £135 in value will be treated differently to those goods in consignments exceeding £135.
Ensure drivers have correct International Driving Permits
Hauliers need to ensure their drivers have the correct documentation, for example an international driving permit (IDP) or an additional licence may be required to drive in some countries. More information will be provided on GOV.UK as the requirements are clarified.
Additional Actions for Customs, VAT, and Excise Processes
• Check suitability for facilitations SECTION 1.1.5 and SECTION 4.1.5. that will make processes smoother.
• Find the right commodity code for your goods.
• Businesses importing goods into GB should ensure they are familiar with using the
‘Trade with the UK’ tool which provides detailed information on tariffs, taxes and rules. The tariffs shown are those currently being applied until 1 January 2021. Use the UK Global Tariff tool to check the tariffs that will apply to goods imported from 1 January 2021.
• Exporters of goods from GB should ensure they are familiar with using the ‘Check How to Export Goods’ tool which provides detailed information on duties and customs procedures for over 160 countries.
• Traders should engage with supply chains to discuss how to work together going forward and the information required by different entities to complete customs procedures.
• Excise traders wishing to use excise duty suspension must also apply as a registered consignor or seek the services of someone who is already approved. Only registered consignors are permitted to move excise goods in excise duty suspension and use the Excise Movement and Control System (EMCS) at import.
• Businesses exporting excise goods must also use the EMCS. Excise duty liability will be discharged when confirmation is received that the goods have exited GB (this is via the customs export declaration).
Consider Commercial Arrangements
Individual commercial contracts and arrangements may alter the default legal responsibilities and requirements. Contractual obligations for international commercial transactions are outlined in the Incoterms rules, which are administered by the International Chamber of Commerce. These are an important consideration for traders when moving goods internationally, and should be considered and understood alongside the information in this document.