Currently (pre-Brexit), product moving from the EU to the UK (and vice versa) moves freely without customs controls because the EU operates as a single market. Post Brexit, particularly a No Deal Brexit, this will not be the case. Products will need to be declared for customs purposes and customs duty and, in most cases, import VAT will be payable.
How this will impact individual businesses will depend on what steps importers take between now and 29 March to prepare for Brexit. Businesses that receive goods from either the UK and EU will need to make customs declarations and pay customs duty and either pay, or account for, import VAT. The UK Government recently confirmed they will introduce a postponed accounting approach for import VAT on all import that will allow import VAT to be accounted for on a VAT return. Similar facilities are allowed in some but not all EU member states.
However, Her Majesty’s Revenue and Customs (“HMRC”, the UK tax authority) has introduced a transitional simplified procedure primarily aimed at businesses that have not previously been involved with the customs process and transport goods through the English Channel ports, which will allow products to flow into the UK from the EU with reduced requirements for customs declarations. Further details of this can be found on www.gov.uk/hmrc/eu-simple-importing.
Some EU countries are also extending or implementing similar relief that will facilitate the movement of goods from the UK into those countries. However, please note that not all EU countries have implemented an import simplification procedure. The table below provides a snapshot for the major EU trading partners with the UK and where simplification import procedures exist.
Deferred import procedure
|Belgium||Yes||ET 14000 licence|
|France||Limited||Customs broker required|
|Ireland||Proposed||Subject to miniterial ratification|
|Netherlands||Yes||Article 23 license|
|Spain||Yes||For monthly VAT return filers only|
|UK||Yes||Transitional simplified procedure|
It should also be noted that these procedures are not automatic and need to be applied for.
In any event, an Economic Operator Registration and Identification (EORI) number will be required by any business making a customs declaration into the UK or the EU. Simplified import procedures should not be confused with customs procedure code 42, which is a deferral rule that transfers an import VAT event into an intracommunity transaction if the immediate destination of the imported product is an EU country other than the country of arrival.
PRACTICAL STEPS TO TAKE NOW
- Ensure you have an EORI number
- For those UK companies involved in customs processes for the first time this will be a UK EORI number
- Businesses based in, or will be making imports in EU countries, will require an EU EORI number. Apply for transitional simplified procedures in those countries where you import product and want to defer import VAT expense to the VAT return – cashflow advantage
- Explore opportunities to mitigate the number of customs declarations required on product being transported by road/rail freight across the EU by utilising transit procedures, which suspend import VAT and duty requirements until country of destination