Colin Laidlaw CTA AIIT
- VAT Tax Director - Technical Specialist
- +44 (0)330 124 1399
- Email Colin[email protected]
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The temporary customs arrangements which applied from 1 January 2021 and that were extended to 31 December 2021 to ease issues with shipments have now ended. They have been replaced by the full customs regime which is much more demanding. Businesses must now be prepared if they are to ensure that their goods clear customs effectively and they and their customers and not at a later stage subject to unexpected duty costs and perhaps even penalties.
The temporary arrangements have allowed businesses to import goods from the EU into the UK making the necessary customs declarations and paying VAT and any import duties within a six-month window.
From 1 January 2022, that has changed. Businesses will need to make export and import declarations in advance. If duty is payable it will need to be paid on entry, unless a duty deferment account has been set up. Businesses that are not VAT registered will need to pay the import VAT immediately, whilst VAT registered businesses can continue to opt to utilise Postponed VAT Accounting, which means that they can postpone the payment at entry to the UK of the import VAT and instead account for and recover the same VAT via their usual VAT returns.
Businesses can themselves make customs declarations directly or, as HMRC appear to be encouraging in recent trader support webinars, appoint an intermediary such as a customs agent to make those declarations on their behalf.
The complex rules of origin regulations will also take full effect with businesses importing or exporting goods to and from the EU having to clearly demonstrate at the time of importation/ exportation the original manufacturing countries of origin on goods they are shipping in order to gain relief. This extends to all component parts. This may well involve the production of supplier statements and declarations and will be a cause of concern for many businesses because failure to produce the correct evidence when imports are subject to verification checks by a customs/tax authority may lead to an unexpected duty bill, for example for an EU customer buying from a UK supplier. HMRC have confirmed that they may also charge a penalty for errors in this regard.
Some key elements of the full customs regime have been delayed until 1 July 2022. Safety and security declarations will not be required until 1 July 2022 as will pre-notification agreements, or phytosanitary certificates, on animal and agricultural products.
Businesses and hauliers can, however, expect delays at borders with an increase in physical checks on goods being imported and exported or being directed to an Inland Border Facility for further checks. Having the right paperwork will be essential.
Some businesses will already by authorised by HMRC under the ‘simplified declarations’ regime. They will be able to continue to operate under those arrangements, allowing goods to be released without having to make a full customs declaration at the point of release.
HMRC’s new software platform, the Customs Declaration Software (CDS), has also been delayed until the autumn leaving businesses continuing to rely on the older and difficult to use CHIEF platform.
HMRC is warning businesses and hauliers that “unless goods have a valid declaration and have received customs clearance, they will not be released into circulation, and in most cases will not be able to leave the port”.
The key message, therefore, is to plan for future shipments in and out of the UK; make sure that you take appropriate advice on what is necessary and ask for assistance from a customs agent if you are in any doubt as to how you will deal with full-blown customs border processes.
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