Currently, businesses can move goods freely between the UK and the EU.
In the event that the UK leaves the EU without a deal, businesses importing and exporting goods within the EU will have to comply with new rules.
Customs declarations will be needed on UK-EU trade in a no deal scenario, which means businesses will need to decide how they want to manage the declarations process.
HMRC is working to ensure that as many businesses as possible have the capability to make customs declarations on day 1.
Transit and the Common Transit Convention (CTC)
CTC facilitates the movement of goods across borders of member countries by only requiring customs declarations and payment of duties when goods arrive at their final destination.
The UK is a member of the CTC now, and will continue to be a member once we have left the EU.
The requirements for traders will be similar to now, with the additional requirement of scanning a Transit Accompanying Document at the point of entry into the UK (or into the EU when exporting).
Businesses who currently or may wish to use the transit regime may want to consider;
- Registering to use NCTS, which is the system used for moving goods under transit
- Registering as an Authorised Consignor/Consignee to allow them to start and end transit movements from their own premises
- Expanding existing or adding new Authorised Consignor/Consignee facilities
Key Actions for Business
Businesses who only trade with the EU need to act now to ensure that they are prepared in the event of a No Deal EU exit.
- Apply for an EORI Number
- Confirm that you can complete each data field in the declaration
- Agree responsibilities with your customs agent and logistics provider for each part of the process and update your contracts to reflect this
VAT Implications if “NO DEAL”
Business will not need to register to use postponed accounting. They will simply make the appropriate entry and provide their VAT registration number on their customs declaration.
An online monthly statement will show the VAT that’s been postponed. This will provide the evidence to declare/ recover import VAT on your VAT return.
Import VAT Postponed Accounting in the event of a No-Deal EU Exit Explained
Currently, incoming goods from an EU country are treated as acquisitions, with VAT due accounted for by the purchaser on their periodic VAT return. Goods from a non-EU country are treated as imports, with import VAT due at the same time as customs duty. This is usually on or soon after the goods arrive at the UK border, on release of the goods into free circulation. Although payment of the customs duty and import VAT is normally due immediately, it can be deferred to the 15th of the following month.
However, a deferment account must be applied for and requires a financial guarantee
If the UK leaves the EU without a deal, the government’s aim is to keep VAT procedures as close as possible to what they are now. This will provide continuity and certainty for businesses. There will be certain changes in import VAT procedures to allow businesses to continue to import goods from both EU and non-EU countries with ease.
This Customs Information Paper lays out the changes that are to be expected, how these changes will affect businesses and other parties involved in the process and how HMRC can support businesses through these changes.
Changes to Import VAT for businesses
In the event that the UK leaves the EU without a deal, Postponed VAT Accounting (PVA) will be introduced for both EU and non-EU imports by UK VAT registered businesses. The change in accounting treatment will enable VAT registered businesses that import goods from outside the UK to declare and recover import VAT on their periodic VAT returns, rather than having to pay it upfront and recover it on a subsequent return
If PVA is introduced for imports, importers will not need to register to use it; they will simply make the appropriate entry and provide their VAT registration number (VRN) on the import declaration. This process will allow the goods to enter free circulation without up-front payment of the import VAT.
The import declaration will generate a certificate of postponed import VAT which will be the evidence the business needs to declare and recover the import VAT on their next VAT return.
PVA would only apply to VAT Registered businesses. Non-VAT registered businesses and individuals must use current Rest of the World processes and pay import VAT on imported goods at the same time as the customs duty.
If you are using the current CHIEF system to declare your Customs duties, you will be required to input your VRN into either Registered Consignee (SAD box 44h) or Consignee (SAD box 8) and enter the MOP ‘G’ on VAT Item Tax lines (SAD box 47e) as the method of payment to enable the postponed VAT function. A monthly postponed import VAT statement will be made available for the traders via the government digital service. This statement will indicate the total VAT postponed for the previous month and will be used to inform your quarterly VAT return
Changes if you use the new Customs Declaration Service (CDS)
If you are using the new CDS system to declare your Customs Duties, you will be able to postpone the VAT due by entering your VRN at header level in Data Element 3/40. VAT will be postponed against the declarant’s EORI and will be at declaration level only. A monthly postponed import VAT statement will be made available by HMRC for the traders via the government digital service. This statement will indicate the total VAT postponed for the previous month and will be used to inform your quarterly VAT return.
For exports, businesses will no longer need to complete EC sales lists, but will need to review the rules in individual member states that apply for import VAT
The UK would stop having access to certain EU VAT IT systems – but a new UK VAT registration number checker will be available
No Deal Scenario
Imports / Exports Rest of the world rules will apply to imports UK companies will need to make an import declaration at the border, the same will apply for exports where full customs declaration will need to be performed at the point of exit from the UK.
Once a decision has been made, TLC will implement outsourced and internal training of all staff involved on Customs Clearance Entries
TLC are also in close liaisons with our IT provider to ensure we are ready for the new CDS system due to be implemented for customs entries in 2019.