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Customs arrangements – preparation for Brexit, what you need to know in relation to the movement of goods

As of today 25 October 2019, there is still no clarity on if, when and how the UK will leave the EU. HMRC has released guidance which is being updated daily, but is not necessarily easy to navigate. Therefore, we have set out the common terms used by HMRC, what they actually mean and what you need to do.

Please click on the titles below to reveal more information:

  • This is a number that you must be issued with in order to trade goods outside of the UK after Brexit
  • Then, only numbers beginning with the prefix GB will be valid for UK businesses
  • In August 2019 HMRC decided to automatically enrol thousands of businesses that had traded goods with the EU in 2018. Be sure to check if you have received a letter
  • If you do not have a number, you should submit an application as soon as possible. Approval can take as little as 5 minutes
  • If you trade with EU countries, you will be required to submit a customs declaration. The declaration is a digital form that contains important information about the goods you are trading
  • You can choose to submit declarations yourself, however this does require complicated registration procedures and requirements
  • Most business approach a third-party to submit the declaration on their behalf. Depending on the business and your requirements, this representative may be a freight forwarder, a customs agent or fast parcel operator
  • The contents of the declaration remain your responsibility. You can be found liable for errors so always make sure the information provided to HMRC is correct
  • You will need to establish who will be responsible for paying costs at each stage of the delivery (such as insurance and freight)
  • You should establish an agreed Incoterm, a set of rules defining those responsibilities, with your supplier or customer and make sure that the ownership of the goods is clearly defined.
  • The UK Government is currently offering a simplification procedure called TSP. This approval reduces the amount of information required to allow goods from the EU to pass the UK border at time of arrival. Further information is submitted at a later date. TSP also allows the payment of duties to be deferred
  • In October 2019, HMRC automatically enrolled thousands of businesses onto this scheme. Check whether you have received an approval letter. You will need to provide your freight forwarder with your approval number if you wish to use TSP
  • A deferment account allows import taxes to be paid at a later date, goods can clear the border and the bill can be settled later on
  • In order to take advantage of TSP, you must hold a deferment account. HMRC has set up arrangements for a no deal deferment account which will become active on day one of a no deal.
  • The forms are available on HMRC’s website and can be submitted to the HMRC central deferment office for approval.
  • The commodity code is one of the most important pieces of information included on a customs declaration. It is the description of your goods in a number format. It determines the duty that will apply to your goods, along with restrictions, documentation and licence requirements.
  • Any coding decision must follow the World Trade Organisation six general rules of interpretation and you must be confident with your coding decisions and record your reasoning. Commodity codes can be most easily found on HMRC’s online trade tariff
  • The rate of duty applicable to your goods will be determined by a no deal tariff in the absence of a withdrawal agreement. Approximately 88% of items on the list will be 0% for a temporary period
  • HMRC has already published the rates they will introduce, however these will be in place temporarily until new arrangements and agreements are established. WTO agreements mean these reduced rates will apply to both EU and rest of the world imports
  • This allows import VAT to be accounted for (paid and reclaimed where appropriate) in your VAT return, rather than paying or deferring it at the port of entry

The boxes on the VAT return will be as follows:

Box 2   : VAT due in this period on imports accounted for through postponed accounting

Box 4   : VAT reclaimed in this period on purchases and other inputs (including imports)

Box 8   : Total value of all exports of goods, excluding any VAT

Box 9   : Total value of all imports of goods, excluding any VAT

  • Using postponed import VAT accounting is not automatic. You must select ‘G’ when declaring payment and must inform your freight forwarder of your intention to account for VAT in this way
  • There are a wide variety of procedures, terminology and rules with which you will need to become familiar with when importing and exporting
  • PKF Francis Clark has produced a customs health checklist to help you to ascertain your level of understanding

Download our customs checklist now

You can download a PDF version of this information below. If you have any questions about this, please email our specialists:

Liam Dushynsky (Indirect Tax Director) – liam.dushynsky@pkf-francisclark.co.uk
Richard Phillips (Indirect Tax Consultant) – richard.phillips@pkf-francisclark.co.uk

Download Factsheet Download Checklist

FEATURING: Liam Dushynsky
Liam is an Indirect Tax director specialising in VAT, Customs Duty and other indirect tax matters. Liam joined PKF Francis Clark in 2005 as part… read more
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