New Transition Timeline, New UK Tariff and more funding to help businesses - PKF Francis Clark
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New Transition Timeline, New UK Tariff and more funding to help businesses

The UK has now formally made it clear that it wishes to exit transition arrangements at the end of 2020. This has prompted a step up in preparations for the future of UK trade and gives a bit more of an insight to how things will work so businesses can start preparations now. The most important pieces of news are:

  • The announcement of a three phase introduction for declarations, duty payments and control requirements that will govern EU-GB trade.

This includes major arrangements to relieve cash-flow issues and the admin burden in the first 6 months of 2021.

  • The launch of the UK Trade Tariff including a wide array of changes to duty liabilities.

This will help businesses plan the implications for their global supply chains. We have provided bespoke analysis to a number of our clients which suggests significant duty savings (subject to the UK having a Free Trade Agreements with the EU).

  • A pledge of a further £50 million of grant funding to assist with training and preparation costs.

Several of our clients have signed up and received fully grant funded Brexit declaration training from us. This announcement promises further funding to ease the burden on customs intermediaries.

Phased Introduction

Rather than a cliff-edge for new procedures on 1 January 2021, the new UK Customs Import process will be rolled out in a set of 3 phases. The government has cited the current epidemic for this amended approach.

The changes will be relevant to UK businesses sourcing goods from the EU (though will not apply to Northern Ireland due to the alternative arrangements already agreed).




Key Date 1: 1 January 2021 – End of Transition

The UK will officially no longer be party to the transition arrangements currently in force. However, from this date:

  • Businesses importing standard EU goods (not subject to additional controls) will have up to six months to complete a customs declaration
  • Customs duties will be due on these imports (but may be mitigated depending on any trade agreements in force at the time of import). Furthermore payment of the duty liability can be deferred until a customs declaration is submitted
  • Businesses importing controlled EU goods (such as tobacco) will require a full customs declaration
  • Safety and Security declarations will not be required for six months for all goods
  • High risk live animals and plants will be subject to physical checks at the point of destination or other approved premises and documentary checks will be carried out remotely
  • Pre-notification and health documentation must be held from the outset. Imports of high-risk animal by-products (ABP) will also need pre-notification

A deferment account will be required if you would like to delay payment of the duty liability until 30 June 2021. This is not the transitional Simplified Procedure (TSP) that was announced as part of no deal preparations. It is not yet clear whether No-Deal Deferment accounts set up by businesses over the last year will be accepted for this purpose or whether a new account will be required. Further details on the practicalities of this deferral should be announced by the end of July.

In practical terms, this means that business importing standard (e.g. Non-food / non controlled) goods should be in a position where EU imports made on or after 1 January 2021 will not require submission of a declaration or payment of duty until 30 June 2021.

Key Date 2: 1 April 2021 – Extra Controls for Plants and Animals

From this date, all EU products of animal origin (POAO) and regulated plants / plant products, will require submission of a pre-notification to HMRC prior to clearing the goods and you must provide any relevant health documentation. E.g. Meat, pet food, honey, milk and egg products etc.

Key Date 3: 1 July 2021 – Full Declarations, including Safety and Security

All goods imported after this date will require a customs import declaration to be made at the point of entry and tariffs will become due immediately unless other arrangements are in place (e.g. your business has authorisation for a customs special procedure such as Customs Warehousing).

Goods subject to sanitary and phytosanitary requirements will be subject to a greater volume of physical checks. Sampling of plant and animal products will now take place at a series of UK border inspection posts.

New UK Tariff

As part of the shift away from the European customs tariff, the UK Government has performed a major customs duty rationalisation project.

The new UK tariff can be accessed using the search tool available here.

The work performed can be broken down into the following categories:

  • Liberalisation – 2001 Codes Effected
    • This is the complete removal of customs duty associated with a given commodity code. The changes cover a wide variety of products, including certain manufacturing and green industrial items. Particularly welcome is the complete removal of customs duty for items with a duty of 2.5% or less under the current tariff regime
  • Simplification- 4747 Codes Effected
    • Simplification has in many cases seen the rounding and reduction of tariffs which were not previously whole percentage points. This change also includes the removal of:
    • Threshold/Variable Tariffs and the Entry Price System
    • Specific Measures – Including the Meursing Code calculation of Starch content
  • Currency Conversion – 3963 Codes Effected
    • All codes previous relying on Euro ratios have been replaced by Sterling equivalents
  • Reduction – 36 Codes Effected
    • In some cases (such as certain types of Brown Rice) – The converted rate also includes a reduction based on current exchange rates
    • This also includes reduction for a number of industrial vehicles
  • No Change – 3963 Codes
    • These codes have currently not been changed but may be altered at a future date

What is yet to change?

The above is correct at time of writing, however further changes may be required before the final launch.

The new tariff lists intended duty rates but has not yet been integrated with other key trade information. Areas still to be finalised include:

  • Anti-Dumping Duties
  • Countervailing Duties
  • Safeguards
  • Other Measures in line with UK Policy (e.g. Suspensions)
  • Quotas (Due to be published later this year)

Further Funding

The government has announced further funding for the customs sector. The Customs Grant Scheme remains open and businesses that complete declarations or intend to have until 31 January 2021 to apply for grant funding.

We have been assisting many businesses with their Brexit preparations and can provide bespoke training covered by this scheme.

The government has also announced a further £50 million targeting the Customs Intermediary sector. Further details of eligibility and the application process will be unveiled soon.

FEATURING: Liam Dushynsky
Liam is an Indirect Tax Partner 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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