- In June 2020, the UK notified the EU that it will neither accept nor seek any extension to the Transition Period (set to end 31 December 2020)
- Border controls for EU goods imported into Great Britain will be introduced in 3 stages to give businesses more time to prepare.
- Businesses based in the EU and UK will need to be aware of changes in the handling of Import VAT.
From 1 January 2021 the UK will have the autonomy to introduce its own approach to goods imported to GB from the EU. The Chancellor of the Duchy of Lancaster, Michael Gove, formally notified the EU that the UK will not be needing any extension to the Transition Period.
“We have informed the EU today that we will not extend the Transition Period. The moment for extension has now passed,” said Grove speaking at the Withdrawal Agreement Joint Committee meeting.
Grove explained that the UK’s border controls will be rolled out in three phases and that having control of their own laws and borders allows Great Britain to take the sovereign decision to roll out the controls slower so that it gives businesses impacted by coronavirus time to adjust.
UK-EU Import Border Controls
The new border controls will be rolled in three stages up until 1 July 2021. This flexible and pragmatic approach will give industry extra time to make necessary arrangements. The stages are described by HMRC as follows:
From January 2021: Traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods, and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination or other approved premises on all high-risk live animals and plants.
From April 2021: All products of animal origin (POAO) – for example meat, pet food, honey, milk or egg products – and all regulated plants and plant products will also require pre-notification and the relevant health documentation.
From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for SPS commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.
(source= gov.uk )
Traders importing standard goods will need to prepare for basic customs requirements and will have up to six months to submit customs declarations to HMRC.
While tariffs will need to be paid on all imports from Day One, payments can be deferred until the customs declaration has been made, giving traders time to adjust to the new requirements. Safety and Security declarations will not be required for six months for all goods.
Traders will, however, need to consider some other processes, such as how they will account for import VAT. Any EU companies shipping goods to the UK via DDP shipments will incur Import VAT that may have to be claimed via the 13th Directive which is an onerous task. UK businesses shipping goods DDP to the EU may face the same challenges and should be prepared for either extra foreign VAT registration requirements or more cumbersome VAT reclaim processes.
VAT IT is able to offer companies both in the UK and EU assistance in navigating the Import VAT implications post the transition period. For any queries, please email email@example.com or leave your details below.
Read more VAT-related Brexit articles here.
UK import VAT changes on the Horizon post-transition period