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Brexit: new customs checks from 1 January 2022 mean hard border with EU is almost complete

HMRC has updated its online guidance and written to UK traders reminding them to prepare for more post-Brexit customs controls, which will take effect on 1 January 2022.

The four most significant changes coming into force on that day are as follows:

Happily, HMRC’s statement confirms that importers can continue to use postponed VAT accounting, which has been available since the beginning of 2021 to allow import VAT to be paid and recovered on the importer’s VAT return, instead of being paid upfront at the time of import. This provides an important cashflow saving, so its continuation will be warmly welcomed by cross border traders.

Despite this, a recent survey by the Federation of Small Businesses indicated that only a quarter of small British importers are ready for the requirement to submit full customs declarations at the time of import, largely due to a lack of capacity to process the paperwork. The Brexit changes which came into force just under a year ago led to many smaller vendors in the EU deciding to suspend their supplies of goods to UK customers, and many UK SMEs opting to avoid the red tape and concentrate on the domestic market. The next wave of changes looks set to take even more small businesses out of the game when it comes to trading with the EU.

Many UK importers of EU goods will also be faced with the reality of submitting supplementary declarations and accounting for duty on imports that were originally routed through the simplified import arrangements. This adds significant complexity for importers and HMRC alike as they navigate the vast numbers of consignments routed through the simplified route. How HMRC deal with this scenario from a compliance perspective remains to be seen.