14 December 2021
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:
- During 2021, most importers of goods from the EU into Great Britain have had the option of delaying submission of the customs declaration to HMRC for up to six months from the point of import. From 1 January 2022, full customs entries must be submitted at the point of import. Any customs duty and import VAT due must also be paid at the time of customs clearance, unless the importer has arrangements in place to pay them through duty deferment or postponed VAT accounting before the goods are made available to the importer.
- Ports and other border locations will introduce customs controls on goods moving into Great Britain from the EU. This will inevitably result in delays for those consignments selected for verification, which HMRC says may be directed to an Inland Border Facility for documentary or physical checks if these checks cannot be done at the border.
- Since 1 January 2021, traders have been able to move goods between the UK and EU without incurring customs duty, provided they can demonstrate that those goods are of UK or EU origin. During 2021, UK exporters declaring their goods as being of UK origin have been allowed to obtain a declaration from their supplier to confirm this after the export has taken place. However, from 1 January 2022 they must hold supplier declarations to support their declaration of origin at the time they export the goods.
- Finally, HMRC has confirmed that the annual review of commodity codes that took place under EU rules will continue in the UK Global Tariff; these changes always take effect from 1 January. Commodity codes are vitally important, as they confirm the rate of duty payable and other important customs requirements relating to the type of goods. HMRC urges importers and exporters to check their classification of goods to see if there are any changes for 2022 in respect of the goods they are moving in or out of the UK.
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.