Preparing for Changes at the UK Border After a No Deal EU Exit
By: Dandan Li, Assistant Tax Manager
Summarised below is our understanding of the changes and necessary steps which may be required to be undertaken for UK businesses trading within the EU in the event of a No Deal EU Exit. We have principally focused on the impact on Customs and Excise and VAT. Most of the contents are taken from the published documents by UK government and HMRC.
Customs and Excise
From 11pm on 29 March 2019, for businesses trading with the EU, the impacts would include:
- Businesses would have to apply the same customs and excise rules to goods moving between the UK and the EU as are currently applied in cases where goods move between the UK and a country outside of the EU. This means customs declarations would be needed when goods enter the UK and when they leave the UK. For imports into the UK a separate safety and security declaration needs to be made by the carrier of the goods. For exports from the UK, the export declaration includes the safety and security declaration. Businesses need to register for Economic Operator Registration and Identification (EORI) number if they haven’t already done so.
- The EU applying customs and excise rules to goods it receives from the UK, in the same way it does for goods it receives from outside of the EU. This means that the EU would require customs declarations on goods coming from, or going to, the UK, as well as requiring separate safety and security declarations for imports into the EU.
- For movements of excise goods, the Excise Movement and Control System (EMCS) would no longer be used to control duty-suspended movements between the EU and the UK. This will mean that, immediately on importation to the UK, businesses moving excise goods from the EU, including those in duty suspension, will have to make a customs declaration and the goods placed either into a customs or excise suspensive arrangement or the duty must be paid at that point.
Making importing easier from the EU
HMRC is introducing new Transitional Simplified Procedures (TSP), to make importing through roll-on, roll-off ports and the Channel Tunnel easier for the initial period after the UK leaves the EU, should there be no deal. Sign up for HMRC’s new Transitional Simplified Procedures (TSP), online from 7 February, to make importing easier for you until at least April 2020. Once you are registered for TSP you will be able to:
- transport most goods into the UK without having to make a full customs declaration at the port
- postpone paying your customs duties.
Controlled goods procedure
Controlled goods are goods that require a license to import or excise goods like alcohol or tobacco. If you’re importing controlled goods from the EU and want to use transitional simplified procedures you’ll need to use the controlled goods procedure.
You’ll need to:
- send a simplified frontier declaration before you import the controlled goods into the UK
- make sure that the controlled goods are accompanied by full supporting documentation, for example the appropriate license
- send a supplementary declaration by the fourth working day of the month following the arrival of the goods into the UK
If you have duties or taxes to pay, HMRC will take your direct debit on the 15th day of the month after the goods arrive in the UK.
If you’re also importing goods that are not controlled you may choose to use the same procedure to declare them as you do for your controlled goods.
VAT for businesses
In the VAT for businesses technical notice, the government has announced that in a no deal scenario it will introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. This will apply both to imports from the EU and non-EU countries.
UK VAT Mini One Stop Shop (MOSS)
If you currently use MOSS to declare and pay VAT on sales of digital services to EU consumers, you should submit your return for supplies made between 1 January 2019 and 29 March 2019 via the UK portal by the normal deadline of 20 April 2019. If you want to continue to use MOSS for sales you make after the UK leaves the EU, you will need to register for MOSS in an EU Member State and this should be done by 10 April 2019.
The rules for travel to most countries in Europe change if the UK leaves the EU with no deal. From 29 March 2019, you will need to show that your passport is still valid for at least six months from when you arrive in the Schengen area. The new rules do not apply when travelling to Ireland.