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Import controls on goods from the EU

Arrangements for importing goods from the EU into the UK from 1 January 2021.

Robert Marchant, Partner, VAT
port with containers

The UK government has announced its intention to introduce import controls on goods coming to the UK from the EU after the Brexit transitional period ends on 31 December 2020. This will mean businesses will have to submit customs declarations, be liable to checks on goods and pay import VAT and customs duties. The EU has said it will be doing the same for goods shipped from the UK to the EU.

The government has also confirmed that some of the import easements that were discussed as part of the ‘no-deal’ Brexit planning will not be introduced given that, in their view, businesses have sufficient time to prepare.

Loss of postponed import VAT accounting

Businesses who currently import goods from outside of the EU will be familiar with the process, but there are likely to be significant changes for those that previously only purchased goods from the EU. The precise details will depend on the outcome of the UK/EU trade negotiations but we expect that:

  • On a practical level, there will be a need for customs declarations in order to bring the goods into the UK and businesses will need to investigate using a customs agent and/or training their own staff to do this.

  • When the goods come to the UK they are likely to be subject to import taxes, comprising both customs duty and VAT. Customs Duties are irrecoverable. For many businesses the import VAT paid may be recoverable but there will be a change in the cash-flow position for EU purchased goods, as import VAT is paid up front and then reclaimed at a later date. This is different to how VAT is currently dealt with on purchases of goods between the UK and the other Member States.

This approach does not apply to the flow of trade between Northern Ireland and Ireland, or between Northern Ireland and Great Britain.

In a departure from provisions announced in 2019 as part of the preparation for a ‘no-deal’ Brexit, the government has said that postponed import VAT accounting and Transitional Simplified Procedures (TSP) will be no longer be introduced. TSP was intended to defer the time by when an import entry was required to be made. Postponed import VAT accounting was designed to allow the payment and recovery of VAT to be deferred to the VAT return, so that there would be no cash flow cost arising from the payment and subsequent reclaim of VAT. This decision will be disappointing news given the negative cash flow impact that will now arise for businesses.

Actions to take

Business wanting to bring goods into the UK will need an Economic Operator Registration and Identification (EORI) number and as part of HMRC’s no-deal Brexit preparations they had automatically issued EORI numbers to many UK VAT registered businesses. However, non-VAT registered businesses and businesses registered as part of a VAT group may not have received an EORI number and should apply themselves.

Businesses should also monitor the UK/EU trade negotiations which will determine the details of whether there will be import controls, the processes to be followed and rates of import taxes payable.

How we can help

Please contact us if you have any further questions or would like our support.

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Robert Marchant
Robert Marchant
Partner, VAT and Customs Duty services