Post Brexit reviews

VAT and Customs Duty impact on your supply chains

Ian Worth, Director and Robert Marchant, Partner, VAT and Customs Duty services

At our recent 'hybrid' event Rob Marchant and Ian Worth took the opportunity to reflect on how Brexit had impacted businesses and their supply chains and what they may expect to happen next.

Reminder of what changed

A number of months have passed since the UK formally left the EU, so it is now a good time to review whether or not business preparations had been effective, or whether some of the changes had been unexpected.

Attendees told us that whilst they generally felt they had prepared as best they could, it had been difficult to manage the expectations of trading partners in the EU. The last-minute Trade Agreement presented a great deal of confusion, not helped by misleading media coverage claiming 'tariff-free, quota-free trade' between the UK and the EU. Most attendees also reported difficulties in finding clearance agents, as well as agents experiencing problems themselves with completion of the necessary declarations.

In a poll of attendees, almost half reported challenges with unexpected delays at the UK / EU border, and one in four experienced difficulties in finding clearance agents to complete their customs declarations.

The UK’s 'easement', allowing importers to delay submission of full customs entries was widely misunderstood, with agents and importers alike failing to comply with the requirements of the easement – in many instances, importers were unaware that their agents had opted to delay their declarations, so were also unaware of the deadlines for submission of the necessary supplementary declaration.

Almost all attendees had recognised the cash flow benefits of using Postponed Import VAT Accounting (PIVA), to account for their import VAT without having to physically pay before recovering as input VAT on their VAT return.

Current frustrations

It was clear that there is still much confusion over the UK/EU trade agreement, and how to determine whether or not goods are eligible for the all important preferential rate of 0% customs duty. Understandably for many businesses with no pre-Brexit customs experience, the complex relationship between commodity codes, rules of origin and manufacturing activity is proving to be a compliance minefield, with little clear guidance from HMRC.

Against the background of pre-Brexit trade with the EU, most attendees had not fully understood the importance of Incoterms® in their trading relationships – indeed, the ability to move goods freely within the EU had largely negated the relevance of Incoterms®. Businesses have experienced a steep learning curve, not only in understanding Incoterms® for themselves, but also in agreeing and communicating the allocation of responsibilities throughout their supply chains. Many EU trading partners have also struggled with the correct use of Incoterms® since Brexit, as they too have had little or no previous exposure to customs formalities.

Few attendees had undertaken any meaningful review of their customs declarations made during 2021, even though for some the UK’s departure from the EU presented their first exposure to customs formalities. We discussed at some length the value of strong communications with all players in the supply chain, the importance of checking import declarations made by customs clearance agents, and the analysis that could be provided by Crowe’s Customs Team, using a newly developed data analysis tool.

Upcoming developments

Further changes during 2022 and beyond were discussed. The switchover of HMRC’s system from CHIEF to CDS is a topic that HMRC are actively publicising with importers, but few clients are getting the necessary reassurances from their clearance agents that migration to CDS will be complete by the end of September 2022, when CHIEF will be switched off for new import declarations. Forthcoming new requirements for importers of products of animal origin were recognised as having scope to cause difficulties for some in the food sector.

There was an appetite to understand how goods can meet the preferential rules of origin requirements in order to eliminate customs duty costs, where eligible. Businesses with significant movements of goods between the UK and EU were interested in Crowe’s analytic capabilities, to provide a meaningful insight into the compliance of declarations made to HMRC by their customs clearance agents.

The nature of queries arising from Brexit has also changed. In the initial weeks and months following departure from the EU, the majority of queries related to documentation and clearance delays, and difficulties in finding clearance agents with adequate capacity. More recently, UK businesses seem to have accepted that Brexit has introduced additional cost and burden, with a large uptake in the use of duty relief regimes to eliminate UK customs duty and VAT which for some would not otherwise be recoverable. Many businesses are also exploring strategic restructure of their supply chains, recognising the difficulties in servicing an EU market from the UK, and the VAT obligations associated with selling goods in EU countries.

Organisations are noticing that HMRC are emerging from their pandemic restrictions and starting to carry out post-clearance customs audits again. The declarations made during 2021 by, or on behalf of businesses who were not fully conversant with their post-Brexit customs compliance obligations, are likely to be priority targets for HMRC’s customs audit teams.

How we can help

Crowe’s Customs and VAT specialists can support clients in managing their post-Brexit compliance obligations, as well as advising on the customs and VAT implications of any supply chain restructuring. Crowe’s data analytics tool can provide valuable insights into the accuracy and efficiency of customs declarations, with opportunities for duty reclaims and process improvements to generate future savings.

For more information, please speak with Ian Worth or Rob Marchant using the details below, or through your usual Crowe contact.


Many organisations are still struggling with the changes arising from Brexit to the process for bringing goods to the UK.

Contact us

Ian Worth
Ian Worth
Director, VAT and Customs Duty services
Robert Marchant
Robert Marchant
Partner, National Head of Tax