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This publication is available at https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit/traders-importing-from-the-eu-only-what-to-expect-on-day-one-of-a-no-deal-scenario
The trade that you carry out with the EU will broadly follow the customs controls that apply for the rest of the world – you will need to adapt your business to comply with these new systems, processes and controls.
How the import process will change
If the UK leaves the EU without a deal, you will be subject to customs controls in the same way that businesses currently do when importing goods from a country outside the EU. This means that you will need to make an import declaration for goods entering the UK from the EU.
Customs checks may be carried out and you will need to pay any customs duties required under a new UK Trade Tariff, to replace the EU Common Customs Tariff (CCT) (see ‘Customs, excise, VAT and regulatory changes’ for more information about establishing a new UK Trade Tariff).
HMRC wants to ensure that traders have access to the right authorisations ahead of 29 March to ensure trade can keep flowing. We will be publishing further information in January 2019 specifically for importers, exporters, carriers, and port operators who trade with the EU through roll-on roll-off locations. This will include new and temporary easements to support continued trade fluidity at these locations.
What to do before you import goods from the EU
You will need to:
- have a UK Economic Operator Registration and Identification (EORI) number (see, below, ‘Actions you can take now’ to find out how to register for this). You’ll need an EORI number to continue to import goods after 29 March and before you can apply for authorisations that will make customs processes easier for you – see our guide for the information you’ll need to register
- ensure your contracts and International Terms and Conditions of Service (INCOTERMS) show that you are now an importer
- consider how you will submit import declarations. It’s up to you whether you choose to make declarations yourself or do it through a third party such as a customs broker, freight forwarder or logistics provider (see more information about these below). If you choose to do it yourself, you’ll need the right software and the necessary authorisations from HMRC, both of which will come at a cost. The main customs form used in international trade is known as the Single Administrative Document. You can submit a Single Administrative Document electronically using the Customs Declaration Service or Customs Handling of Import and Export Freight (CHIEF). Check how to complete a customs declaration
- check if you need a licence to import or export your goods – you may also need to apply for an import licence or provide supporting documents to import specific types of goods into the UK, or to meet the conditions of the relevant customs import procedure
- check if they’re restricted goods. You will always need a licence to import:
- military and paramilitary goods
- dual-use and technology
- certain artworks
- plants and animals
- medicines and chemicals
- find out the commodity code of your goods. Commodity codes classify goods so you can fill in import declarations accurately, check if there’s UK import duty to pay and find out about duty reliefs. Classifying your goods correctly means that you:
- pay the right amount of customs duty, excise duty and/or VAT
- know if duty is suspended on any of your goods
- know if you can apply any preferential duty rates
- know if you need to get an import licence
- if you’re unsure about how to classify your goods, check the product classification guides or the Trade Tariff lists all commodity codes. You can also email HMRC for further advice
- work out the value of your goods. You need to know the value of your goods to work out the level of customs duty, excise duty and, or VAT
- check whether any reliefs apply. Duty relief schemes allow you to pay less or no duty on imports and exports. Find further information on reliefs
- check whether you can use any customs procedures. There are customs procedures you can use to suspend the payment of duty to HMRC. They help businesses to manage cash flow. Find further information in Customs procedures if the UK leaves the EU with no deal
- if you use a UK roll-on roll-off location, for example, where a lorry or van travels through using a ferry or train, then you will need to declare your goods before they board the ferry or train
- when importing, make a safety and security declaration before the goods arrive in the UK
- pay customs duty on goods. Some goods benefit from a duty suspension regime. Your goods might also be liable to additional duties, such as anti-dumping duties
Getting help from third parties
There are third parties that can help with the customs process and movement of your goods, these are:
- freight forwarders
- customs agents or brokers
- express courier industry (fast parcel operators)
Freight forwarding is a service that involves moving goods around the world for importers and exporters. A freight forwarder will arrange customs clearance of goods crossing the frontier and they’ll have the right software to communicate with HMRC’s systems. There’s more about this on the British International Freight Association and Institute of Export websites.
Customs agents or brokers
Customs agents and brokers make sure that your goods clear through customs on their way to the final place of delivery in the UK. A customs agent or broker will act as either a direct representative or indirect representative.
Express courier industry
The express courier industry involves operators who specialise in time critical transportation services for documents, parcels and freight. These fast parcel operators offer worldwide, integrated, door-to-door movement of shipments. They track and control shipments throughout their journey.
Software providers offer software that enables you to make customs declarations electronically to HMRC’s systems.
What to do when you import goods from the EU
You’ll need to:
- have a valid EORI number
- make sure that your carrier, which can be a haulage company or a ferry or train operator, depending on the type of traffic, submits a safety and security declaration at the appropriate time
- submit an import declaration to HMRC using their software, or get your customs broker, freight forwarder or logistics provider to do this for you
- pay VAT and import duties, including excise duty on excise goods, unless the goods are entered into duty suspension (for example, a customs or excise warehouse). If you’re using a warehouse, a financial security will be required to cover the duty liability of the goods while they are being moved to the warehouse. Import VAT may also be due (see ‘Dealing with import VAT’ below)
If you currently use a warehouse to store goods which you import from the EU, then you will need to ensure that the warehouse space is authorised as either temporary storage or a customs warehouse, sometimes known as a bonded warehouse.
If you use your own premises you will need to consider whether you require additional customs authorisations and, if you do, make early contact with the appropriate unit to ensure there is sufficient time for the changes to be made. If you store your goods with a warehouse provider, you may want to contact to them to check their warehouse space has the appropriate authorisations.
Read the government’s existing guidance for importing outside of the EU, to familiarise yourself with the key processes. On GOV.UK, search for ‘Starting to import’ and then select ‘Importing from non-EU countries’.
A temporary storage facility is a place situated inside or outside the approved area of a sea or airport, where you can place non-UK goods in storage for 90 days before you put them into a customs procedure or export them. Temporary storage allows you to store chargeable goods under customs supervision before you:
- place them under a customs procedure
- release them for free circulation
- export them outside of the UK
To apply for temporary storage you must apply to Border Force.
How the excise process will change
You must pay excise duty on tobacco products, alcohol and fuel that you import into the UK. A list of products and the rates of excise duty are published in the Tariff. At the time of importation you must either pay the excise duty that’s due, or place the excise goods under a customs or excise duty suspension arrangement.
Once excise goods leave a customs suspensive arrangement, they may be immediately entered into an excise duty suspension regime, so you will need to declare the goods on the Excise Movement and Control System (EMCS) for onward movement in the UK via a registered consignor.
For more information about this read Public Notice 197.
Dealing with import VAT
If the UK leaves the EU without a deal, the government will introduce postponed accounting for import VAT on goods brought into the UK. This means that, if you’re a UK VAT-registered business importing goods to the UK, you can account for import VAT on your VAT return, rather than paying import VAT when the goods arrive at the UK border. This will apply to imports from the EU and non-EU countries.
To reach this decision, the government took account of the views of businesses and sought to mitigate any adverse cash-flow impacts and ensure that VAT processes are kept as close as possible to what they are now.
To ensure equity of treatment, in a ‘no deal’ scenario, you will be able to account for your import VAT from non-EU countries in the same way. This will help you make the most of trading opportunities around the world.
We will issue more guidance setting out further detail on accounting and record keeping requirements soon.
VAT on parcels sent by overseas businesses
If the UK leaves the EU without a deal, UK VAT will be payable on goods entering the UK as parcels, sent by overseas businesses.
Low Value Consignment Relief (LVCR) – a tax relief from UK VAT on goods valued £15 or less – will no longer apply to any parcels arriving in the UK. This will align the UK with the global direction of travel on LVCR.
This means that all goods entering the UK as parcels, sent by overseas businesses, will be liable for VAT unless they are already relieved from VAT under domestic rules (for example zero-rated children’s clothing).
For parcels valued up to and including £135, which are non-excise goods, a technology-based solution will allow VAT to be collected from the overseas business that’s selling the goods in the UK. Overseas businesses will charge VAT at the point of purchase and will be expected to register with an HMRC digital service and account for VAT due.
This digital service is an online registration, accounting, and payments service for overseas businesses. On registration, businesses will be provided with a Unique Identifier which will accompany the parcels they send in to the UK. They will then declare the VAT due on those parcels and pay this via their online account.
This ensures the process of paying VAT on parcels does not become difficult for UK consumers and businesses.
The online service will be available for overseas businesses to register in early 2019, prior to 29 March.
On goods worth more than £135 sent as parcels, VAT will continue to be collected from UK recipients in line with current procedures for parcels from non-EU countries. VAT will also continue to be collected in line with current procedures for all excise goods sent as parcels and potentially in cases where their supplier is not compliant with HMRC’s new parcels policy.
HMRC is working with the relevant industry stakeholders and will provide further information soon.
VAT on vehicles imported to the UK
If the UK leaves the EU without a deal, you should continue to notify HMRC about vehicles brought into the UK from abroad, using the online Notification of Vehicle Arrival Procedures (NOVA) system, to ensure that VAT is correctly paid.
The rules on the movement of goods to the UK from the EU will change when the UK leaves the EU and, as a result, import VAT will be due on vehicles you bring into the UK from EU countries. Certain reliefs will also be available as with current imports of vehicles from non-EU countries.
The Driver Vehicle Licensing Agency (DVLA) will not register a vehicle brought into the UK for use on UK roads unless it has a valid NOVA notification or it has been registered using the DVLA secure registration scheme.
Changes to VAT IT systems
If the UK leaves the EU without a deal, the UK will stop being part of EU-wide VAT IT systems such as the Mini One Stop Shop (MOSS).
UK VAT Mini One Stop Shop
MOSS is an online service that allows EU businesses that sell digital services to consumers in other EU countries, to report and pay VAT via a single return and payment in their home country. Non-EU businesses can also use the system by registering in an EU country.
In a ‘no deal’ scenario, you will no longer be able to use the UK’s MOSS portal to report and pay VAT on sales of digital services to consumers in the EU.
If you want to continue to use the MOSS system, you will need to register for the VAT MOSS non-union scheme in an EU country. You can only do this after the date the UK leaves the EU.
The non-union MOSS scheme requires you to register by the 10th of the month following a sale, so you will need to register by 10 April 2019 if you make a sale from the 29 to 31 March 2019, and by 10 May 2019 if you make a sale in April 2019.
Alternatively, you can register in each EU country where sales are made. Go to the EU Commission’s website for more information.
EU VAT Refund System
You will no longer have access to the EU VAT Refund System but you can continue to claim refunds of VAT from EU countries by using the existing processes for non-EU businesses.
This process varies across the EU and you will need to make yourself aware of the processes in the individual countries where you incur costs and want to claim a refund.
There is more information about claiming VAT refunds from EU countries on the EU Commission’s website.
EU VAT registration number validation
This service allows businesses to check whether a customer or supplier’s VAT number is valid. You will still be able to use this service to check the validity of EU business VAT registration numbers.
UK VAT registration numbers will no longer be part of this service. In the event of ‘no deal’, HMRC is developing a system that can continue to validate UK VAT numbers. We know this is important for certain businesses in order to carry out due diligence.
Northern Irish businesses importing from Ireland
The UK government is clear that in a ‘no deal’ scenario we must respect our unique relationship with Ireland, with whom we share a land border and are co-signatories of the Belfast Agreement.
The UK government has consistently placed upholding the Agreement and its successors at the heart of our approach. We recognise the basis it has provided for the deep economic and social cooperation on the island of Ireland.
It is the responsibility of the UK government to continue preparations for the full range of potential outcomes, including ‘no deal’. In such a scenario, the UK would stand ready to engage constructively to meet our commitments and act in the best interests of the people of Northern Ireland, recognising the very significant challenges that the lack of a UK-EU legal agreement would pose in this unique and highly sensitive context. This would include engagement on arrangements for land border trade. We will provide more information in due course.
The Irish Government has indicated it would need to discuss arrangements in the event of ‘no deal’ with the European Commission and EU countries. We would recommend that, if you trade across the land border, you should consider whether you will need advice from the Irish Government about preparations you need to make.
Exhaustion of intellectual property rights
Intellectual property rights give the business, organisation or individual that holds the rights (the right holder) certain exclusive entitlements, which include the right to control distribution of a protected product. The exhaustion of intellectual property (IP) rights refers to the loss of the right to control distribution and resale of that product after it has been placed on the market within a specified territory by, or with the permission of, the right holder.
The UK is currently part of a regional European Economic Area (EEA) exhaustion scheme, meaning that IP rights are considered exhausted once they have been put on the market anywhere in the EEA with the right holder’s permission.
In a ‘no deal’ scenario, the UK will continue to recognise the EEA regional exhaustion regime from exit day, to provide continuity in the immediate term for businesses and consumers.
This approach means there will be no change to the rules affecting imports of goods into the UK, and businesses that undertake this activity may continue unaffected.
Ongoing UK recognition of the EEA regional exhaustion area will ensure that parallel imports of goods, such as pharmaceuticals, can continue from the EEA. A parallel import is a non-counterfeit product which is imported into a country where the intellectual property rights in that product have already been exhausted.
The implication for UK businesses is that intellectual property-protected goods placed on the EEA market by, or with the consent of, the right holder after the UK has left the EU will continue to be considered exhausted in the UK.
This means that parallel imports of these goods from the EEA to the UK will be able to continue unaffected.
The government is currently considering all options for how the exhaustion regime should operate after this temporary period, and is undertaking a research programme to support this decision. The government will be working closely with business representatives, trade associations and other stakeholders on the implications of our plans.
The Intellectual Property Office has also published a factsheet on intellectual property rights and EU exit.
Trading under the mutual recognition principle
Some manufactured goods, such as furniture, textiles, bicycles, and cooking utensils are subject to national regulations rather than EU-wide rules.
These non-harmonised goods can circulate on the EU market under the mutual recognition principle, which prevents EU countries from prohibiting the sale of goods that have already been legally sold in another EU country.
This applies even where countries have different national requirements covering the same good. As an example, a bicycle made to comply with French national requirements and sold in France can then lawfully be marketed in other EU countries – even though those countries may have different national requirements for bicycles.
The only exceptions to the mutual recognition principle are restrictions which EU countries can introduce on grounds such as public safety, public policy and public morality.
EU countries’ right to restrict the circulation of these goods, for the above reasons, is regulated by the EU Mutual Recognition Regulation (764/2008). As well as setting out rules and procedures, it establishes product contact points in each EU country which respond to requests for information about national regulations.
How processes will change
In the event of a ‘no deal’ scenario, the UK would no longer fall within the scope of the mutual recognition principle.
This means that, if you import non-harmonised goods into the UK, you will need to ensure they meet UK national requirements, even if your goods were previously lawfully marketed in another EU country.
Similarly, non-UK businesses exporting non-harmonised goods to the UK will need to ensure that the goods meet UK national requirements, regardless of whether they were previously lawfully marketed in another EU country or in the UK.
Trading goods regulated under the ‘New Approach’
EU legislation sets out the rules, or ‘essential safety requirements’, which certain products must meet before they are placed on the EU market.
If you trade in goods covered by these specific EU directives and regulations, you can read more guidance in the section Customs, excise, VAT and regulatory changes you need to know about if there is no deal in this pack and read the technical notice on Trading goods regulated under the ‘New Approach’ if there’s no Brexit deal
£8 million funding scheme for customs intermediaries and traders
The government fully acknowledges the potential capacity challenges facing the customs intermediaries sector in supporting existing and new clients when the UK leaves the EU. In September HM Treasury and HMRC announced a one-off investment of £8 million to support broker training and increased automation.
As part of this investment, funding is now available to help customs intermediaries and traders based in the UK, meet the upfront costs of employee training and IT improvements.
Employee training grant
There’s £2 million available to fund training for intermediaries and traders that complete customs declarations, or intend to complete customs declarations in the future. The grant will provide funding for up to 50% of the cost of training staff.
How to qualify
Your business must:
- either complete customs declarations for themselves or someone else (or intend to in the future)
- or import from, or export to the EU and complete customs declarations (or intend to complete customs declarations in the future)
What you can use the grant for
The grant will provide funding for up to 50% of the cost of training your employees to:
- complete customs declarations
- facilitate other businesses to use import and export procedures
- carry out the technical processes of customs procedures
The training does not have to lead to a formal qualification.
What you cannot use the grant for
You cannot use the grant:
- towards the existing costs of current training
- for other unrelated training
IT improvements grant
There is £3 million available for funding IT improvements. This is available to small and medium-sized enterprises in the customs intermediaries sector who are currently completing customs declarations on behalf of importers and exporters. The grant will fund investment in packaged software that increases the automation and productivity of completing customs declarations.
How to qualify
Your business must:
- currently complete customs declarations on behalf of importers and exporters
- have 250 employees or less
- have an annual turnover of £50 million or less
What you can use the grant for
You must use the funding to buy software that’s:
- a packaged solution
- used to increase the automation or productivity of your business in completing customs declarations
The funding can also be used:
- to buy hardware that’s needed for the software to run
- to install and configure the software and hardware
- for the first year licence
- for training employees to use the software
What you cannot use the grant for
You cannot use the funding:
- to commission bespoke software
- for unrelated networking costs
How to apply
Applications will close on 5 April 2019, or earlier once all the funding is allocated. If you think your business qualifies for either grant, please apply at the earliest opportunity. More information, and a link to the online application page, are on GOV.UK.
Actions you can take now
- Register for a UK Economic Operator Registration and Identification (EORI) number. Read more information about how to do this.
- Decide if you want to hire an agent to make export declarations for you or if you want to make them yourself (by buying software that interacts with HMRC’s systems). If you want to declare through an agent, contact one to find out what information they’ll need from you. If you want to use software to make declarations yourself, talk to a software provider to make sure that their product meets your needs, depending on whether you import, export or both.
- Contact the organisation that moves your goods (for example, a haulage firm) to find out if you will need to supply additional information to them so that they can make the safety and security declarations for your goods, or whether you will need to submit these declarations yourself.
- If you currently use a warehouse to store goods which you import from the EU, then you may want to check that the warehouse space is authorised as either temporary storage or a customs warehouse. If you use your own premises you will need to consider whether you require additional customs authorisations, or if you store your goods with a warehouse provider you may want to contact to them to check their warehouse space has the appropriate authorisations.
- If necessary, put steps in place to renegotiate commercial terms to reflect any changes in customs and excise procedures, and any new tariffs that may apply to UK-EU trade.
- If you deal with intellectual property-protected goods, you may wish to seek legal advice on how a ‘no deal’ scenario could affect your business model or intellectual property rights.
- If you trade under the mutual recognition principle, check that the goods you import to the UK meet relevant UK national regulations. This list is not exhaustive.
- If you trade across the land border between Northern Ireland and the Republic of Ireland, you should consider any advice issued by the Irish Government about preparations you need to make, in addition to the guidance set out by the UK government.
- The passport rules for travel to most countries in Europe will change if the UK leaves the EU on 29 March 2019 (may also apply to new exit date on 31 December 2020) without a deal. Read the government’s guidance on Travelling to the EU with a UK passport if there’s no Brexit deal and, if relevant, ensure your employees and customers are aware of the potential changes.
- Stay up-to-date with these changes by registering for email alerts. Follow the link, add your email address, select ‘Submit’, select ‘Add subscription’ and choose ‘EU Exit’ then select ‘Submit’.