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UK Brexit Border Operating Model 1 Jan 2021

  • Jul 15, 2020 | Richard Asquith

The UK’s HMRC has published guidance on the goods border procedures that will come into place after the 31 December 2020, when the UK leaves the EU Customs Union and VAT Regime. This is known as the Border Operating Model (BOM), and includes a mix of physical and digital procedures. This comprises the new Goods Vehicle Movement Service (GMVS) platform that will enable exporters to the EU to pre-declare their shipments and avoid exit queues at UK ports. Failure to complete such processes will result in trucks being blocked from leaving the UK.

An estimated 150,000 UK businesses will be required to complete customs procedures, pay duties and account for import VAT. This will result in an estimated 215m new declarations compared to 50m today.

Aside from the additional bureaucracy, and businesses’ preparedness, there is uncertainty around the readiness of systems and sufficient customs intermediaries (customs brokers, freight forwarders and express parcel operators) to help traders to complete the processes.

Businesses should at a minimum ensure they have a UK and EU EORI number, and have an import duty deferment account.

Phased launch of new Border Operating Model

Under the new BOM, initially, there will be a six-month deferral of customs declarations and duty payments, which was announced in June 2020. This will be processed through the Customs Freight Simplified Procedures EIDR scheme. Following this, full border operating model procedures will be in place.

Below is a summary of the steps to clear goods from the EU into the UK, excepting Northern Ireland. This will apply if there is no Free Trade Agreement struck between the EU and UK by the end of the transition period. But this will possibly only change the tariffs rates and process. There is a separate Northern Ireland VAT and customs Brexit procedure agreed under the Brexit agreement.

Goods clearance procedures – Jan to June 2021

During this period, importers may opt to the use Deferred Declarations for non-controlled goods.Goods only passing through the UK to other EU states may apply Transit procedures.

Deferred declarations Preparations

  • Importers must check that they have any necessary import licenses or certificates (e.g. livestock) and appoint a freight forwarder as their authorised intermediary for customs declarations, plus a licensed haulier. If the importer is to complete the Supplementry Declaration, they must be authorised.
  • Intermediaries – customs brokers, freight forwarders and express parcel operators – help businesses to import and export goods by ensuring the necessary customs paperwork has been completed.  The UK also intends to change the  rules which will remove the financial liability from intermediaries operating on behalf of their clients and allow parcel operators to continue declaring multiple consignments in a single customs declaration.
  • Commodity codes and attached UK Global Tariffs must be established for the customs declaration and payment process.
  • Ensure you have a CHIEF / CDS badge, which enables you to register goods movements on HMRC’s system for recording imports and exports.It is required to completee the Supplementary Declaration.
  • Ensure you have a valid UK EORI number from HMRC. This should have been issued to all existing EU importers in 2019
  • Import duties may be deferred, as per above. But you should still apply for a Duty Deferment Account beforee completing the Supplementary Declaration. The existing customs comprehensive guarantee rules are to be relaxed.
  • Import VAT may be paid: at the border at clearance; via the Postponed Accounting route through the VAT return; or through a VAT deferment account.
  • Customs declarations are not required immediately for the first six months of 2020; although controlled goods will have to be declared.

Import under deferred declarations prior to July 2021

  • When the goods come to be imported, you should ensure your shipper has details of the goods and your EORI number.
  • Ensure the exporter from the EU has completed their obligations (EORI numbers; export declaration etc).
  • HMRC will check the goods at the port or one of the new Border Control points.
  • You will make a simplified frontier declaration through CHIEF.
  • You will only have to make a customs Supplementary Declaration and pay the duties on imports between 1 Jan and 30 Jun 2021 by 1 July 2021. You must ensure your customs intermediary has all the necessary information for this.
  • Your duty deferment account will be debited for tariffs after the supplementary declarations has been submitted.
  • VAT payment may be avoided by using the Postponed Accounting prodedure. If you are not VAT registered, you will pay import VAT with duties.
  • Intrastat declarations, recording the movement of goods, must still be completed.

Standard import procedures – July 2021

  • The standard import procedures will commence for all imports.
  • Once the initial 6-month deferral of customs declarations and duty payment is ended, there will be a number of changes to the above process.
  • Import declarations and Entry Summary Declarations will have to be made prior to importation. This can be made by you or your transporter. The new Goods Vehicle Movement Service (GVMS) system should be used to register the movement of the goods with details (EORI etc). This will provide a single Goods Movement Reference (GMR) number, which is presented at the ferry/Euro Tunnel for the vehicle to board on the EU-side.
  • The GMR is shown to customs, who perform a risk-assessment on the load to determine if the goods should be stopped for inspection prior to release
  • Duties must be paid immediately, of via monthly direct debit payment on a deferred account. VAT cash payments may be omitted via Postponed Accounting.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.