Post Brexit: Customs Special Procedures

After 1 January 2021 when the Brexit transition period ends, UK business should consider a number of Customs Special procedures and other import facilitation measures when goods come into the UK.

Not all of these reliefs are necessary and will depend on the type of business involved.

Businesses can use Customs Special Procedures to suspend, reduce or claim relief on the payment of customs duties and VAT under specified conditions. Special procedures include:

Customs Warehousing

  • Allows for goods not in free circulation to be stored without payment of customs duty, and where appropriate excise duty or import VAT, in a customs warehouse.

Inward Processing Relief (“IPR”)

  • Allows for the payment of customs duties, import VAT and excise duties to be suspended on imported goods whilst processing is taking place.

Outward Processing Relief (“OPR”)

  • Allows for the temporary export of goods for processing or repair, and to re-import the processed products whilst retaining domestic status or with partial relief from import duties.

Temporary Admission

  • Allows for businesses and individuals who are established outside of the UK to be authorised to import goods with total or partial relief from customs duties and other charges because of the specific use to which the goods will be put.

Authorised Use

  • Allows for reduced or nil rates of Customs duty on certain imported goods, provided they are put to a prescribed end use.

In the past these procedures required a Customs Comprehensive Guarantee.  Businesses will be able to apply to be fully authorised to operate special procedures without the need to provide a Customs Comprehensive Guarantee unless one is specifically required as a condition of authorisation by HMRC, for example because a trade presents a payment risk.

Other import facilitations

Temporary Storage facilities that are not part of an existing inventory-linked community will be able to temporarily operate without an inventory linked system in place until 1 July 2021. They will still be required to have control over their facility and keep effective records.

Authorised parcel operators will be able to submit a bulked customs declaration for non-controlled goods with a value not exceeding £135.

Duty Deferment Accounts (DDAs) will be required for traders making delayed declarations (non-controlled goods) because delaying a customs declaration also means deferring the duty payable. A DDA belonging to either the trader or their agent must be in place at the point of submitting the supplementary declaration (which can be deferred up to six months from point of import). Traders importing controlled goods will need access to a DDA at point of import if they are using simplified declaration procedures. HMRC are introducing new rules that will allow most businesses to use duty deferment without needing to obtain a Customs Comprehensive Guarantee.

Businesses with Authorised Economic Operator (C) status will automatically be able to use duty deferment without providing a guarantee. Other compliant and solvent businesses will be able to defer customs duty, import VAT and/or excise duty up to £10,000 per month without needing to provide a guarantee. They will be able to obtain approval to defer amounts above this monthly limit if they have sufficient financial resources for the amount they’re seeking to defer. Duty deferment limits agreed with HMRC will not need to cover amounts included in delayed supplementary declarations. A new application process for duty deferment accounts has been available from early November 2020. Businesses who don’t meet these criteria will still be able to set up a DDA if they provide a guarantee.

Authorised Economic Operator (AEO) Status

Traders can apply for AEO status for moving goods between the UK and the EU. AEO status is an internationally recognised quality mark that shows a business’s role in the international supply chain is secure and has customs control procedures that meet UK and EU standards.

From 1 January 2021 to 30 June 2021, goods with pre-lodged temporary storage declarations may be imported via GB border locations without existing customs control systems and transported to a temporary storage facility (TSF) in GB provided they meet specific requirements. More information on the requirements for TSF operators and Community Systems Providers wishing to offer this service is available here. For GB border locations with existing customs control systems, movements in temporary storage will continue to be permitted under current requirements.

The ability to delay customs declarations in the period 1 January 2021 to 30 June 2021 only applies to non-controlled goods which have been in free circulation in the EU immediately prior to import. All rejected exports that haven’t entered free circulation in the EU cannot meet this condition and therefore must submit a customs declarations on their return to the UK.

Returned / Rejected Goods

From January 2021, businesses that export goods from GB to another country, (including the EU), may need to have those exported goods returned to the UK, or may have their goods rejected upon import to the EU.

In order to return such goods to GB, there are differing requirements depending on:

  • Whether the goods have been in free circulation in the UK prior to being exported,
  • Whether the goods were in free circulation in the EU prior to being returned,
  • Whether the goods have been rejected upon import to the EU,
  • And/or whether the goods are subject to additional requirements before they can be imported to GB, for example those goods featured in 1.2 additional requirements

Returned goods – Customs requirements

Customs import duty and VAT

Traders returning goods will be able to claim Returned Goods Relief (RGR) from customs import duty for goods that are exported from the UK and re-imported within three years of export, subject to certain conditions similar to those set out in existing guidance here. VAT relief will also apply, providing that any VAT due has previously been paid in the UK, and the importer/exporter is the same person. VAT relief will also be available from the 1 January 2021 for goods that are in free circulation in the UK on the 31 December 2020, providing that EU VAT has been paid. Such goods will be treated as domestic goods for customs purposes.

Businesses would normally apply for RGR in the same way as they do currently which means filling out a full Customs Declaration. In order to identify the goods as returning, the RGR Procedure Code should be used. This declaration should also reference the export declaration, and where the export declaration is not available, HMRC will consider alternative evidence which proves the goods were previously within the UK.

Delayed declarations and returned goods

During the period 1 January 2021 to 30 June 2021, traders have the ability to delay customs declarations if they are returning non-controlled goods that have been in free circulation in the EU immediately prior to their return. For those goods, traders can use delayed declarations procedures as detailed in delayed declarations and claim Returned Goods Relief from customs import duty (and VAT relief, if applicable) by completing their Entry in Declarants Records and subsequently submitting the supplementary declaration.

Controlled goods and goods rejected upon import into the EU Controlled goods (as listed in Annex C) and any rejected exports that have not entered free circulation in the EU cannot use delayed declarations

The trader must submit a full Customs Declaration on returning these goods to the UK. They will also need to meet any additional requirements as detailed below.

Returned / Rejected goods – Additional requirements

Some commodities are subject to additional regulatory requirements, such as those listed in additional requirements, and/or those goods that are included on the controlled goods list as detailed in Annex C. To return these goods to GB, a full customs declaration will be required on their return, and the relevant additional requirements will need to be met.

If you have a query about Brexit, please contact our team today at VAT@chiene.co.uk or visit our dedicated Brexit page for more information on how we can help you.