Full customs controls introduced on 1 January 2022

HMRC has issued guidance reminding businesses to prepare for customs controls changes that come into effect on 1 January 2022.

Businesses that import goods into the UK will no longer be able to delay making import customs declarations under the Staged Customs Controls rules that have applied during 2021. Most businesses will have to make declarations and pay relevant Duty and VAT at the point of import.

Customs declarations

You will no longer be able to delay making import customs declarations under the Staged Customs Controls rules that have applied during 2021, as this simplification is coming to an end.  This means full Customs Declarations are required to be submitted, before goods are released into free circulation.  There is no longer a deferral period of 175 days to complete paperwork.

Some businesses already have a ‘Simplified Declarations’ authorisation from HMRC that allows their goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release.

However, if you want to apply to use Simplified Declarations, this process can take up to 60 calendar days to complete, you’ll also need to have a Duty Deferment Account in place.

Realistically, a new application made now is unlikely to be authorised before 1 January 2022, so businesses are encouraged to consider alternative arrangements to ensure that goods can be imported without unnecessary delays.

Border controls

Border controls mean that unless you hold a valid declaration for your goods and the goods are customs cleared, they will not be able to be released into circulation, and in most cases will not be able  Leave the point of entry to the UK (such as the port)

From 1 January 2022, physical checks on goods are reinstated, as the ‘light touch’ from HMRC comes to an end.

If you use a service such as a courier or freight forwarder to move your goods, you need to be clear about which party will make the declarations, and if it’s your agent, you will need to understand what information they need from you to do this on your behalf.

Rules of origin – for imports and exports

The UK’s deal with the EU, (the Trade and Cooperation Agreement (‘TCA’)), means that the goods you import or export may benefit from a reduced rate of Customs Duty (tariff preference). To use this, you need proof that the goods you:

• import from the EU originate there
• export to the EU originate in the UK

UK and EU importers can claim tariff preference if they have one of the following proofs of origin:

• a statement on origin – this must be made out by the exporter to confirm that the product originates in the UK or EU
• the importer’s knowledge – this option allows the importer to claim tariff preference based on their own knowledge of where the goods they’re importing originate from

If you export goods to the EU and you provide the EU importer with a statement on origin certifying that the goods are ‘origin UK’, you may also need to have a supplier declaration in place. These are needed to confirm the origin of the goods you’re exporting when the manufacture alone is not enough to meet the product specific rules of origin.

If you cannot provide a supplier declaration to confirm the UK origin of goods you exported to the EU between 1 January and 31 December 2021, you must let your customer know.

If you’re subject to a request for verification by EU customs authorities and you can’t provide this supporting evidence, your EU customer will be liable to pay the full (non-preferential) rate of Customs Duty and HMRC may also charge you a penalty.

Even if goods you import from the EU are eligible for tariff preference, normal import VAT rules will still apply.

What does this mean for postponed Import VAT accounting (PIVA)?

If you’re a VAT-registered importer, you can continue to use PIVA on all customs declarations that require you to account for import VAT, including supplementary declarations, except when HMRC have told you otherwise.

It’s important that you notify your import agent (or the party that completes your import paperwork) that you wish to account for import VAT using PIVA.  If the import documentation doesn’t show ‘G’ in Box 47 ‘e’ then another method of payment will be required (such as deferment account, or paying in full at the border).

Get in touch

Cowgills is a leading independent firm of Chartered Accountants and Business Advisors based in the North West of England – from Greater Manchester to Liverpool. We use our sector experience to deliver tailored financial solutions and support for businesses.

Please do get in touch with our team if you require advice on this subject.