Guidance

The Taxation Cross-border Trade (Special Procedures Supplementary and General Provision) (EU Exit) Regulations 2020

Published 16 December 2020

Who is likely to be affected?

Businesses or individuals who import or export goods, including those businesses who import materials for manufacture, modification and other processing operations, as well as those who import certain goods for a temporary period.

General description of the measure

The measure includes a variety of different changes in relation to customs and excise duty. These include:

• simplified customs release arrangements for goods that have been imported without duty being paid, and which are used in Great Britain for certain purposes - this includes imported materials used in certain processing operations or certain goods imported for a temporary period only
• an update to rules concerning who is required to keep records in relation to the importation or exportation of goods
• provisions that will clarify how lower rates of duty agreed under the UK’s Free Trade Arrangements (FTAs) will apply
• provisions that will allow a future modification of rules about amending or withdrawing customs declarations submitted to HMRC before the goods in question are imported
• ensuring that certain goods entering the UK by train are treated in the same way as goods arriving by other forms of transport for the purposes of excise duty

Policy objective

To ensure that the UK maintains an effective system of customs controls at the end of the transition period, including simplifications of customs requirements where appropriate.

Background to the measure

Since the UK left the EU on 31 January 2020, EU customs legislation has continued to apply on a temporary basis during the transition period. This transition period ends on 31 December 2020, and at that time new UK legislation concerning customs and excise duty will take effect.

The changes in this instrument have not previously been announced but are part of wider-ranging work to ensure that the UK maintains an effective system of customs legislation at the end of the transition period. HMRC remains in frequent contact with importers, exporters and their representatives in relation to customs matters, including changes to the customs legislation.

Detailed proposal

Operative date

Parts of the instrument that relate to excise goods carried by train and duty rates for FTA goods will come into effect on the day after this instrument is made, and the record keeping amendments will come into effect on 31 December 2020. The remaining provisions will be brought into force using appointed day regulations.

Current law

The measures are made under, and in some cases amend, the Taxation (Cross-border Trade) Act 2018 (the TCTA). This Act, and the regulations made under it, will provide the basis of the UK’s rules on customs duty from the end of the transition period on 31 December.

The provisions in relation to special customs procedures will operate alongside rules set out in the Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018.

Provisions in relation to record-keeping requirements amend rules and definitions set out in the Customs (Records) (EU Exit) Regulations 2019.

The provision in relation to excise duty and goods carried by train will update amendments to the Customs and Excise Management Act 1979 (CEMA) made by the TCTA.

Proposed revisions

The changes in this instrument either broadly replicate simplified arrangements and facilitations which already apply in the UK, or concern technical matters and are designed to clarify requirements or to allow additional provision to be made in the future.

The measure includes simplified arrangements for certain goods that have been imported to the UK and declared for:

• an inward processing procedure - under which goods, such as raw materials or semi-manufactured goods, can be imported for use in a processing operation – with import duty only becoming due if goods are subsequently placed on the home market
• a temporary admission procedure, which allows for the temporary importation of goods with full or partial relief from import duty

While subject to these customs procedures, goods remain subject to customs control in relation to how they can be used. The measure provides that in certain circumstances goods can be released from this customs control, for use in the home market, without any requirement to make a further customs declaration or pay import duty.

The measure also includes miscellaneous other customs provisions, such as updates to record-keeping requirements that clarify that a person is required to retain certain customs records if they are subject to a ‘customs obligation’ – and updates the definition of customs obligation for that purpose. The change also clarifies how these record-keeping requirements apply in relation to records created before the end of the transition period.

In addition, the measure includes amendments to the TCTA to enable technical changes to be made to ensure that the duty rate charged on goods which are subject to the UK’s Free Trade Agreements will be the lower of the rate set out under the relevant trade agreement and the normal UK tariff rate.

Minor changes are also included to amend the TCTA in order to clarify when an importer may amend or withdraw a customs declaration which is required in advance of goods being imported, and amend the CEMA to clarify that goods on a train are included within provisions concerning the excise treatment of stores held on a vehicle entering the UK.

Summary of impacts

Exchequer impact (£m)

2020 to 2021	2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026
nil	nil	nil	nil	nil	nil

Once the UK transitions to its new relationship with the EU, costings, where required, will be subject to scrutiny by the Office for Budget Responsibility and included in their forecasts at a future fiscal event.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

It is not anticipated that there will be an impact on individuals, households and families as this measure only impacts businesses. There is expected to be no impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts on groups sharing protected characteristics.

Impact on business including civil society organisations

This measure is expected to have a negligible impact on business and civil society organisations. Since the changes broadly replicate simplifications available under EU legislation, or are technical amendments to clarify requirements, they are not expected to affect the overall burden on business. Businesses may incur negligible one-off costs which are likely to include familiarisation with the legislation. There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC.

Operational impact (£m) (HMRC or other)

There are not expected to be any additional costs to HMRC.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication and ongoing stakeholder engagement with trade bodies and other representative businesses.

Further advice

If you have any questions about this change, please contact James Holburn, by email: james.holburn@hmrc.gov.uk.

Declaration

The Rt Hon Jesse Norman MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.