Open consultation

Low Value Import Reform - Consultation Launch Event Transcript

Updated 9 January 2026

0:05
Fantastic.

0:06
Well, we’re one minute past 2:00 in the afternoon.

0:11
Thanks everybody for joining us this afternoon.

0:15
Today is all about low value imports and the consultation that was published last week.

0:22
I hope a week on from the budget you’ve all had an opportunity to fully digest it.

0:29
I’m Lloyd Mulkerrins, I work in the Treasury’s customs unit on low value imports and today myself, alongside Lauren Atkinson from HMRC’s low Value Imports customs team and Will Perera from HMRC’s VAT team.

0:47
We’re going to run you through the consultation.

0:51
We recognize that what we set out in the document that was published are a big set of reforms which include a lot of complexity.

0:58
And so today is really an opportunity for you to hear from us about the consultation, what we’ve set out, how we envisage the arrangements working, clarify some of those initial questions that you have sent across to us.

1:16
And really today is the start of what I imagine is going to be a very busy period of stakeholder engagement for us, which is really the point of this consultation that we’ve published and what the next few months have ahead for us.

1:31
So a couple of bits of housekeeping.

1:33
The session’s going to run for about an hour.

1:35
We’ll look to wrap up at about 3:00.

1:38
The session is also being recorded.

1:41
So what we’re going to try and do is put a copy of this on the gov.uk page where the consultation is in the next week or so.

1:49
That’ll be available for you all to go back and look at if you need to.

1:54
And some of you have also kindly submitted questions ahead of today’s session.

1:59
Lauren’s going to cover some of the key themes that have been coming out of those questions towards the end of the session.

2:07
So in the next 55 minutes or so, we’re going to try and cover three things.

2:11
We’ll do a bit of context and scene setting on how we got to last week’s announcement and the consultation that was published.

2:19
The three of us will then walk you through the consultation and the input that we are looking for from you all.

2:27
And then we’ll touch on what our stakeholder engagement plans look like for this three-month period because I’m sure lots of you are interested to know what our plans are and to get involved in that stakeholder engagement as well.

2:40
So on the next slide, if I start off with a bit of the context and scene setting.

2:47
Last week at the Budget, the Chancellor announced that we are doing two things.

2:53
The first is removing the customs duty relief that is currently in place on low value imports and the second was publishing a technical consultation on the new set of customs arrangements that are going to apply to these goods.

3:09
The timelines that we set out were that these changes will be introduced by March 2029 at the latest.

3:18
Now last week announcements comes off the back of quite a lot of work that has been taking place on low value imports.

3:24
Back in April, the Chancellor announced an initial review of the customs treatment of these goods.

3:31
That led to a very intensive period of stakeholder engagement, which I’m sure many of you were involved in and ministers also took part in, and that concluded that these current arrangements that we’ve got in place on low value imports need to be reformed.

3:49
Now, we in the UK aren’t alone in making these changes or indeed announcing them.

3:55
As I’m sure many of you are aware.

3:58
Other trading partners of ours, such as the US and the EU have also been on a similar journey.

4:05
The US have implemented reforms to their equivalent customs arrangements and the EU have announced intentions to also do something similar.

4:16
This consultation is really the next step in the ongoing process.

4:20
We had April and the engagement, we had last week’s announcement, and now we’re moving on to actually policy design what the new customs arrangements looks like.

4:30
And all of you in industry are really important to helping us both design those arrangements so that they can actually work in practice and also implement them because we recognise that there are going to be a number of changes that need to happen on your side as well.

4:44
So hopefully this session this afternoon gives you a really clear understanding of elements of our proposals and what those next steps look like.

4:53
I’m going to hand over to Lauren who’s going to dive into chapter one of the consultation, and I’ll be back online shortly.

5:03
Thank you very much, Lloyd, for setting out the wider context.

5:06
And good afternoon everyone.

5:07
I’m Lauren Atkinson, I’m the policy lead for low value import reform in HMRC.

5:13
And as Lloyd just said, I’ll now be taking you through the first few chapters of the consultation document on the introduction, the current customs arrangements and the new arrangements that are being proposed so that you have a clearer understanding of what’s in scope and what’s excluded, as well as the key areas where we’re seeking your input.

5:32
So to start with, you might be wondering what are low value imports?

5:37
Low value imports or LVIs are consignments of goods valued at £135 or less sent from overseas to recipients in the UK.

5:47
At the moment, these consignments benefit from a customs duty relief.

5:51
That means that customs duty is not due on these goods.

5:54
Since 2021 VAT has been due on all imports and for low value imports VAT is handled either by the seller or the marketplace for consumer sales or by the business customer for business-to-business transactions.

6:09
There is also a separate relief for gifts.

6:11
So non-commercial consignments valued at £39 or less sent between private individuals are exempt from duty and VAT the LVI duty to relief and data requirements were put in place to prevent disproportionate burdens and costs falling on the government, traders and individuals moving goods into the UK.

6:32
In the past the number of low value inputs coming into the UK was small because it wasn’t very easy to buy and bring in individual low value items.

6:41
So offering a relief on these goods made sense because the trade was low in value and volume.

6:48
However, in recent years volumes have increased because of increasing popularity of e-commerce, new business models and changing consumer behaviour.

6:57
And so it’s right that we re-evaluate whether the existing arrangements are still fit for purpose.

7:03
HMRC analysis based on sample data estimates that 600 million consignments were brought in imported using the bulk import reduced data set in 2024, representing a more than threefold increase compared to 2021.

7:20
Consequently, the customs processes in place are now being used at a scale it was never intended for.

7:27
And so, as Lloyd has set out, the consultation is the next step following the Chancellor’s announcement that will be removing the customs duty relief and collecting customs duty on these goods from March 2029 at the latest.

7:40
But of course, we want to design a system that works for businesses, consumers and government.

7:45
So with that in mind, I’ll now start talking about how LVIs are currently declared and what will change in the future.

7:53
So if we can move on to the next slide, please.

7:56
Thank you.

7:57
And so currently LVIs can be declared using the standard import customs processes or if authorized by HMRC, the Bulk Import Reduced Data set, also known as BIRDS, which allows multiple LVIs to be declared on a single simplified customs declaration.

8:16
BIRDS is a bespoke declaration for LVIs and most parcel operators and customs intermediaries use BIRDS because it is quicker and easier than submitting a full customs declaration for each of these goods.

8:31
Most apologies 1 moment.

8:35
But with the removal of the £135 duty relief, LVIs will be subject to customs duty just like other imports and therefore it’s necessary for us to consider whether the existing customs arrangements are fit for purpose.

8:50
The current BIRDS declaration does not enable HMRC to collect data on LVIs and HMRC needs to be able to collect LVI item level data on LVIs to support compliance activity in the same way that it does for other types of imports.

9:05
And so as a result, the simplified BIRDS declaration will be replaced by a new set of LVI customs arrangements to ensure all goods are appropriately controlled.

9:15
These new customs arrangements will apply to most consignments of goods valued at £135 or less sent by a business from overseas to a UK business or consumer.

9:29
They will not apply to parcels sent from one private individual to another and consumer to consumer.

9:34
Movements will continue to follow the standard import process and relief for non-commercial consignments valued at £39 or less will remain in place.

9:50
There are some exclusions to be aware of so some consignments of goods will need to use the standard import customs arrangements.

9:58
These include consignments of goods above £135 in value, consignments of goods subject to non ad valorem tariff rates, consignments of goods that need a license or certificate, goods subject to excise duty, and goods subject as trade defence measures.

10:19
And even if your goods are under or your consignments of goods are under £135, you might still want to or need to use the standard arrangements in some circumstances.

10:30
For example, if you’re claiming A preferential duty rate, using a customs relief, or moving goods under a special procedure, the standard process is required.

10:42
That’s because these cases need more detailed data than that goes beyond what the new LVI system will be designed to handle.

10:50
So to summarize, the new arrangements are for business to business and business to consumer imports, consumer to consumer parcels and certain cases of B to B and B to C imports will continue to move through standard processes.

11:07
We are seeking your views from on whether the consignments you import into the UK are eligible for these arrangements based on these circumstances or if they fall into one of the excluded categories.

11:18
So if there are things in the excluded list that you think should be eligible, we’d really like to hear from you.

11:24
And that is covered in question nine of the consultation.

11:28
And your feedback on this question will help us to ensure that the new system that we’re designing works for the majority of LVIs being moved into the UK.

11:37
Let’s now move on to Chapter 3, which sets out in more detail what the new customs arrangements will be once the relief is removed.

11:45
So this chapter covers quite a lot of details, so I’ll go through it slowly.

11:50
The main kind of things that we’re going to cover here are who will be responsible for paying customs duty, how and when those payments will be made, the new requirement for fiscal representatives for non-established sellers and the new data requirements for these imports.

12:05
It also sets out at the start of the chapter, with the exceptions of the exclusions that I’ve just talked through, that the government is minded to make it mandatory to use the new LVI customs arrangements for goods valued at £135 or less.

12:20
To give clarity and consistency to the application of LVI customs arrangements, we’re seeking your views on the opportunities, challenges and impacts of implementing these arrangements on a mandatory basis.

12:33
And as I mentioned, the government is maintaining the existing relief of non-commercial consignment sent by 1 private individual to another valued at £39 or less.

12:43
And we’re interested in hearing how you expect the implementation of the new arrangements to impact the use of the £39 relief.

12:51
So I’ll now move on to talk through each of the key elements in turn, starting first with the payment of duty.

12:57
So, under the new customs arrangements, the responsibility for paying customs duty will shift.

13:04
Instead of parcel operators or intermediaries, it will be the sellers and online marketplaces who are responsible for paying the customs duty to HMRC.

13:13
This will mean that sellers and online marketplaces will need to register for the new LVI system.

13:19
There are a few reasons why the government has chosen to make sellers responsible for the payment of customs duty.

13:26
Online marketplaces and sellers are already responsible for collecting VAT at point of sale for LVIs and we believe these actors hold the most accurate data about the goods, including the item description and value.

13:39
Consolidating responsibility for LVI taxes arising at the border will also have benefits for consumers in that they will know the full cost of the item, including all taxes at the time of purchase.

13:52
And in instances where goods are sold through an online marketplace, the government will make the operator of the online marketplace responsible instead of the seller.

14:02
As part of this consultation, we have confirmed that payments of customs duty to HMRC will be required on a quarterly basis.

14:10
We recognize that often these payments are made using third party software and so we will ensure that these changes can be integrated too, so the process is as seamless as possible.

14:21
If you are a seller or marketplace, you’ll need to register for the new arrangements and ensure that you can pay customs duty each quarter.

14:28
And if you are a software provider, there might be opportunities for you to support these payments.

14:34
We’ve included three questions in the consultation on the topic of payment process aimed at sellers and online marketplaces, software providers and intermediaries and these are covered in questions 13, 14 and 15 of the consultation.

14:50
We’d like to know how you will facilitate quarterly customs duty payments and whether you would use third party software to make payments or if you’d require a new solution.

15:01
If we could move on to the next slide, please.

15:05
Thank you.

15:06
So the next section of this chapter covers the requirement for a fiscal representative.

15:13
A key principle of EU KS customs regime is that importers either directly or indirectly have a UK presence and having an actor with a UK presence under the new LVI customs arrangements could improve HMRCs ability to take compliance action where necessary.

15:31
For businesses based outside the UK, the government is minded to mandate that you’ll need to appoint a UK based fiscal representative in order to use the new LVI customs arrangements.

15:43
The fiscal representative would act in an intermediary between the non-established business and HMRC and they would share liability for customs debts and possibly VAT debts too.

15:54
And as I just said, the aim is to make sure that there’s always someone in the UK who HMRC can contact if there are payment issues or instances of non-compliance.

16:05
The UK based businesses, ie one with a permanent UK address and/ or is incorporated at company’s house.

16:13
There’s no need to appoint a fiscal representative, but if you are a customs intermediary or similar who is established in the UK, you might be interested in acting as a fiscal representative for sellers who aren’t established in the UK.

16:26
This requirement is designed to strengthen compliance, but we also recognize that this could mean extra costs to business models.

16:34
So we’re really keen to hear your views.

16:36
In particular, we would like to know from sellers and online marketplaces how you would meet this requirement if it were mandated, ie whether you would appoint A fiscal representative or if you would look to be established, have a physical presence in the UK and if the former, how much you estimate it would cost.

16:55
We’re also interested in hearing from those who’d be prepared to act as a fiscal representative and these questions are covered in questions 16/17/18 of the consultation.

17:07
If we could just move on to the next slide please.

17:11
Thank you.

17:12
So the final section of the chapter focuses on data requirements.

17:17
As I set out earlier, currently most low value imports are declared using birds, which allows authorized parcel operators and intermediaries to submit bulk declarations with limited data.

17:29
This was designed for efficiency at a time where volumes were lower and the nature of trade was different, but it means that HMRC doesn’t receive detailed information about LVIs and so under the new arrangements this will change.

17:44
Once the LVI relief is removed, HMRC will require item level data on low value imports to support compliance activity.

17:52
In the same way for most other types of imports, the government is considering what data should be collected and from whom, while ensuring that this is proportionate and deliverable.

18:03
Some examples of the types of item level data being considered include goods description, value weight, consignee and consignor.

18:13
And the government’s belief is that sellers and operators of online marketplaces typically hold the most accurate data on LVIs and therefore it follows that they’d be best placed to submit the item level data to satisfy customs requirements.

18:27
Collecting data directly from the source is expected to improve the quality of data and reduce the risk of data degradation as consignments go through the supply chain.

18:38
Under this model, additional data from parcel operators, customs intermediaries and carriers will be needed as a supplement, such as countries of routing, mode of transport at the border, and expected date and time of arrival.

18:52
This data would be needed for customs clearance and security purposes.

18:57
Given the vast majority of LVIs will no longer be declared using standard import procedures or birds, there will need to be a new mechanism for goods to be presented to customs on import as well as risked and cleared.

19:11
One option is for HMRC to issue a reference number to the actors submitting the data.

19:17
This reference could then be used to generate a good movement reference known as also known as the GMR at roll on and roll off ports or linked to an inventory record at other locations.

19:29
We recognize that placing additional data requirements on sellers and operators of online marketplaces could increase costs and the administrative burden of importing low value imports into the UK, particularly for smaller businesses.

19:41
And we also know that industry already supplies data for a range of purposes.

19:46
So we’ll aim to avoid unnecessary duplication of data requirements when developing the new customs arrangements.

19:55
And that’s why the consultation is seeking views on what item level data is held in what format and how easy it would be to share with HMRC.

20:04
A new system will be established to enable the sharing of this data.

20:08
And we’re committed to working with industry to identify the best way to implement these requirements.

20:15
So in this final section of the chapter, we include a number of questions for sellers and online marketplaces, parcel operators, customs intermediaries, carriers and CSPs from questions 19 to 26 of the consultation document.

20:30
These are summarized on this slide, but I recognise that this just scratches the surface of arguably one of the most complex and technical parts of the consultation.

20:39
So we’d like to progress the detail of these requirements and discussions with key stakeholders to allow us to really understand what item level data is held and what the best way is for it to be shared with government.

20:53
I’m aware that I’ve talked through an awful lot of detail there.

20:56
So before handing over to Lloyd, I just wanted to take a moment to bring together how all of these different elements will fit together.

21:03
So if we could just move on to the next slide.

21:06
Thank you.

21:07
This is an illustrative summary of which is of course subject to your views, but hopefully helpful to see at a high level how all of this comes together.

21:16
So I’ll just quickly talk you through it.

21:19
So firstly, sellers or operators of online marketplaces will need to register for the new LVI service.

21:25
Once registered, they’ll receive an authorization number from HMRC.

21:30
Sellers will then submit detailed item level data about their consignments to HMRC.

21:36
This could include information such as a good description value, weight and details of the consignor and consignee.

21:47
HMRC will then process this data and issue a reference number for each submission.

21:52
The seller or marketplace then shares this reference number with the parcel operator, customs intermediary or carrier, and these actors then use the reference number to submit shipment level data to HMRC, which covers details needed for customs clearance and security.

22:08
The reference numbers have been submitted into the relevant border systems, so either GVMS for certain locations or the community system provided inventory systems for temporary storage locations.

22:20
And then HMRC will risk assess the data and if any issues are identified, goods may be held at the board for further checks.

22:27
But once the goods clear customs, they’re delivered to the buyer and sellers and marketplaces will pay customs duties on a quarterly basis to HMRC.

22:37
I’ll now hand over to Lloyd, who’s going to take you through the next sections of the consultation.

22:43
Thanks so much, Lauren.

22:45
Let’s do a quick stock take before I get into Chapter 4 and five of the consultation.

22:51
So, so far, we’ve confirmed the removal of the LVI relief, the establishment of a new system and customs arrangements for low value imports where Lauren set out some of the instances where goods can and cannot move through the new system.

23:10
The actors that we expect to pay the customs duty and when that money will need to be paid to HMRC.

23:19
The potential need for a fiscal representation or representative for those businesses with no presence in the UK and that we will be collecting item level data on low value imports and we’re interested in understanding a bit more about the types of data that you hold that could potentially be of benefit.

23:42
So what I’m going to run through on these next two slides is the tariff treatment and the options that we have on low value imports there that we’re consulting on and then the potential for an additional fee on low value imports as well.

23:58
So if I start with tariffs, once the low value imports relief is removed, low value imports will become subject to the tariffs and the rates that are set out in UKs global tariff schedule, which we often refer to as UKGT.

24:16
Now, in order to use these tariff rates, companies, businesses are going to have to follow the classification process to work out the 10-digit commodity code of the low value imports that they’re looking to import into the UK.

24:35
UKGT the tariff schedules and the rates that are set out in there will always be available for traders to use for low value imports if they choose to, as it is today for those moving goods through CDS.

24:48
Now one of the things that we recognise is that process of classifying goods, identifying the right 10-digit commodity code can be burdensome for some businesses, particularly those trading low value goods.

25:02
And so one of the things that we are considering is whether to introduce an optional simplified tariff schedule that could be used as part of the low value customs arrangements.

25:13
And just to stress, this simplified schedule would only be available as part of the low value import customs arrangements.

25:22
Now what the consultation sets out is that there are two illustrative ways that the UK global tariff chapters could be grouped into different buckets.

25:33
In effect, what we’ve got to try and do is take the 97 UKGT chapters and the thousands of commodity codes that are there and push them into a handful of tariff rates for what we refer to in the consultation as buckets.

25:52
The two ideas, illustrative ways that are set out in the consultation are just that, they’re illustrative.

25:56
What we’re really keen to understand from stakeholders is whether there are other ways that it could be done or what the benefits and drawbacks of those proposals that we’ve set out are.

26:09
Now earlier on in this presentation, Lauren set out the list of exclusions that will apply in the circumstances in which the low value import customs arrangements cannot be used.

26:21
And so as a result of these exclusions and circumstances where goods cannot move through the new arrangements, some UKGT chapters have not been assigned to the buckets as set out in the consultation.

26:37
So for example, a product that has a non ad valorem tariff will not be able to move through the new LVI customs arrangements.

26:47
So that means the UKGT chapter, such as Chapter 1, which is all about live animals where tariff rates are calculated by weight of the good, They’re not going to be able to use the customs arrangements because we’ve got an exclusion in place for goods which are subject to a non ad valorem tariff.

27:08
What we set out in the consultation is a full table of all of the chapters that we have not assigned the buckets.

27:17
Then the final point worth stressing on bucket design is around the goods which have a 0% tariff rate as set out in UKGT, and there are two scenarios worth covering here.

27:33
The first is for a UKGT chapter where every single product in that chapter has a 0% tariff rate.

27:43
That chapter will have been assigned to a 0% bucket in the illustrative examples that we’ve set out in the consultation.

27:53
Now if your good is in a bucket with a tariff rate that is greater than 0, but the UKGT tariff rate for that product is 0%.

28:03
If you want to access that 0% UKGT rate, then you as a business and traders are going to have to classify the good to a 10-digit commodity code to access the 0% tariff rate.

28:18
The middle column of this slide really just starts to explain our theory behind how we go from 97 UKGT chapters and thousands of commodity codes with different tariff rates to looking to assigning these goods in totally a handful of buckets, which we think is roughly the number which we’ll need to condense the schedule down to, for it to be of benefit to stakeholders.

28:44
So finally on tariff treatment, what are we looking for?

28:47
Well, we want to understand from stakeholders your ability and traders ability to classify to UKGT.

28:54
As I mentioned, this can be a burdensome process, but do you as a trader find it easy or is it challenging?

29:02
And what are the time and costs associated with full classification today?

29:07
And then the second key thing is about what’s the actual utility of a simplified tariff schedule.

29:15
We as a government will only introduce a simplified tariff schedule if there is a genuine need.

29:22
And so from the tariff treatment perspective, this consultation is really important for you as stakeholders to feed in the views if you feel like you need this benefit in order to continue trading low value imports into the UK.

29:36
We want to understand what would the time and the cost impact of using this simplified tariff schedule be versus UKGT?

29:43
How much time does it save you?

29:45
What do those costs look like?

29:47
And equally, although we’ve set out two illustrative simplified tariff schedules in the consultation, are there better ways that the buckets could be designed with different rates, with different methodology, with a different number of buckets?

30:02
And for all of these areas, as much quantitative evidence as you have to support your arguments would be really helpful so that we can properly assess that and advise ministers accordingly.

30:15
So that closes the tariff treatment chapter of the consultation.

30:21
I’ll now turn to Chapter 5, which covers the potential for an additional fee on low value imports.

30:28
So as Lauren covered already, the HMRC analysis shows that hundreds of millions of low value import consignments enter the UK every year, over a million a day.

30:39
And the sheer volume of these goods that are crossing the border posed unique administrative challenges for us as government, for HMRC and Border Force in particular.

30:50
And so in recognition of this, we’re considering the introduction of an additional fee on low value imports.

30:58
And this fee would be in addition to the tariffs at low value imports are subject to, not in place of that.

31:07
Now if we were to introduce a fee, what we’d make sure we were doing is limiting the cost, the price of this fee to only cover the administrative costs to HMRC and Border Force to maintain the relevant low value import systems.

31:24
Inspect low value imports and the like as there are a range of compliance approaches under consideration, what the resourcing requirements are, what the systems look like that we are still considering.

31:38
The consultation doesn’t set out the exact fee that we would be looking to levy.

31:45
What the consultation does do is it sets out three different ways that the fee could be designed.

31:51
What we’ve thought about is designing a per consignment fee of X amount.

31:57
So regardless the value of that consignment or the number of items in that consignment, a per consignment fee would apply.

32:08
We’ve then also looked at whether we could potentially apply a per item fee.

32:13
So if there are three items in a consignment, there would be a fee for each of those three items.

32:19
And we’ve also thought about whether we could have a per product fee.

32:23
So for every unique product that is in an LVI consignment, maybe it’s two T-shirts and a pair of shorts, that’s two different products.

32:32
And so we could look to charge a fee on low value imports that way.

32:38
So as part of the consultation, we’re keen to hear stakeholder views on a couple of different areas.

32:44
One is quite a big question on the concept and implementation of an additional fee on low value imports.

32:52
Should we be looking to introduce this and why?

32:55
How practically could this be done?

32:59
And then secondly, what the potential impacts of an additional fee on low value imports are?

33:05
Would it impact the customs procedures that stakeholders use?

33:08
Would it impact the business models that are currently in place and at what fee level, like at what price the stakeholders start considering changes, whether it’s different customs procedures and business models or not trading into the UK at all.

33:27
And equally, as I mentioned as part of the tariff chapter, much quantitative evidence as possible to support your views would be extremely welcome too.

33:37
The final part is then on other ways that the fee could be designed.

33:41
I’ve set out the three ways that the consultation sets out fees potentially being designed and the consultation also notes that we will not be introducing a fee on an ad valorem basis, but there are other ways that the government could potentially do this.

33:56
We’re really keen for your thoughts.

33:59
I’ll finish there.

34:00
I’m going to hand over to Will in HMRC’s VAT team, who’s going to talk us through Chapter 6 of the consultation on VAT.

34:11
Thanks Very much Lloyd and hello everyone.

34:14
My name is Will Perera and I’m one of the HMRC VAT policy leads for low value imports.

34:19
Today I’ll be covering the VAT chapter of the consultation, now alongside the customs treatment VAT is a key component of UKs approach to low value imports.

34:30
Chapter 6 of the consultation document focuses on the VAT treatment of low value imports and seeks views from stakeholders on some of the proposals under consideration, which aim to simplify compliance and strengthen fairness across the system, ensuring businesses can operate with confidence.

34:48
I’ll first provide some background to the existing VAT model before moving on to the consultation.

34:54
So as Lauren mentioned earlier, from January 2021 VAT is due on imported goods of all values.

35:01
Following the removal of low value consignment Relief, VAT collection on low value imports has shifted away from the border to the point of sale and is accounted for through a VAT return either by the seller or online marketplace for B to C supplies or by the VAT registered business customer for B to B supplies.

35:21
Consignments of any value containing non commercial or excise goods are excluded from these rules and continue to be subject to import.

35:29
VAT collection at the border and No  VAT is due on imported gifts valued up to £39 sent between private individuals.

35:39
Now moving on to the consultation.

35:41
If we could have the next slide please.

35:50
Thank you.

35:51
So the 2021 BAC reforms were made possible in part because of the existing customs arrangements for low value imports and the complementary interaction between the customs and VAT systems in the treatment of these goods.

36:05
With the decision to remove the customs duty relief and reform customs arrangements for low value imports, the government is considering how new processes would interact with the VAT system and whether any changes should be made.

36:18
Under the proposed customs arrangements, sellers and online marketplaces will be responsible for collecting customs duty and accounting for it through a new low value import system.

36:29
One proposal under consideration is whether VAT or low value imports should continue to be collected through the VAT return or whether it should be collected alongside customs duty and integrated within the new low value import system.

36:43
While the current collection mechanism operates well and has been a broad success, there are potential benefits that may be realised through integration by having a single unified system for accounting for both customs duty and VAT on low value imports.

37:00
In addition to this, as Lauren covered earlier, the government is minded to mandate the appointment of a fiscal representative for sellers and online marketplaces without a physical presence in the UK.

37:11
While this fiscal representative would be held jointly and severally liable for customs debts incurred by the business, the government is considering whether this joint and several liability should be extended to include their VAT debts arising from low value imports too.

37:28
Another proposal under consideration is the VAT treatment for low value imports cleared into the UK using standard import customs declarations.

37:37
Currently, the way in which low value imports are cleared into the UK, whether by a BIRDS declaration or a standard import customs declaration, is uncoupled from the VAT treatment VAT is to be accounted for through the VAT return, unless specific exceptions apply.

37:53
This approach operates effectively in part because there are no import duties collected on importation for these goods.

38:00
Under the current proposals, certain goods covered in Chapter 2 and set out by Lauren earlier would be excluded from the new low value import customs arrangements.

38:10
While some goods within the proposed exclusion list are currently subject to VAT collection on importation, others are chargeable to VAT at the point of sale.

38:19
Under the new arrangements, excluded goods would need to be cleared by a standard import customs declaration with any customs duty collected on importation.

38:28
This could reduce the benefit of VAT collection at the point of sale.

38:33
The Government is therefore considering whether for the relevant excluded goods VAT should continue to be chargeable at the point of sale, or whether that should be collected alongside customs duty on importation.

38:45
The Government welcomes views from stakeholders on the potential impacts of these proposals in relation to VAT.

38:52
We are particularly interested in your views on how the new customs processes might affect VAT collection compliance burdens and the overall experience for business and consumers.

39:05
These are captured by questions 41 through 46 of the consultation.

39:10
That covers Chapter 6.

39:11
On VAT, I’ll now hand back to Lauren.

39:15
Thank you.

39:15
Will, if we could move on to the next slide, please.

39:20
Thank you.

39:21
So we’ve now covered each of the main areas of the consultation.

39:26
So I quickly wanted to recap the main decisions that the government have taken and the areas where we particularly welcome your views.

39:35
And this is set out in the in the table on the slide.

39:38
So if I just run through first, what’s already been decided?

39:42
So the government has decided to remove the customs duty relief for low value imports and introduce the new customs arrangements by March 2029 at the latest.

39:53
The relief that I talked about earlier on, C to C goods valued at £39 or less will be maintained.

40:02
The government has decided that sellers and operators of online marketplaces will be responsible for paying customs duty to HMRC and this will be paid on a quarterly basis.

40:11
And the government has decided to collect item level data on low value goods.

40:16
The main areas of consultation are as follows.

40:20
The government is minded to make it mandatory for the new LVI customs arrangements to go through the new LVI system for consignments of goods valued at £135 or less.

40:33
The government is minded to mandate that sells and operators of online marketplaces that do not have a physical presence in the UK.

40:40
Appoint A fiscal representative that assumes joint and several liability for debts.

40:45
We are considering what data should be collected and from who.

40:48
We are considering an optional simplified tariff schedule.

40:52
We are considering the introduction of a fee on LVIs, and we are considering changes to the operation of VAT to reflect the changes to LVI customs arrangements and ensure cohesion across the two areas.

41:04
So hopefully that helps to summarize the changes that are set out in the consultation and particularly the areas where we’d really, really welcome your views on how we can operationalize these changes.

41:15
I’ll now move on to the next slide, please, which addresses a few of the key questions that we received ahead of today’s event.

41:23
I’m aware that this doesn’t cover all of the questions we’ve received, but hopefully following today’s event, we’ve been able to address the majority of your questions through the discussion today.

41:33
Some of the frequent questions we’ve been asked are on this slide here, so I’ll just run through each of them in turn.

41:40
So when will the changes be implemented?

41:42
The new changes will be in place by March 2029 at the latest.

41:47
We are exploring whether some elements can be brought in sooner provided that we can maintain flow at the border.

41:53
Will low value parcels still be imported in bulk? As we’ve discussed today, the authorization for the bulk import reduced data set or birds will be removed for B to B and B to C goods.

42:08
We are consulting on as part of this whether there’s scope to consolidate reference numbers to reduce the number of declarations and provide shipment level data where that is possible and why are some goods excluded from the LVI system.

42:23
So given the high volumes of LVI trade, we believe the LVIs continue to require a different approach to the standard import processes and the new LVI system isn’t intended to replicate a full customs declaration for low value goods.

42:38
Claiming preference or using special procedures requires additional data which goes beyond the scope of the new system.

42:44
So for these instances, a full customs declaration will be necessary.

42:49
So hopefully that helps to address some of the questions that have been coming up.

42:52
But if you have further questions, we do have a mailbox on the next slide.

42:57
So you are welcome to post your questions through there.

43:00
If we could just move on to the next slide, I’m now going to kind of wrap up today’s discussion.

43:07
So thank you so much for attending today.

43:11
If I just talk quickly about what our next steps are.

43:13
So we will of course continue to engage with you through the consultation process.

43:20
We are planning on holding further discussions with different groups of stakeholders in the new year.

43:26
In the meantime, we’d also welcome any written feedback you’d like to share with us either as part of your consultation response or separately.

43:33
The mailbox for sharing feedback is lowvalueimports@hmtreasury.gov.uk.

43:40
Many of you hopefully do already have that mailbox and it is also included on our gov.uk page, so hopefully you can find it.

43:47
But, as Lloyd said at the start, this will be recorded as well.

43:51
So you will be able to refer back to this to this meeting as and when you wish.

43:57
And just to kind of give a sense of what the next steps are post consultation.

44:01
So once the consultation closes in March, we will then be confirming the final policy positions and submitting and publishing a summary of responses.

44:11
So that’s kind of when you can expect to sort of hear something following the consultation.

44:16
And I suppose all that’s left for me to really say is thank you so much for joining today’s event.

44:22
We, we really look forward to hearing your views and really appreciate the engagement that we’ve had so far.

44:26
So thank you so much.

44:28
And we’re really looking forward to continuing the conversation on both the design and the implementation of these changes in the weeks and months ahead.

44:35
So thank you so much and we will be in touch.