Policy paper

The Customs (Miscellaneous Amendments) Regulations 2022

Published 9 June 2022

Who is likely to be affected

Businesses bringing goods to Great Britain (England, Scotland and Wales) under customs transit arrangements and persons authorised by HMRC to receive these goods at their own premises (authorised consignees).

Businesses who choose to keep imported goods in a customs free zone in Great Britain.

General description of the measure

The measure establishes new simplified arrangements under which certain persons approved by HM Revenue and Customs (HMRC) to receive goods at the end of a cross-border customs transit movement (authorised consignees) can temporarily store those goods at their approved premises for a limited period before the goods are placed under another customs procedure or exported.

The measure also modifies the rules concerning the use of simplified customs declaration arrangements, by enabling these simplified arrangements to be used by authorised persons declaring imported goods to be kept in a customs free zone also known as a Freeport customs site (a special customs area within a Freeport).

Policy objective

In relation to customs transit arrangements, the policy objective is to reduce costs for authorised consignees, by simplifying the rules that apply where goods subject to customs controls are stored at their premises at the end of a cross-border transit movement.

This could enable more businesses importing goods using customs transit arrangements to complete customs formalities at an authorised consignee’s premises, rather than at the place where the goods arrive in the UK. This may, in turn, contribute to maintaining the flow of goods at the border and reduce the need for Government infrastructure at certain ports.

In relation to customs free zones, the policy objective is to enable traders authorised to use simplified customs declaration arrangements to place goods under a free zone customs procedure using these simplified arrangements. It also waives the requirement to provide supplementary information, which usually applies to declarations made under these simplified arrangements.

Background to the measure

Authorised consignees are persons approved by HMRC to receive goods imported under the common transit procedure at an authorised place (usually away from the border), in order to end the transit procedure.

A person approved as an authorised consignee must currently make sure that their premises are authorised as an external temporary storage facility (ETSF), where imported goods can be stored for up to 90 days after the common transit procedure has ended. Since 1 January 2022, HMRC has required all external temporary storage facilities to be inventory linked (which means that they must have software that integrates with HMRC’s systems to control and monitor goods moving through temporary storage facilities).

In the case of premises operated by authorised consignees, this requirement may prove disproportionate to the compliance risk it is designed to address as many authorised consignees rarely store goods for any significant period, after a common transit procedure has ended at their premises.

During the summer of 2021, HMRC conducted an informal consultation on a policy proposal to relax temporary storage requirements for goods stored for a limited period after a common transit procedure has ended at an authorised consignee’s premises.

HMRC policy officials spoke to and received written responses from 17 respondents which included a wide range of trade bodies and businesses from sectors including logistics and freight forwarders, fast parcel operators, motor manufacturing, food retailers and a community service provider. The responses received were in favour of the relaxing these temporary storage requirements and the consultation helped to shape the policy framework.

HMRC announced on 25 November 2021 that authorised consignees would be permitted to temporarily store goods at an authorised premises for up to 6 calendar days after a common transit procedure has ended, without the need for that premises to be subject to the full range of external temporary storage facility conditions and requirements, providing those goods are placed under a customs procedure or exported before the end of this 6-day period.

Customs free zones are special areas for customs purposes that are located within Freeports. The Free Zones (Customs, Excise and Value Added Tax) Regulations 2021 (SI 2021/1156) set out customs rules that apply where goods are kept in a free zone, including where imported goods are declared to a free zone procedure. These regulations did not permit goods to be declared for a free zone procedure using the simplified customs declaration process as further development of the customs declaration systems was required before these simplified customs declarations could be used in relation to a free zone procedure.

Detailed proposal

Operative date

This instrument will take effect from 1 July 2022. The change that will require an authorised consignee to have a form of temporary storage facility approval, will take effect from 1 January 2023.

Current law

Legislation concerning the common transit procedure is in Schedule 1 to the Customs (Transit Procedures) (EU Exit) Regulations 2018 (SI 2018/1248) (transit regulations). Paragraphs 6 and 18 of this Schedule provide for the authorisation of persons as authorised consignees, who can receive goods moved under the common transit procedure at an authorised place to end that procedure. Paragraphs 14 and deal with the end (discharge) of a common transit procedure, and the subsequent deeming of the goods to be in temporary storage.

The conditions that must be met for before premises can be approved as a temporary storage facility are set out in the Customs (Temporary Storage Facilities Approval Conditions and Miscellaneous Amendments) (EU Exit) Regulations 2018 (SI 2018/1247) (temporary storage facilities approval conditions regulations) and the Wharves, Examination Stations and Temporary Storage (Approval Conditions) (EU Exit) Regulations 2018 (SI 2018/1264) (miscellaneous approval conditions regulations). Part 3 of the Customs (Import Duty) EU Exit Regulations (SI 2018/1248) (import duty regulations) concerns goods that are in temporary storage and imposes certain restrictions on the handling of these goods.

Details of penalties that may be applied where there are breaches of customs rules can be found in the Customs (Contravention of a Relevant Rule) Regulations 2003 (SI 2003/3113).

Chapter 3, Part 4 of the import duty regulations makes provision in relation to the simplified customs declaration process, including details of when this process can be used, and requirements in relation to the provision of:

(i) a simplified customs declaration and

(ii) a supplementary customs declaration (subject to waivers that apply in specified circumstances)

Part 2 of the Free Zones (Customs, Excise and Value Added Tax) Regulations 2021 included an amendment to the import duty regulations to provide that simplified customs declaration process could not be used to declare goods for a free zone procedure.

Proposed revisions

The proposed revisions will update the temporary storage facilities approval conditions regulations and the miscellaneous approval conditions regulations to enable an authorised consignee’s premises to be approved as a temporary storage facility without satisfying the full range of conditions and requirements that currently apply for external temporary storage facilities. This approval will permit only the storage of goods that are deemed by the transit regulations to be in temporary storage at the end of a common transit procedure. Such goods can be stored in temporary storage at the premises for a period up to 6 days, starting with the date on which the common transit procedure ends in relation to the goods.

Consequential changes are made to other legislation to clarify the temporary storage status of goods held in an authorised consignee’s premises at the end of a common transit procedure and to make sure that appropriate penalties are in place for breaches of the customs rules concerning the approval of these premises. We have introduced a 6-month delay to the requirement for an authorised consignee to have a form of temporary storage facilities approval for existing authorised consignees to make sure time for application and approval.

In relation to the simplified declaration process and free zones, the proposed revisions to the import duty regulations would:

• omit the prohibition on using simplified declaration process to declare goods for a free zone procedure
• permit any cases in which the simplified declaration process cannot be used to be set out in a notice published by HMRC
• remove the usual requirement to supply a supplementary customs declaration where simplified customs declaration process is used to declare goods for a free zone procedure

Summary of impacts

Exchequer impact (£million)

2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027
Negligible	Negligible	Negligible	Negligible	Negligible	Negligible

This measure is expected to have a negligible impact on the Exchequer.

Economic impact

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

Impact on individuals, households and families

This measure is expected to mainly affect businesses. There is not expected to be any impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts for those in groups sharing protected characteristics

Impact on business including civil society organisations

This measure is expected to have a positive impact on businesses as the policy objective is to reduce costs for authorised consignees, by simplifying the rules that apply where goods subject to customs controls are stored at their premises at the end of a cross-border transit movement.

There may be a one-off cost in setting up the new type of temporary storage facility and familiarisation of the new rules but it is expected that that there will be continuing cost savings for existing and new businesses that apply to become authorised consignees.

There will also be cost savings in applying for the new form of temporary storage as the application process will be completed by HMRC as part of the application to be an authorised consignee and will not require a separate approval by Border Force. This could enable more businesses using customs transit arrangements to complete customs formalities at an authorised consignee’s premises, rather than at the place where the goods arrive in the UK.

For free zones, the measure is expected to have a positive impact on a small number of businesses who choose to keep imported goods in a customs free zone in Great Britain and are authorised to use simplified customs declaration processes.

Operational impact (£million) (HMRC or other)

While there will be minimal costs to HMRC in amending forms to take account of the new 6-day temporary storage rules, it is not envisaged that the measure will require any additional funding.

The process for the approval of a premises for temporary storage will not change existing processes significantly, and should be delivered within existing resources. We are expecting to carry out additional compliance checks for new businesses, but this should be deliverable within existing compliance resources.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

This measure will be monitored through information collected from HMRC Customer Service teams and HMRC IT systems and will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change, contact Sara Godfrey in the Customs Transit policy team by email at: sara.godfrey@hmrc.gov.uk.

Declaration

The Right Honourable Lucy Frazer QC 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.