The Customs Transit Procedures (Amendment) (EU Exit) Regulations 2020
Published 10 December 2020
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Who is likely to be affected
Traders, intermediaries and haulage companies moving goods under transit to and from the UK to or through a Common Transit Convention (CTC) customs territory, including the EU.
General description of the measure
The measure includes some additional legislative changes in relation to the CTC – a customs facilitation that allows for the suspension of duties and some customs processes until goods arrive at their final destination, and it also allows some customs processes to be conducted away from the border. This includes:
- Updating the list of Great Britain (GB) port locations where the pre-notification of a transit declaration will be mandatory. This amendment will allow the Office of Transit (the supervising customs office which marks the arrival of transit movements into a new customs territory) to be carried out digitally at certain locations in GB.
- A provision to introduce fees for certain services carried out at government inland sites to align with the charge for services usually applied at existing border locations. This amendment will facilitate flow and prevent congestion at the new government Inland Border Facilities.
- An amendment to retain the ability of traders to use guarantees authorised by other CTC customs authorities to start transit movements in GB. This is a flexibility currently available in the UK and this amendment ensures that it will continue to operate beyond the 1 January 2021.
- A minor amendment to align domestic legislation with the CTC.
Policy objective
To ensure that the UK maintains an effective system of customs controls at the end of the transition period, along with the benefits of frictionless trade available through membership of the CTC.
Background to the measure
When the UK left the EU on 31 January 2020, it became a separate customs territory and has negotiated accession to the CTC in its own right. The CTC is a treaty between the EU and other countries enabling businesses to move goods using simplified customs procedures between the contracting parties, under common rules.
The government has set out in the Border Operating Model the UK’s approach to border controls following the end of the Transition Period. The Border Operating Model sets out the CTC processes that will apply from 1 January 2021, specifically the process for moving goods into the UK under CTC, and the new inland infrastructure locations that the government is providing in GB to support different customs processes.
List of locations and pre-lodgement amendment: when transit movements arrive at GB ports, the goods and the Transit Accompanying Document must be presented at an Office of Transit. From 1 January 2021, the UK Government will allow the Office of Transit process to be completed digitally. At locations using this digital process hauliers will be required to pre-notify their transit documentation. This amendment sets out in a public notice the additional locations where pre-notification is required.
Where ports do not have the space to carry out certain customs functions, the government is providing inland infrastructure. This amendment allows for a limited set of fees to be introduced to align with the charge for services usually applied at existing border locations.
The other two amendments are technical and ensure that domestic legislation is in line with the CTC.
Detailed proposal
Operative date
The part of this instrument that relates to introducing fees will come into effect on 30 December 2020. The remaining provisions will be brought into force using appointed day regulations.
Current law
Schedule 1 of the Customs Transit Procedures (EU Exit) Regulations 2018 brings the CTC into domestic UK law.
Legislation for fees is contained within Part 14 of the Customs (Import Duty) (EU Exit) Regulations 2018. This sets out the authority and circumstances for fees to be charged.
Proposed revisions
This instrument makes three changes to Schedule 1 of the Customs Transit Procedures (EU Exit) Regulations 2018. The first change amends Paragraphs 2 and 27 of Schedule 1 to expand the points of entry, set out in a public notice, where the movement reference number (MRN) from the transit declaration and either a vehicle reference number or container reference number must be pre-notified to enable the digital operation of the Office of Transit Function. The second change amends Paragraph 18(4) and introduces Paragraph 29(1A) which allows the holder of transit procedure to use any qualifying guarantee which has been approved by a CTC customs authority to maintain the current approach. The third change is a minor technical amendment to Paragraph 19, along with consequential changes to Schedule 3 to bring it in line with Appendix 1, Article 30 of the CTC.
This instrument also makes a change to Part 14 of the Customs (Import Duty) (EU Exit) Regulations 2018. This introduces new regulations that will allow HMRC to charge fees for functions set out in a public notice. Commercial pricing is not widely published but to the best of our understanding, these will be in line with existing charges at border locations that offer these services.
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 |
This measure is not expected to have an Exchequer impact.
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
The impact on businesses is expected to be negligible. It will be a commercial decision for port operators as to whether they will implement a digital Office of Transit. If these locations choose to use a digital process, hauliers and carriers will need to put in place additional processes and systems to ensure that the information required is submitted and processed before goods arrive at their port of entry in GB. One-off costs will include familiarisation with the change, and could include hauliers and carriers adapting their existing systems to ensure that goods are pre-notified and the transit declaration is submitted prior to arrival in GB. This is a matter of timing and does not relate to requirements to provide the transit documentation. There are not expected to be any continuing costs where pre-notification requirements are established, and these integration costs will be offset by faster processing of these goods on arrival into GB, and longer term, this digital process is less resource and time intensive for carriers, hauliers, ports and HM Government than the alternative manual process.
There will be a cost to hauliers who will incur a fee at the government inland sites. These charges are being introduced to avoid market distortion. If we did not introduce these charges, the government inland sites would be providing free services where these would otherwise be charged for at commercial border locations. To the best of our understanding, the fees are set to be comparable with commercial locations and will be set at cost recovery levels only.
This measure is expected overall to have no impact on businesses’ experience of dealing with HMRC. There is expected to be no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
The implementation of digital Offices of Transit by UK ports will greatly reduce the demand for customs authority resource and infrastructure requirements at these locations, compared to a manual process.
There will be a one-off cost to HMRC of setting up a payment process to administer the fees.
Other impacts
This legislation offers indirect support to carriers into the UK by maintaining commercial demand for their services for goods moving to and from the UK to the EU.
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 Oliver Rodin in the Transit Policy Team by email: Oliver.Rodin@hmrc.gov.uk.
Declaration
The Right Honourable 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.