Policy paper

The Taxation (Cross-border Trade) (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021 and The Customs Importation (Miscellaneous Provisions and Amendment) (EU Exit) (Amendment) Regulations 2021

Published 16 December 2021

Who is likely to be affected

Businesses moving goods to Great Britain (England, Scotland and Wales) from Northern Ireland through Ireland and those moving European Union goods (as defined in article 5(23) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code as it has effect in EU law) directly or indirectly from Ireland to Great Britain. These businesses include traders, border location operators, carriers, intermediaries, community system providers and hauliers involved in the movement of such goods.

General description of the measures

This document covers 2 Statutory Instruments:

• The Taxation (Cross-border Trade) (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021
• The Customs Importation (Miscellaneous Provisions and Amendment) (EU Exit) (Amendment) Regulations 2021

These measures extend staged customs controls for goods that are in Ireland or Northern Ireland, where applicable, immediately before their importation into Great Britain. Businesses will continue to benefit from delayed customs declarations for non-controlled goods, meaning goods that are not listed in a public notice as controlled goods, such as alcohol, tobacco or firearms. This means pre-lodged customs declarations are not required for these non-controlled goods. The deferral of the supplementary declaration for these goods also defers any import duty payable until the supplementary declaration is made to HMRC.

These measures also make consequential changes to ensure that VAT registered businesses using staged customs controls continue to be required to account for import VAT as appropriate in the VAT return for the period in which the import takes place. They also ensure the continued alignment of the excise duty time of payment rules with the staged customs controls process for notifying the arrival of excise goods from Ireland or Northern Ireland, where applicable, immediately before their importation into Great Britain.

These measures remove restrictions relating to European Union goods that are in Ireland or, where applicable, Northern Ireland immediately before their importation into Great Britain. These measures do not affect businesses moving Northern Ireland qualifying goods, who will continue to have unfettered access on the Northern Ireland to Great Britain direct route.

Policy objective

These measures are required to temporarily maintain the status-quo for goods moving from Ireland or, where applicable, Northern Ireland immediately before their importation into Great Britain while negotiations continue with the European Union on the implementation of the Northern Ireland Protocol.

Background to the measures

The government has decided to extend the current arrangements for goods moving from Ireland or Northern Ireland immediately before their importation into Great Britain while discussions between the United Kingdom and the European Union on the operation of the Northern Ireland Protocol are ongoing.

This avoids any disruption and ensures that Northern Ireland and Ireland businesses moving goods from Ireland or Northern Ireland immediately before their importation to Great Britain can continue to follow the same processes they do now. That means that the import controls taking effect for movements from the European Union to Great Britain will not be applied to those movements from 1 January 2022.

These measures do not affect current arrangements for Northern Ireland qualifying goods. Businesses moving Northern Ireland qualifying goods, which will continue to have unfettered access on the Northern Ireland to Great Britain direct route.

Detailed proposal

Operative date

Amendments to the Taxation (Cross-border Trade) (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021 will take effect from 31 December 2021 and 1 January 2022. However, amendments to the Customs Importation (Miscellaneous Provisions and Amendment) (EU Exit) (Amendment) Regulations 2021 will take effect from 31 December 2021.

Current law

The Taxation (Cross-border Trade) (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021 are made under the Taxation (Cross-Border Trade) Act 2018 (TCTA). This Act, and the regulations made under it, such as the Customs (Import Duty) (EU Exit) Regulations 2018 (SI 2018/1248) (import regulations) and the Customs (Northern Ireland) (EU Exit) Regulations 2020 (SI 2020/1605) (Northern Ireland regulations) provide the basis of the UK’s customs rules. The power in section 51 of TCTA allows for changes to be made in consequence or otherwise in connection of EU Exit in relation to customs, VAT and excise. The excise changes are being made under section 45 (1) and (2) of the TCTA.

Legislation listing roll on roll off (RoRo) and other locations and the requirements for pre-lodgement of customs declarations is in Part 13 and Part 13C of the import regulations. Legislation for notification of importation and acceptance of declarations at RoRo and other listed locations is in Part 2 of the same regulations. The Taxation (Cross-border Trade) (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021 (SI 2021/1347) makes changes to the import regulations that end temporary easements to customs controls at border locations which did not have customs control systems at the end of transition and apply full customs controls to goods imported at border locations where declarations need to be pre-lodged in advance of arrival.

Legislation on penalties for failure to comply with rules relating to customs duty is in the Customs (Contravention of a Relevant Rule) Regulations 2003.

Legislation on HMRC powers to make regulations on the unloading, landing, movement and removal of goods on their importation is in the Customs and Excise Management Act 1979. Legislation on obligations relating to goods imported at border locations where pre-lodgement of declarations is required and where such goods are required to undergo checks carried out inland (because there is insufficient physical capacity to conduct checks at the border location) is in the Customs Importation (Miscellaneous Provisions and Amendment) (EU Exit) Regulations 2021 (SI 2021/1312).

Legislation on HMRC powers to make regulations on the unloading, landing, movement and removal of goods on their importation is in the Customs and Excise Management Act 1979. Legislation on obligations relating to goods imported at border locations where pre-lodgement of declarations is required and where such goods are required to undergo checks carried out inland (because there is insufficient physical capacity to conduct checks at the border location) is in the Customs Importation (Miscellaneous Provisions and Amendment) (EU Exit) Regulations 2021 (SI 2021/1312).

The relevant VAT provisions are contained in the Value Added Tax (Miscellaneous and Transitional Provisions, Amendment and Revocation) (EU Exit) Regulations 2020 (SI 2020/1495).

The relevant excise provisions are contained in the Customs and Excise Border Procedures (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021 (SI 2021/1347) and the Excise Duties (Miscellaneous Amendments) (EU Exit) (No. 3) Regulations 2019 (SI 2019/474).

Proposed revisions

These measures extend staged customs controls for goods that are in Ireland or, where applicable, Northern Ireland immediately before their importation into Great Britain and make the following revisions:

• They will extend the transitional entry in the declarant’s records declaration process, which allows traders to make a note of the movement in their own records and then submit a supplementary declaration within 175 days. This will also apply to goods arriving through fixed transport installations.
• The deferral of the supplementary declaration for these goods also defers any import duty payable until the supplementary declaration is made to HMRC. This will only apply to non-controlled goods, which are goods that are not listed in a public notice as controlled goods (such as alcohol, tobacco or firearms).
• The proposed revisions will also allow HMRC to continue to exclude any importers with a poor compliance history from being able to defer declarations and allows HMRC to write to these traders informing them that they will not be able to defer declarations and will need to submit full or simplified declarations at the time of import.
• Where pre-lodgement of declarations is required carriers will not be required to notify HMRC when the vessel or aircraft carrying the goods has embarked for Great Britain. Where declarations have been lodged in HMRC systems, including for controlled goods, there will continue to be a requirement on businesses to notify HMRC via its IT system by 11:59pm the day after the day on which the goods were imported.
• They will also make consequential changes to ensure that VAT registered businesses using staged customs controls continue to be required to account for import VAT on non-qualifying goods in the VAT return for the period in which the import takes place.
• The measures also ensure the continued alignment of the excise duty time of payment rules with the staged customs control process for notifying the arrival of excise goods from Ireland or, where applicable, Northern Ireland immediately before their importation into Great Britain.
• These measures ensure restrictions on removing goods from border locations where pre-lodgement of declarations is required will not apply to European Union goods that are in Ireland or, where applicable, Northern Ireland immediately before their importation into Great Britain. This means the treatment that such goods receive under staged customs controls when imported at these locations will continue, but only for goods entering Great Britain from Ireland or, where applicable, Northern Ireland.

Summary of impacts

Exchequer impact (£million)

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

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

These measures are not expected to have any significant economic impacts.

Impact on individuals, households and families

There is expected to be no impact on individuals as this measure only affects 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 for those in groups sharing protected characteristics.

Impact on business including civil society organisations

These measures support businesses, such as traders, border location operators, carriers and hauliers, involved in the movement of goods. They are expected to have a negligible impact on businesses that move goods from Ireland or, where applicable, Northern Ireland, by extending the transitional entry in the declarant’s records simplified customs declaration process and the mandatory use of postponed VAT accounting.

Businesses that choose to use this facilitation will not need to be authorised or provide a declaration to HMRC. However, they will need to become authorised to use simplified customs declaration process (or appoint an agent who is authorised) before they can submit their deferred supplementary declaration.

One-off costs for businesses will include familiarisation with the changes. There are not expected to be any further one-off or continuing costs as the measures are an extension of current arrangements.

Customer experience is expected to remain broadly the same as the change allows businesses to continue to use the current arrangements and does not alter how they interact with HMRC.

The measures are not expected to impact civil society organisations.

Operational impact (£million) (HMRC or other)

We expect no significant impact on HMRC as these measures extend existing arrangements for staged customs controls for European Union goods that are in Ireland or, where applicable, Northern Ireland immediately before their importation into Great Britain.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

These temporary measures will be monitored through customs information collected through HMRC and will be kept under review through communication with affected taxpayer groups and other government departments.

Further advice

If you have any questions about this change, contact Marcia Harris in HMRC by email: marcia.harris@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.