The Taxation Cross-border Trade (Miscellaneous Amendments) (EU Exit) Regulations 2021
Published 10 June 2021
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Who is likely to be affected
Businesses and intermediaries importing non-controlled goods from the European Union (EU) into Great Britain (England, Wales and Scotland) until 31 December 2021 who choose to delay their declarations. It may also affect businesses and individuals exporting goods via the United Kingdom’s (UK) Universal Postal Union designated operator – Royal Mail.
General description of the measure
This measure allows for an extension to the transitional entry in declarant’s records (EIDR) simplified customs declaration process (delayed declarations). This policy has been in place since 1 January 2021 and was intended to last until 30 June 2021. In recognition of the impact of coronavirus (COVID-19) and the need to give businesses more time to prepare for the new customs regime after the UK’s withdrawal from the EU, the duration of this easement is being extended until 31 December 2021.
Delayed declarations allow traders importing non-controlled goods from the EU into Great Britain free circulation, to make a declaration in their internal commercial records at the time of, or before import and delay providing a declaration (a transitional supplementary customs declaration) to HMRC up to a time period specified by HMRC in a notice (currently 175 days from importation). This measure excludes controlled goods such as alcohol or tobacco.
Where VAT registered businesses adopt delayed declarations, postponed VAT accounting is mandatory and import VAT must be declared on the VAT return for the accounting period in which the goods are imported. This avoids a revenue cash flow impact as a result of the delay of the transitional supplementary customs declaration. The measure also extends the end date of mandatory postponed VAT accounting from 30 June to 31 December 2021.
It also makes changes to the period in which operators or consignees, who import oil, gas and electricity through pipelines and cables (referred to as ‘fixed transport installations’) must make a supplementary customs declaration in order to comply with the EIDR procedure. Operators or consignees can delay submitting a supplementary customs declaration for a time specified in a public notice (currently 175 days from importation) for their imports up to and including 31 December 2021.
A change has also been made to increase the value threshold above which goods exported outside the UK by post cannot be declared by conduct. ‘By conduct’ in this regard means exporting goods outside the UK using the UK’s postal service. The threshold has been increased from £900 to £1,000.
Policy objective
These amendments will assist businesses adversely impacted by COVID-19 by extending the period for which they can make delayed declarations. The extension will give businesses additional time to have processes in place to meet their customs obligations. It also allows operators and users of fixed transport installations additional time to get used to the new processes for them which were introduced following the end of the transition period.
The increase to the value threshold above which a conduct declaration cannot be made for goods exported by post is intended to reduce some of the administrative burden of exporting goods and so be more facilitative to trade following our departure from the EU.
Background to the measure
The government announced on 11 March 2021 that the ability of traders to use delayed declarations for EU goods imported into Great Britain would be extended from 30 June 2021 until the end of 2021. This extension gives businesses affected by COVID-19 more time to prepare for full custom requirements from 2022 onwards.
The additional time provided for the operators and users of fixed transport installations was in line with what was provided for delayed declarations. The same extension has therefore been provided.
The value threshold uplift for posted goods above which a conduct declaration cannot be made has been reviewed and increased in order to be more facilitative to trade.
Detailed proposal
Operative date
The instrument will have effect from 1 July 2021.
Current law
The legislative framework that allows traders and their agents to use delayed declarations, including operators and consignees who import goods through fixed transport installations, is set out in the Customs (Import Duty) (EU Exit) Regulations 2018.
The legislative framework for postponed VAT accounting is set out in the Value Added Tax (Accounting Procedures for Import VAT for VAT Registered Persons and Amendment) (EU Exit) Regulations 2019.
The legislative framework for goods exported by post to be declared by conduct is set out in the Customs (Export) (EU Exit) Regulations 2019.
Proposed revisions
The instrument makes amendments to the Customs (Import Duty) (EU Exit) Regulations 2018 (the Import Duty Regulations) by extending the period that allows businesses and intermediaries the ability to make a transitional simplified customs declaration in their commercial records and delay the submission of a transitional supplementary customs declaration to HMRC for up to 175 days from the date of import when declaring goods for the free circulation procedure.
Under the transitional EIDR simplified customs declaration process a person will be notified of their duty to pay any import duty owing (and any import VAT owing if they are not VAT registered) after they have submitted a supplementary declaration to HMRC. This includes during the extended period. The delayed declaration process is available to all eligible traders that import non-controlled EU goods and wish to declare them for free circulation in the period 1 January 2021 to 31 December 2021.
The process does not apply to controlled goods such as alcohol and tobacco and businesses importing these goods will need to submit full customs declarations or, if they are authorised, simplified customs declarations.
In respect of which traders are eligible, a public notice has been published which sets out further detail on what HMRC regards as not a ‘fit and proper’ person for the purpose of excluding traders from the delayed declaration process.
The instrument makes a consequential amendment to the Value Added Tax (Miscellaneous and Transitional Provisions, Amendment and Revocation) (EU Exit) Regulations 2020 to extend the mandatory use of postponed VAT accounting when the delayed declaration process is used to 31 December 2021. Postponed VAT accounting is provided for in the Value Added Tax (Accounting Procedures for Import VAT for VAT Registered Persons and Amendment) (EU Exit) Regulations 2019.
The instrument also makes additional amendments to the Import Duty Regulations by extending the period that users and operators of fixed transport installations can import goods and submit a supplementary customs declaration no later than the end of a period specified in a public notice (currently 175 days) rather than by the fourth working day of the following month.
The instrument also makes an amendment to the Export Duty Regulations by increasing the value threshold above which goods exported by post cannot be declared by conduct. The increase takes the threshold from £900 to £1,000.
Summary of impacts
Exchequer impact (£m)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
Where required, final costings will be subject to scrutiny by the Office for Budget Responsibility and will be included in their forecast at the next fiscal event.
Economic impact
This measure is not expected to have any significant economic impacts.
This measure provides economic certainty to traders by extending the period in which delayed declarations can be used. For these traders (and those using fixed transport installations) this will give industry more time to make necessary arrangements (for example obtaining authorisation or hiring an intermediary) and reduce the risk of delays at Great Britain ports.
The changes to the value threshold for goods exported by post has been made in order to be more facilitative to trade as it will reduce, at the margin, costs of exporting goods with a value between the old and the new threshold.
Impact on individuals, households and families
There is not expected to be an impact on individuals as this measure only affects businesses.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
Equalities impacts have been considered and HMRC does not anticipate that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure supports businesses by providing additional time to make changes. It is expected to have a negligible impact on businesses who import from the EU, some of whom may need more time to prepare to meet their full customs obligations, by extending the transitional EIDR simplified customs declaration process and the mandatory use of postponed VAT accounting. This will facilitate trading whilst businesses prepare to comply with full customs controls from January 2022 onwards.
Businesses that choose to use this facilitation will not need to be authorised or provide a declaration to HMRC on import. 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 will include familiarisation with the changes. There are not expected to be any continuing costs as the change is a matter of timing and should not materially affect the total number of declarations submitted to HMRC over 2021 to 2022 or the overall administrative costs to businesses of submitting the declarations over the annual period.
Neither the use of delayed declarations nor the delay available to users of fixed transport installations is mandatory, but it is expected to be most beneficial for those businesses that only import from the EU and therefore have little or no experience of customs processes. The additional time for businesses to prepare provided by delayed declarations reduces the risk of disruption at Great Britain ports from unready traders once full customs controls are introduced on 1 January 2022.
The changes to the value threshold for goods exported by post has been made in order to be more facilitative to trade.
This measure is not expected to impact civil society organisations.
Customer experience is expected to remain broadly the same as a result of this change as it is just an extension of transitional arrangements and an uplift.
Operational impact (£m) (HMRC or other)
The operational impact on HMRC is not significant as much of the work to put certain processes and procedures in place to identify and exclude high risk traders from making a simplified customs declaration and to end staged customs controls has already been carried out. Resource will continue to be required to enforce this exclusion. This includes HMRC taking proactive steps to monitor and take action against non-compliance, including ensuring the accuracy of submitted declarations. This resource will mostly take the form of HMRC staff being re-directed from other work.
Other impacts
Other impacts have been considered and none has been identified.
Monitoring and evaluation
The measure will be kept under review through regular communication with affected taxpayer groups and will be monitored through information collected from customs declarations.
Further advice
If you have any questions about this change, please contact Umar Hanif in the Declarations Policy team by email: umar.hanif@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.