Policy paper

UK Transition: The Customs (Bulk Customs Declaration and Miscellaneous Amendments) (EU Exit) Regulations 2020

Published 10 September 2020

Who is likely to be affected

Parcel operators that import low value goods into Great Britain (GB), businesses that use duty deferment and freight forwarders or businesses importing goods via Eurotunnel.

General description of the measure

The measure introduces a number of targeted legislative changes that will allow customs procedures to continue to operate efficiently at the end of the Transition Period and to make it easier for businesses to access a duty deferment account. This includes:

• changes to the guarantee requirements for duty deferment to make it easier for compliant and solvent importers to defer import duty
• an authorisation framework to allow parcel operators and other traders to continue to declare multiple consignments of low value parcels in a single customs declaration
• making sure domestic regulations for recovering import debt and other liabilities for goods admitted temporarily to the UK maintain alignment with relevant conventions to which the UK is a signatory
• extending customs rules for presentation of goods unloaded and reloaded from a vessel or aircraft so that they also apply to goods on board trains arriving from the EU, thereby removing liability to import duty and maintaining current operational practice

Policy objective

The amendments make sure that effective border controls continue after the Transition Period. The instrument maintains existing facilitations whilst also making them more accessible to help make sure importers can meet their customs obligations.

Background to the measure

HMRC announced proposals on future guarantee requirements for duty deferment in July 2020. This followed discussions with the Joint Customs Consultative Committee (JCCC) in February 2019 to consider how existing requirements could be eased to reduce the burden on importers.

On 19 June 2020, the Government announced that from 1 January 2021, parcel operators will be able to continue to make a single declaration for multiple consignments of low value parcels imported into GB.

Detailed proposal

Operative date

Parts of the instrument that relate to the bulking of consignments, guarantee requirements and some additional minor amendments will come into effect on 1 October 2020, or 31 October 2020. The remaining provisions will be brought into force using appointed day regulations.

Current law

This measure will introduce new legislation for bulk customs declarations and amend the:

• Customs (Import Duty) (EU Exit) Regulations 2018
• Customs (Export) (EU Exit) Regulations 2019
• Customs (Temporary Storage Facilities Approval Conditions and Miscellaneous Amendments) (EU Exit) Regulations 2018
• Customs (Crown Dependencies Customs Union) (EU Exit) Regulations 2019
• Taxation (Cross-border Trade) (Miscellaneous Provisions) (EU Exit) Regulations 2019
• Taxation (Cross-border Trade) (Miscellaneous Provisions) (EU Exit) (No. 2) Regulations 2019

Proposed revisions

The instrument establishes an authorisation framework to support traders using the bulked customs declaration process. Bulking is a customs simplification that allows parcel operators and other traders to declare multiple consignments of low value parcels in a single customs declaration using a significantly reduced data set compared to a full customs declaration. This can only be used if the value of each parcel does not exceed £135 and the goods contained in the parcel are not classified as restricted or excise goods.

This legislation creates a framework that is robust for customs and tax compliance purposes and makes sure that simple bulked customs declarations can be used in GB once the Transition Period ends. A public notice will be made so that postal operators who meet the eligibility criteria will be authorised without having to submit an application form to HMRC.

The instrument also introduces an easement for businesses wanting to use a Duty Deferment Account (DDA). Under the arrangements set out in the Customs (Import Duty) (EU Exit) Regulations 2018, importers wanting to use a DDA need to apply to HMRC for authorisation to use a Customs Comprehensive Guarantee (CCG) and specify in this application that they want to use duty deferment.

Having been authorised by HMRC to provide a CCG, businesses then need to provide a guarantee from a financial institution, after which the duty deferment account is set up. The change will allow businesses to defer amounts of import duty up to a threshold amount without providing a CCG if they meet eligibility criteria relating to compliance and solvency.

It will also allow businesses to defer amounts above the threshold if they meet these criteria and have sufficient financial standing relative to the maximum monthly amount they intend to defer. Businesses failing the eligibility criteria will still be able to open a DDA if they provide a guarantee. A public notice power will be introduced that will allow HMRC to set the duty deferment threshold limit.

The instrument makes a further amendment to make sure that provisions for recovering import debt and other liabilities in the Customs (Import Duty) (EU Exit) Regulations 2018 align with debt recovery provisions in the Admission Temporaire or Temporary Admission (ATA) Convention and the Istanbul Convention, to which the UK is a signatory.

The ATA carnet is an international customs document that can be used in different countries around the world to cover temporary use or transit of the goods without payment of customs charges and a Carnets de Passages en Douane (CPD) allows travellers temporarily to import their vehicles and provides an international guarantee for payment of customs charges should vehicles not be re-exported from the country visited.

In respect of ATA and CPD goods admitted temporarily to the UK, these conventions allow HMRC to recover import duty liabilities from the guaranteeing association if the goods do not leave the UK. The instrument makes an amendment to make sure the legal obligation to notify a debtor in order to enforce a liability to import duty is treated as being satisfied when HMRC makes a claim on the guaranteeing association.

Under provisions in the Customs (Import Duty) (EU Exit) Regulations 2018, goods unloaded and reloaded from a vessel or aircraft (or that remain on a vessel or aircraft) do not need to be presented for customs purposes. This means that there is no liability to import duty. This instrument extends these provisions to include trains and makes sure a consistency of treatment between goods arriving by vessel and aircraft and those arriving by train.

The eligibility criteria to be authorised to use simplified declaration processes reference some of the eligibility criteria to be an authorised economic operator. Minor amendments are made to the Customs (Import Duty) (EU Exit) Regulations 2018 and the Customs (Export) (EU Exit) Regulations 2019 to make sure that the correct criteria are cross-referenced.

The instrument also makes a minor amendment to the definition of a person ‘established in the UK’ used in the Customs (Temporary Storage Facilities Approval Conditions and Miscellaneous Amendments) (EU Exit) Regulations 2018 so that it aligns with the definition used in the Customs (Import Duty) (EU Exit) Regulations 2018 to make sure consistency across both sets of regulations.

Summary of impacts

Exchequer impact (£million)

2020 to 2021	2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026

Once the UK transitions to its new relationship with the EU, final costings will be produced and will be subject to scrutiny by the Office for Budget Responsibility and will be set out at a later date.

Economic impact

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

Impact on individuals, households and families

There is no impact on individuals as this measure only affects businesses.

Impact on business including civil society organisations

Due to the scope of this measure and the degree of change needed, the impact on businesses and civil society organisations is expected to be negligible – although the impact will vary. The overall impact will depend on how many businesses are brought within the scope of complying with customs obligations following introduction of this measure. Many of these businesses will be interacting with these procedures for the first time. In many cases this will be the result of a business decision if there are commercial benefits to be gained, for instance, in deferring payment of import duty or completing a single customs declaration for multiple low-value consignments.

One-off costs include familiarisation for businesses adopting the procedures for the first time, but HMRC will aim to reduce these costs by providing guidance and giving businesses more time to prepare by staging the introduction of border controls for EU goods imported into GB at the end of the Transition Period. Ongoing costs include recording information and providing data to HMRC. These ongoing costs are estimated to be negligible.

Bulking of low value consignments – postal operators who meet the eligibility criteria will be able to be authorised without making an application. This will help to minimize the administrative burden although there is expected to be negligible one-off costs as they familiarise themselves with the new authorisation rules.

Other postal operators will need to make an application to HMRC in order to be authorised. It is anticipated that there will be a negligible one-off cost in applying for authorisation, but once authorised, the operator will be subject to the same on-going record keeping and information requirements that currently apply to the scheme. It is anticipated that the initial one-off costs will be outweighed by annual savings from not having to submit single declarations with a full data set.

Changes to the guarantee requirements for duty deferment – there are currently an estimated 13,000 businesses that have been approved for duty deferment, and of those, approximately 11,900 provide guarantees to HMRC. There will be no need for businesses that already have a duty deferment account to re-register with HMRC. Most will be eligible for a guarantee waiver, in which case they will need to cancel their existing guarantee which will incur a negligible one-off cost. For these businesses, the day-to-day operation of duty deferment will be exactly as it is now.

The majority of businesses new to customs procedures, particularly small and medium sized enterprises that would otherwise have had to undertake the expense of getting a CCG, will now be able to apply for duty deferment. One-off costs include familiarisation with guidance on using duty deferment and making an application to HMRC. These costs are likely to be substantially outweighed by financial savings of not needing to obtain a guarantee from a financial institution. Financial institutions typically charge businesses requiring a guarantee a fee of between 1-5% of the guarantee’s value, depending on their assessment of a business’s creditworthiness and other factors.

Under the new arrangements we anticipate that most businesses using duty deferment that currently provide a guarantee will benefit from a guarantee waiver. HMRC cannot quantify these financial savings as they are not a direct result of complying with customs regulations and they are confidential between business and financial institution.

Customs rules for goods on board trains – as this provision enables the continuation of current operational practice, HMRC does not anticipate businesses incurring any additional administrative costs other than negligible one-off costs of the time spent familiarising themselves with the new legislation.

Debt recovery on ATA and CPD goods – HMRC does not anticipate businesses incurring any additional administrative costs other than the negligible one-off costs of the time spent familiarising themselves with the new legislation.

Operational impact (£million) (HMRC or other)

It is likely that HM Revenue and Customs (HMRC) will need to put certain processes and procedures in place to implement an authorisation process for the bulking of low value parcels. This may result in a one-off cost to amend existing IT systems. Additional minor IT changes may also need to be made to develop a new application form for the duty deferment scheme. The costs to HMRC are currently being developed, but it is anticipated that this will be managed within existing UK Transition funding.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication and ongoing stakeholder engagement with trade bodies and other representative businesses.

More advice

If you have any questions about this change, contact Neil Vosper in the Customs Legislation team by email: neil.vosper@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.