Guidance

Customs agents - what to expect on day one of a 'no deal' scenario

HMRC wants to ensure that customs agents have access to the right authorisations ahead of 29 March to ensure trade can keep flowing.

The trade that’s carried out with the EU will broadly follow the customs controls that apply for the rest of the world, and there’s likely to be an increase in demand for customs agents’ services from traders who had only worked within the EU before, or traded both within the EU and with the rest of the world. So you’ll need to adapt your business to comply with these new systems, processes and controls.

How customs processes will change

You can expect to see an increase in demand for customs services from the traders who have only traded within the EU to date.

If you’re established in the EU and are making import declarations on behalf of UK clients, you’ll need to have a European Economic Operator Registration and Identification (EORI) number as well as a UK EORI number - HMRC wants to ensure that traders have access to the right authorisations ahead of 29 March to ensure trade can keep flowing. We’ve published further information specifically for importers, exporters, carriers, and port operators who trade with the EU through roll-on roll-off locations. It includes new and temporary easements to support continued trade fluidity at these locations.

When using roll-on roll-off (RoRo) transport, for example ships designated to carry wheeled cargo such as lorries, you’ll need to have information from traders about goods, in order to pre-notify HMRC of consignments.

You’ll also need to know transport information from the haulier – such as the registration details of the vehicle that goods are travelling in – and communicate with them if they need to go to a specific inland location, such as a Designated Export Place for certain exports.

For an introduction to these issues, watch our YouTube video:

Intermediaries in a no deal EU exit: changes at the UK border in 60 seconds.

Dealing with import VAT

If the UK leaves the EU without a deal, the government will introduce postponed accounting for import VAT on goods brought into the UK.

This means that UK VAT registered businesses importing goods to the UK can account for import VAT on their VAT return, rather than paying import VAT when the goods arrive at the UK border. This will apply to imports from the EU and non-EU countries.

To reach this decision, the government took into account the views of businesses and sought to mitigate any adverse cash-flow impacts and ensure that VAT processes are kept as close as possible to what they are now. To ensure equity of treatment, in a ‘no deal’ scenario, businesses will be able to account for their import VAT from non-EU countries in the same way, which will help to make the most of trading opportunities around the world.

We’ll issue more guidance setting out further detail on accounting and record keeping requirements soon.

Changes to VAT IT systems

EU VAT registration number validation

This service allows businesses to check whether a customer or supplier’s VAT number is valid. You will still be able to use this service to check the validity of EU business VAT registration numbers. UK VAT registration numbers will no longer be part of this service.

In the event of ‘no deal’, HMRC is developing a system that can continue to validate UK VAT numbers. We know this is important for certain businesses in order to carry out due diligence.

£8 million funding scheme for customs intermediaries and traders

The government fully acknowledges the potential capacity challenges facing the customs intermediaries sector in supporting existing and new clients when the UK leaves the EU. In September HM Treasury and HMRC announced a one-off investment of £8 million to support broker training and increased automation.

As part of this investment, funding is now available to help customs intermediaries and traders based in the UK, meet the upfront costs of employee training and IT improvements.

Employee training grant

There is £2 million available to fund training for intermediaries and traders completing customs declarations, or intending to complete customs declarations in the future. The grant will provide funding for up to 50% of the cost of training staff.

How to qualify

Your business must:

  • either complete customs declarations for themselves or someone else (or intend to in the future)
  • or import from or export to the EU and complete customs declarations (or intend to complete customs declarations in the future)

What you can use the grant for

The grant will provide funding for up to 50% of the cost of training your employees to:

  • complete customs declarations
  • facilitate other businesses to use import and export procedures
  • carry out the technical processes of customs procedures

The training does not have to lead to a formal qualification.

What you cannot use the grant for

You cannot use the grant:

  • towards the existing costs of current training
  • for other unrelated training

IT improvements grant

There is £3 million available for funding IT improvements. This is available to small and medium-sized enterprises in the customs intermediaries sector who are currently completing customs declarations on behalf of importers and exporters.

The grant will fund investment in packaged software that increases the automation and productivity of completing customs declarations.

How to qualify

Your business must:

  • currently complete customs declarations on behalf of importers and exporters
  • have 250 employees or less
  • have an annual turnover of £50 million or less

What you can use the grant for

You must use the funding to buy software that’s:

  • a packaged solution
  • used to increase the automation or productivity of your business in completing customs declarations

The funding can also be used:

  • to buy hardware that’s needed for the software to run
  • to install and configure the software and hardware
  • for the first year license
  • for training employees to use the software

What you cannot use the grant for

You cannot use the funding:

  • to commission bespoke software
  • for unrelated networking costs

How to apply

Applications will close on 5 April 2019, or earlier once all the funding is allocated. If you think your business qualifies for either grant, please apply at the earliest opportunity. More information, and a link to the online application page, are available on GOV.UK.

Actions you can take now

  1. Assess the impact of any increased demand for customs declarations on your business, and whether you need to recruit and train additional staff.
  2. Consider any changes you may need to make if you have to follow the same or similar processes for EU trade as you do with the rest of the world.
  3. Inform businesses if they need to register for a UK Economic Operator Registration and Identification (EORI) number in addition to an EU EORI number, or register for the UK EORI number of their behalf. Read more on GOV.UK.
  4. Stay up-to-date with these changes by registering for email alerts. Follow the link, add your email address, select ‘Submit’, select ‘Add subscription’ and choose ‘EU Exit’ then select ‘Submit’.
  5. The passport rules for travel to most countries in Europe will change if the UK leaves the EU on 29 March 2019 without a deal. Read the government’s guidance on Travelling to the EU with a UK passport if there’s no Brexit deal and, if relevant, ensure your employees and customers are aware of the potential changes.
  6. Consider checking with your customers that they are aware of the potential changes and how these could impact their business, and suggest they also register for email alerts.
Published 6 February 2019