Additional changes related to the UK’s exit from the EU will become effective in 2022. Starting 1st January, a number of new customs controls will be activated. As such, it’s critical for organisations to educate themselves on these new rules and make appropriate preparations.
After 2021 ends, organisations will no longer be allowed to delay import customs declarations. The majority of customers will be required to both make declarations and pay any relevant tariffs at the point of import.
With this change in mind, organisations should be thinking about best practices to avoid operations being delayed or interrupted. It’s important to have a plan for paying tariffs and submitting customs declarations. It may be helpful to utilise an intermediary to manage declarations on your behalf.
When making customs declarations, organisations must use correct codes pertaining to both the country of origin and goods’ eventual destination. It’s important to note that the EU country code will be removed from UK systems in the near future. As such, organisations will be required to use the individual country code of EU member states.
It’s possible to gain authorisation from Her Majesty’s Revenue and Customs (HMRC) to utilise simplified declarations. This means that goods can be released directly to a specified customs procedure without a full declaration being required at the point of release. Applying for this authorisation can take up to 60 days and organisations will also be required to have a duty deferment account.
Rules of Origin
The Trade and Cooperation Agreement (TCA) between the UK and the EU may allow for reduced Customs Duty rates—also known as tariff preference—on both imports and exports.
To take advantage of these benefits, organisations must be able to prove that imported goods originated in the EU and that exported goods originated in the UK. In this sense, it’s important to note that this means goods must have been produced or manufactured in the relevant locations and not simply shipped or purchased there.
To benefit from tariff preference, there are different ways to prove the origin location of goods, including:
- Statement on origin—This must be made out by the exporter to confirm the relevant origin location.
- Importer’s knowledge—An importer can claim tariff preference based on their own knowledge of where their goods originated.
UK organisations exporting goods to EU member states may need to provide a supplier declaration in addition to a statement on origin. If evidence of origin cannot be provided to EU customs authorities, EU customers will be required to pay the full rate of Customs Duty, and further penalties may also apply.
Starting 1st January 2022, supplier declarations will become necessary at the time goods are exported. This is a key change to understand, as, throughout 2021, it was allowable to export goods to the EU using tariff preference while obtaining supplier declarations at a later date. Supplier declarations should also be provided for goods exported in 2021 to confirm UK origin. Customers should be notified if a supplier declaration for goods exported during this year are unable to be provided.
Starting in 2022, ports and border locations will control imports and exports transported between the UK and the EU. As such, goods that do not have a valid declaration and have not been cleared by customs will not be allowed to circulate. If goods cannot be checked at the port or border, they may be directed to an inland border facility.
Organisations will now be required to submit an ‘arrived’ export declaration for shipments transported through border locations that use the arrived exports process. It’s important to realise the delays and interruptions that will be caused by not adhering to proper processes. Otherwise, exports will be turned away from a port or border and not allowed to leave the UK.
It’s necessary to check with couriers, freight forwarders or other parties involved in the transport of goods to ensure a smooth transition into these new rules.
Importers registered for value-added tax (VAT) will be permitted to continue to use postponed VAT accounting on all relevant customs declarations. This includes supplementary declarations unless notified otherwise by HMRC. It’s important to note that goods imported from the EU eligible for tariff preference will still be subject to normal VAT rules.
Organisations should also be aware of changes related to commodity codes starting in 2022. These codes are used around the world to classify imports and export. The latest review by the Worlds Customs Organisation will result in UK codes changing on 1st January. Organisations should stay up to date on these changes and make any necessary adjustments. Click here for further guidance regarding commodity codes.
Additional changes related to customs controls are expected to come into effect beginning 1st July 2022. These new rules will affect the following parts of the import and export process:
- Requirements will change regarding full safety and security for all imports.
- New requirements will come into effect for export health certificates.
- Rules will change for phytosanitary certificates.
- Physical checks at border control posts will be adjusted for sanitary and phytosanitary goods.
Organisations should remain apprised of further changes that may affect their supply chains and transport processes.
Brexit continues to impact both the UK and EU in significant ways. It’s imperative that organisations understand the latest customs controls and continue to be aware of any future changes to avoid unnecessary business interruptions or delays.