Important update for Transport and Logistics // Manufacturing Businesses

HMRC has issued a further letter to all VAT registered businesses trading goods with the EU.

As well as reiterating the steps to be taken in the event of the UK leaving the EU with no deal, the letter outlines new Transitional Simplified Procedures (TSP) for customs, designed to make importing via certain RORO (roll-on roll-off) locations, such as Dover and the Channel Tunnel, easier in the initial no deal period.

What should businesses do?

Businesses can sign up for TSP from 7 February at www.gov.uk/hmrc/eu-simple-importing and will need an Economic Operator Registration and Identification (EORI) number to do so. Once registered, standard goods may be transported into the UK post Brexit by making a customs declaration within the business records. For controlled goods, a ‘simplified frontier declaration’ must be submitted to HMRC up to two hours prior to arrival at the border. The importer will then be required to update the entry within 24 hours to notify HMRC that the goods have arrived. In both cases, an import declaration must be submitted to HMRC by the fourth day of the month following arrival of the goods in the UK and payment of import duties will be postponed until the 15th day of the month following importation.

This temporary measure is due for review after three months, but HMRC have said that they will give a 12 month notice period for any changes, so the TSP should be in place for at least a year following a hard Brexit. Businesses importing goods which are liable to Customs duty will need to have a financial guarantee in place by 30 June 2019 to cover any deferred duty.

What about import VAT?

The process for accounting for import VAT will also change so that businesses will be able to pay import VAT on the next VAT return, rather than when goods arrive at the border, allowing for import VAT to be declared and recovered on the same return.

The proposed new procedures will ease the burden for businesses importing goods through certain ports and it is advised that TSP is applied for in preparation for a no deal scenario.

HMRC have also outlined which EU VAT IT systems will no longer be available in the event of a no deal, these being the EU VAT Refund Electronic System, EU VAT number validation service (VIES) and UK VAT Mini One Stop Shop (MOSS), although alternative systems are expected to be in place.

Businesses in the Manufacturing and Transport and Logistics sectors that have not yet applied for an EORI are advised to do so now as the first step in preparing for a possible no deal.

We recommend that steps are now taken to address the above points. Should assistance or further information be required, please contact your Menzies advisor who can provide support.