Ecommerce businesses haven’t had the easiest time navigating the post-Brexit changes, to say the least. You’ve had to stay up-to-date on changes to the UK’s customs landscape and VAT, and figure out the steps you need to take to adhere to new measures.
To help you along, we’ve provided an overview of the customs procedures for importing goods from the EU to the UK below.
Bear in mind that this is a general guide, and isn’t a substitute for specific advice. If you need further information about VAT, feel free to reach out to our tax consultants at Forma.
Obtain an EORI number
Businesses will now require an EORI number—or Economic Operators Registration and Identification number—to import goods into the UK.
You’ll need to check the type of EORI number you need. Depending on the location you import from or export to, you may require more than one EORI number.
If you’re based in the UK, you should obtain an EORI number that begins with GB. If you already have an EORI number that doesn’t with GB, you’ll have to apply for a GB EORI number. If you’re moving goods to or from Northern Ireland, you’ll need to obtain an EORI number that begins with XI. Do note that you can’t apply for an XI EORI number, unless you already have a GB EORI number.
If you need to apply for an EORI number, bear in mind that it can take up to one week for the application to be completed.
Find out if the post-Brexit changes regarding import VAT apply to your business
Following Brexit, new VAT rules relating to imports, exports, the EU VAT refund system and more have been established.
We’ve summarised the key changes you need to know if you’re importing into the UK in our VAT guide for ecommerce businesses. These include:
- Abolition of the Low Value Consignment Relief (LVCR)
- Duty deferment account
- Introduction of the £135 threshold
- Introduction of the postponed VAT accounting.
Do note that the postponed VAT accounting is mandatory if you choose to defer the submission of customs declarations. We’ll run through the details of completing your import declarations below.
Check that the business sending you goods is able to export to the UK
You need to ensure that the business sending you goods has all the necessary steps required to export to the UK. It includes:
- Making an export declaration in their country
- Obtaining the required EU licences or certificates
- Having an EU EORI number
- Having a statement of origin
- Having a commercial invoice
- Having a packing list
- UPS’ guide to shipping from the EU to the UK, which includes a checklist for exporters.
Preferential tariffs and the rules of origin
The UK and EU have agreed on a free trade agreement, which came into force on 1 January 2021.
For businesses that export and import between the UK and EU, this has an important implication: the agreement provides businesses with customs duty and quota-free access to the respective markets, provided that the rules of origin are met.
To find out if you can claim a preferential rate of duty, you need to check if your goods meet the rules of origin. If the goods meet the rules, you’ll need to obtain a proof of origin. The type of proof required will vary depending on the type of goods you have, where it is imported from or where the goods will be exported to.
- HMRC’s guidance on the rules of origin for goods moving between the UK and EU
- The Trade and Cooperation Agreement
Applying for a duty deferment account
A duty deferment account lets you delay paying customs charges such as customs duties, excise duties and import VAT (if you’re not using the postponed VAT accounting system). You’ll be able to make monthly payment through Direct Debit, rather than paying for individual consignments immediately upon import.
If you’re importing goods on a regular basis, making monthly payments will likely be a more convenient option. There are also instances where applying for a duty deferment account is mandatory, such as when you’re using the simplified frontier declaration system
Do note that the new rules for duty deferment will apply in Great Britain. While obtaining a financial guarantee was a requirement previously, businesses now have the option of applying for a guarantee waiver for their account.
- HMRC’s guidance on applying for a duty deferment account
- HMRC’s guidance on using your duty deferment account
Import licences and certificates
Depending on the type of goods you import, you may need to obtain an import licence or certificate.
Use HMRC’s Trade Tariff tool to find the right commodity code for the goods you’re importing.
Work out the value of your goods
When you complete your import declaration, you’re required to indicate the value of your goods. This is required for the calculation of the duty and VAT you need to pay, as well as for trade statistics.
Read HMRC’s guidance to learn about the different methods you can use to work out the value of your goods.
Completing your import declarations
You’ll need to decide how you’ll complete your import declarations.
You have the option of either completing the import declarations on your own, or through using customs intermediaries such as freight forwarders, fast parcel operators and customs agents or brokers.
Due to the complexity of the procedures, using an intermediary is the recommended option for businesses. This HMRC guide provides further instructions on steps you need to take.
If you choose to complete import declarations on your own, there are a few important things you need to know:
- Deferring import declarations until 30 June 2021: From January 2021 till 30 June 2021, customs declarations may be deferred for imported goods from the EU. Customs payments may also be deferred until the declaration is submitted. Do note that there are exceptions (such as if you’re importing controlled goods) and qualifying conditions (for instance, you’ll need to be authorised by HMRC to use the simplified declaration procedure). Find out more on the HMRC guide.
- Using the simplified declaration procedure (SDP): Depending on factors like the type of goods you’re importing, you may be able use the simplified declaration procedure. See the HMRC guide for further guidance on what you need to, including instructions on how to check if you’re able to use the SDP.
- Registering for the CHIEF system: CHIEF refers to the government’s Customs Handling of Import and Export Freight service. You’ll need to be registered for the CHIEF system, and use software that’s compatible with CHIEF. While the CHIEF service is scheduled to be replaced by the Customs Declaration Service in the future, it remains in use for the time being.
Depending on the choice of Incoterms used in a contract, the buyer and seller will have different customs duty responsibilities. In light of the post-Brexit changes, you need to review your contracts to check if updates should be made to your contract terms and Incoterms.
- Lexology’s guide to Brexit and Incoterms
- Weightman’s guide to contract reviews
- Investopedia’s guide on Incoterms
If you’re a VAT-registered business, you may need to submit monthly Intrastat returns on ‘arrivals’ (goods imported from VAT-registered suppliers in EU member states) if the value of goods exceed the stipulated annual thresholds:
- Your business receives more than £1.5 million worth of goods from the EU in any calendar year
- Your business moves more than £250,000 worth of goods to the EU from Northern Ireland in any calendar year
If the conditions above apply, submitting Intrastat declaration is required:
- For the rest of 2021, if you’re importing into Great Britain from the EU
- Until the end of the NI Protocol, if you’re importing into Northern Ireland from the EU
Download our Ultimate Expenses Guide
Download our Ultimate Expenses Guide
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