The UK Government will introduce new border controls at the end of the Brexit Transition Period. This is in three stages up until 1 July 2021.
Michael Gove, on behalf of the UK Government, formally informed the European Commission that the UK will neither accept nor seek an extension to the current transition period. The Brexit transition period is due to end on 31 December 2020.
Following the UK’s exit from the EU on 31 January 2020, the UK and EU entered into the Withdrawal Agreement. During this ‘transition period’ the UK receives Member State treatment. So the EU rules on VAT, Customs and Excise Duty continue to apply until 31 December 2020.
The End of the Transition Period
This is all set to change on 1 January 2021. The UK government confirmed that the UK will not be a part of the Single Market or Customs Union. In February 2020, the UK Government confirmed that the transitional arrangements put in place in 2019 were no longer required and that full Customs controls will be in place for goods coming from the EU. However, having already changed their mind on postponed accounting for import VAT, which will now be applicable to all imports from January 2021, the Government have also had a rethink on border controls. This is mainly due to the impact of the coronavirus and the ability for businesses being able to plan ahead. However, there is concern with the Government’s preparation in terms of the required resources to apply full controls.
New Border Controls
The UK Government have now announced they are to introduce new border controls in three stages up until 1 July 2021:
- 1st stage from January 2021 – businesses importing standard goods will undergo basic customs requirements. This includes sufficient records of imported goods and there will be up to six months to complete customs declarations. When submitting the customs declaration, any duty is then due on the goods. The recently announced new UK global tariffs (UKGT) will apply. There will still be checks on controlled goods such as alcohol and tobacco.
- 2nd stage from April 2021 – All products of animal origin (POAO). This includes meat, pet food, honey, milk or egg products. In addition to, all regulated plants and plant products will also require pre-notification and the relevant health documentation.
- 3rd stage from July 2021 – businesses moving all goods will have to make declarations at the point of importation. Any customs duty will be due at this time.
Lockdown measures are easing as businesses start to get back to some level of normality. Now is the time to start refocusing minds on the impact of the many changes that lie ahead. The UK is leaving the Single Market and Customs Union. Even if there is a free trade agreement (FTA) with the EU in place by 31 December 2020, there will be changes to trade with the EU. Added to this, there is a proposed delay to the EU’s e-commerce VAT package. This introduces the One Stop Shop (OSS) for accounting for VAT on intra-EU B2C supplies of goods and services. Thus would provide potential simplification for some goods moving from the UK to the EU. As a result, trading cross border is going to become more complex than ever.
For further information on how Accordance can help your business navigate the new UK border controls at the end of the Brexit Transition Period, please contact one of our VAT experts.
We would also be pleased if you would join us for our Brexit and OSS webinar on 7 July 2020.