Introduction of the Border Operating Model
This week, the Government published the new Border Operating Model which will take effect from 1st January 2021.
This document follows the announcement on 12th June that rather than putting in place full border controls on EU movements, the UK will introduce a revised three stage approach. This approach is intended to stagger the customs documentary and financial obligations placed on UK businesses over the first six months of 2021 by applying three key dates: 1st January, 1st April and 1st July.
The Border Operating Model (BOM) covers the broad three stage approach but it also drills down into a significant amount of detail which demonstrates that applying the new approach and the related protocols may not be as simple as businesses first assumed.
The BOM is based around a ‘core model’ for imports and a ‘core model’ for exports which will impact all movements of goods. It also outlines the additional customs requirements for a range of goods which will impact many business sectors within the UK.
The ‘core model’ assumes an Australia style future relationship with the EU which is an interesting premise, particularly as Australia does not have a trade agreement with the EU, only a 12-year-old ‘partnership framework’ agreement which aims to facilitate trade in industrial products by reducing technical barriers with no specific rules set for tariffs.
Is this another way of saying that the new provisions are based around a ‘no deal’ scenario, akin to WTO rules? You decide…
Some key changes which UK businesses will need to be aware of include:
- Excise duty businesses – from 1st January 2021, you will need to submit full customs declarations to HMRC. If you want to use excise duty suspension, you will need to apply to be a ‘registered consignee’ or seek the services of someone who is already approved.
- Deferment of import customs declarations – businesses may need to be authorised by HMRC to use simplified declarations or engage the services of someone who is already authorised. (Although confirmatory guidance issued by HMRC this morning is contradictory).
- Duty Deferment Account (DDA) – businesses will need to have a DDA or access to a DDA in order to defer import duties.
- Intrastat returns – these returns will still need to be submitted for 12 months for those businesses which meet the relevant thresholds.
- EU EORI number – UK business which import goods into the EU will need an EU EORI number, even if you use a customs agents or forwarder to make your declarations.
- GB EORI number – UK businesses will need a UK EORI number if you import or export goods into and from the UK.
- Postponed VAT accounting (non-VAT registered) – non-VAT registered businesses who do not choose or are not eligible to defer their customs declarations will need to report and pay import VAT through the customs processes.
- Postponed VAT accounting (VAT registered) – VAT registered businesses who are eligible to defer their supplementary declarations must use postponed VAT accounting. This means that you will account for import VAT on your VAT return which includes the date you imported the goods.
- Export health certificates – these will be required for certain goods.
- Licences – these will be required for certain goods.
- Hauliers and carriers – new IT systems and responsibilities will be introduced for goods which they carry by road.
- Controlled goods – businesses moving these types of goods will need to submit a full customs declaration from 1st January 2021. These include goods such as alcohol, tobacco, oils, biofuels, controlled drugs, precursor chemicals, endangered animal or plant products, fish, fertilisers, plant and plant products etc.
- Additional duties and tariff sanctions – these may apply to goods imported into the UK such as chemicals, plastics, rubber, paper, textiles, ceramics, glass, metal, electrical goods, vehicles, bicycles and some foods.
- Steel – tariff safeguards may apply to the importation of steel and steel products.
There are other actions which UK businesses will need to adhere to for goods imported into the UK including applying for prior approval from HMRC to operate some customs procedures and measures. UK businesses will need to consider any lead in time to allow any associated applications to be considered by HMRC and to ensure these approvals are in place by 1st January 2021, as required.
For UK businesses which export to the EU, you will be required to submit a full export declaration and meet any additional customs requirements of the country of destination from 1st January 2021.
Further updates are anticipated and HMRC intend to write to some businesses with a high value of trade with the EU to discuss their business and what they need to do to prepare. Unfortunately, those businesses to be contacted will not extend to all of the estimated 145,000 VAT registered businesses in the UK who trade with the EU or the additional estimated 100,000 businesses who trade with the EU but are not UK VAT registered.
For businesses which have not considered any end-of-transition-period planning now is an appropriate juncture to consider the customs changes, how your business may be affected and use the next few months to prepare and to be proactive rather than reacting to repair a situation.
For businesses which have already planned what they intended to do, it would be prudent to revisit these plans to consider whether the recent government announcements will affect those plans and whether they need to be revised and revised.
If you need any customs advice, help to navigate the impending changes or assistance with your end-of-transition-period planning, please contact Lucy Sutcliffe – National Customs Duty Director at firstname.lastname@example.org.