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What does the UK’s zero tariff deal with the EU mean for businesses?

The UK has left the EU customs union so there are changes to the way that we do business with the EU. The deal that the UK has agreed with the EU means that UK businesses may be able to continue to:

• sell goods to the EU without their EU customer being charged Customs Duty

• buy goods from the EU without being charged Customs Duty when their goods arrive in the UK

However, this isn't the same as being in a customs union. To benefit from the zero rate of duty, businesses will have to provide proof that their goods (or their parts/ingredients) originate in the EU or the UK (as the exporting country). Where the goods originate from means where they are manufactured or produced, not just where they are shipped or bought from. The answer to “What proof do businesses need to claim the preferential zero rate of duty for goods they import from the EU into the UK?“ explains what proof you will need to claim the zero rate of duty.

Businesses will still need to pay VAT on goods imported from the EU into Great Britain, where applicable. For more information on paying VAT on goods imported into the UK, please see the answer to “Do traders need to pay VAT for goods they import?“.

Checking a UK VAT number

A new service has been launched Gov.uk: Check a UK VAT number

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What proof do businesses need to claim the preferential zero rate of duty for goods they import from the EU into the UK?

If you import goods from the EU into the UK, that originate in the EU, you need to prove to HMRC that you can claim the preferential zero rate of duty.

First, you will need to classify your goods and check if they meet the rules of origin requirements included in the UK’s deal with the EU; the Trade and Co-Operation Agreement (TCA). Here’s more information about the rules of origin requirements under the UK’s deal with the EU. If your goods meet the rules of origin and product specific rules, you will be able to claim the preferential zero rate of duty.

To claim, you will need to provide proof that your goods comply with the rules of origin. This can be either:

• a statement on origin – showing that the goods are originating, made out by the EU exporter

• through evidence you’ve obtained (‘importer’s knowledge’) that the goods are originating in the EU

You can find more information about the proof you need to provide and how to claim the preferential rate of duty on GOV.UK.

If you choose to delay making declarations for goods you import into the UK from the EU, you do not need to provide proof of origin until you make your supplementary declaration.

Do traders need to pay VAT for goods they import?

VAT will be due on all goods:

• imported into Great Britain from overseas

• imported into Northern Ireland from outside the EU

• sold between Great Britain and Northern Ireland, as well as movements of own goods from Great Britain to Northern Ireland

VAT on goods imported from outside the UK

If you buy goods from outside the UK which don’t exceed £135 in value the seller, or online marketplace (OMP) if sold through one, must charge and account for VAT when the goods are sold.

Business to Business sales that do not exceed £135 in value are also covered by the new rules. Where the UK VAT registered business provides the OMP or direct seller with its VAT registration number, the responsibility to account for VAT is with the UK VAT registered business customer, who will account for it if the goods are supplied in:

• Great Britain using a 'reverse charge' procedure

• Northern Ireland, using Postponed VAT Accounting.

If a valid UK VAT number is not provided, the direct seller or OMP, must treat the transaction as though it were a business to consumer sale and charge VAT accordingly.

You can find more information on GOV.UK about the VAT treatment of overseas goods sold to UK customers either directly or through an online marketplace.

If you buy goods from outside the UK that exceed £135 in value, you will need to pay import VAT when your goods arrive in the UK. HMRC uses commodity codes (also known as tariff codes) to work out the amount of VAT and Customs Duty that you owe on goods you move in or out the UK. When you complete your import declarations, you must make sure you included the correct commodity code. Once you have the correct code, you can check if you need to pay VAT or duty, and how much.

You can use the Trade Tariff tool on GOV.UK to find the correct commodity code for your goods. If you have hired a customs intermediary to deal with your import and export declarations, they will be able to help, but you will need to provide accurate information about your goods.

VAT on goods sold or moved between Great Britain and Northern Ireland

Import VAT will be due on goods sold between Great Britain and Northern Ireland, as well as movements of own goods from Great Britain to Northern Ireland. However, it should be accounted for by the seller/sender of the goods via the VAT return. You can find more information regarding the VAT treatment of goods moving to and from Northern Ireland on GOV.UK.

EMCS

Undischarged ARCs at the end of transition

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From 1 January 2021, will pre advices for goods received from the EU switch to using the ‘From Importation’ Receipt Type?

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Postponed VAT Accounting / PVA

Is there any requirement in order to use Postponed VAT Accounting?

No, as the system currently automatically identifies ‘Acquisition VAT’, from the EOTP onwards it will continue to do so for stocks receipted before the EOTP. For stocks receipted after the EOTP, instead of using ‘Acquisition VAT’, the same entries (plus receipts from ALL other countries - not just the EU) will use ‘Postponed VAT Accounting’.

If acquisition VAT stocks are relanded, will they switch to PVA?

Yes, for pre advices (including those created from transfer orders) if the ‘Received Date’ on the pre advice is on or after 1 January 2021 then acquisition VAT will no longer apply for those stocks.

Does PVA accounting check that the customer has a EORI number - if not present does it assume standard VAT?

The wiki page states "For goods received after the EOTP, acquisition VAT will become PVA VAT and the restriction of applying this solely to EU countries will be removed allowing PVA VAT to be used for imports from any country. " so basically it's the same as before, so yes the customer needs to be VAT registered.

Where PVA is used, how do we provide a summary of VAT that has been postponed to be included on the VAT return?

Vision Bond was updated many versions back (when PVA was first introduced for the day 1 no deal preparations) to show the PVA transactions on the Period End VAT Statement.

What are the conditions for applying PVA and the different VAT types?

See https://visionsoftware.atlassian.net/wiki/spaces/VB/pages/2186608673/Day+End+Processing+Bond#How-is-the-data-processed%3F

Moving goods to Northern Ireland

HMRC systems

Downtime planned

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