General

Importing & exporting wine from 1 January 2021 (inc VI-1 document requirements)

Will an XI country code be introduced for Northern Ireland?

CDS is aware of the EU's introduction of the XI/XU EORIs and Country Codes. Please note, CDS will not accept the new XI or XU country codes on a declaration and traders must continue to declare GB country codes on their declarations. If XI or XU country codes are declared, the declaration will be rejected. There will not be a separate country code introduced for NI. Tariff measures which are specific to Northern Ireland are driven by the AI code declared on the declaration and 'at risk' status of the commodity code.

Additionally, CDS will not be compatible with XI EORI prefixes on 1 January 2021 and traders will need to use their GB prefixed EORI on CDS until further notice.

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

Goods in

If your goods are dispatched on or before 31 December 2020 but received from 1 January 2021

You do not need to complete a UK customs declaration or pay customs duty in the UK if:

• the goods are travelling under a recognised excise scheme at that time

• you can show that the movement started on or before 31 December 2020

The import requirements and any sanctions that may apply to these goods will be based on UK excise legislation and duty points that apply at the time the movement from the EU started.

HMRC or Border Force may ask for evidence of the date and time your goods were dispatched. You can show this by providing:

• for excise duty suspended goods - the eAD or a commercial document containing the ARC

• for excise duty paid goods, either:

• the request to import excise goods bought duty paid in an EU member state (HM4)

• the Simplified Accompanying Administrative Document (SAAD) form

If you cannot prove the date and time your goods were dispatched, the movement will be treated in the same way as one that started from 1 January 2021 and customs import procedures will apply.

Closing movements that started on or before 31 December 2020 but received from 1 January 2021

If your goods arrive in the UK from 1 January 2021 but were dispatched from the EU before this time:

• you cannot use EMCS to create reports of receipt and close the movement

• you’ll need to provide a paper document to HMRC that includes the same information as an EMCS report of receipt to close the movement

Tariff

Will all currently zero rated ‘Tariff preferences’ (ACP etc) continue to be zero rated?

All products that currently have a zero tariff through the EU Generalised Scheme of Preferences will continue to have a zero tariff in the UK Generalised Scheme of Preferences. Furthermore, we have already made arrangements to provide tariff reductions through various Economic Partnership Agreements (EPAs). This includes the transition of the UK-Southern Africa Customs Union and Mozambique (SACU+M), the UK-Eastern and Southern Africa (ESA), the UK-CARIFORUM, and the UK-Pacific EPAs. We are continuing to engage with other partner countries, including but limited to, the East African Community, Côte d’Ivoire, Ghana and Cameroon.

Will the 25% additional import tax continue to be charged for US imports?

From 1 January the UK intends to continue applying rebalancing measures in response to US Section 232 tariffs on UK steel and aluminium, of which the commodity code referred to below is a part [2208308200]. The UK will also consult on the transitioned rebalancing measures to ensure they are in the best interests of the UK economy and steel and aluminium industry.

You can read more here- https://www.gov.uk/government/news/uk-announces-new-approach-on-us-tariffs 

What changes will there be to quota numbers?

From the most commonly used quota numbers among our customers, Defra have confirmed the following:

The three order numbers I’ve set out below are ones I recognise as belonging to Tariff Quotas. From the end of the transition period order numbers will start 05.xxxx rather than 09.xxxx, but the last four digits will remain the same.

091558 – Sparkling wine from North Macedonia. This quota has been agreed as part of the UK’s Partnership Trade and Cooperation Agreement with North Macedonia. The new UK order number will be 051558.

091892 – Wine from South Africa. This quota has been agreed as part of the UK’s Economic Partnership Agreement with SACU nations and Mozambique. The new UK order number will be 051892.

091893 – As above. The new UK order number will be 051893.

Details of all the trade agreements with non-EU countries can be found here. A list of the UK quotas available from 2021 will be published on gov.uk before the end of the year once relevant legislation has been published.

HMRC have since published the following page: Gov.uk: Reference Documents for The Customs (Tariff Quotas) (EU Exit) Regulations 2020

And…Gov.uk: Duty suspensions and tariff quotas from 1 January 2021

Claiming preferential rates of duty

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

There will be an electronic end-to-end electronic message solution (for Member States that can support it) and an automatic data cleanse solution before the end of May 2021 for EMCS movements that are unable to be closed via the report of receipt process.

We would encourage businesses to raise reports of receipt rather than reply on the automated process. Especially as functionality will allow all GB and NI consignees to submit reports of receipt for EMCS Member State movements from 1 January 2021 on UK EMCS.

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

No, ‘European Receipts’ will continue to be used.

Are VI1 certificates required for wine imports to the UK from 1 January 2021?

See: Gov.uk: Importing and exporting wine from 1 January 2021

Moving goods in to GB from NI

See:

Gov.uk: Trading and moving goods in and out of Northern Ireland from 1 January 2021

Gov.uk: Moving qualifying goods from Northern Ireland to the rest of the UK

Goods out

From 1 January 2021, will orders for goods being despatched to the EU switch to using the ‘Export’ Stock Movement Type?

No, ‘EC Warehouse Underbond’ will be renamed to ‘EU Export’ and that movement type should be used, this applies to anything which would’ve previously used the ‘EC Warehouse Underbond’ movement type and also duty paid despatches.

How to SEED check post EOTP?

GB traders will be removed from Europa’s website, Northern Ireland traders will remain. To SEED check a GB trader post EOTP, users are advised to use the ‘Pre Validate’ button in the VB EMCS screen.

Stocks in free circulation prior to the EOTP, and post EOTP exported to the EU?

From 1^st Jan 21, goods moving from GB to the EU will be treated as an export and a declaration will be required. For exporting excise goods, please refer to guidance on gov.uk via the following link. https://www.gov.uk/guidance/exporting-excise-goods-to-the-eu-from-1-january-2021?step-by-step-nav=1faad9b3-e5ef-47f6-a3ba-4715e7e4f263

It may be possible to reclaim any excise duty paid in the UK on alcohol. (This is also covered in the link above).

The importer/buyer in the EU will need to make an import declaration to the relevant EU Customs Authority and account for customs duties due to EU Customs authorities, (this scenario can therefore be viewed as effectively paying customs duty twice on the same goods). It is however a matter for EU Customs to advise further on their procedures/requirements on imports to EU).

NB. This may change subject to any UK – EU Free Trade Agreement

In order to avoid accounting for customs duties twice (UK & EU) businesses may wish to use customs facilitations to suspend payment of customs duties on goods imported into the UK. You can find further details on gov.uk via the following link: https://www.gov.uk/government/collections/pay-less-or-no-duty-on-goods-you-store-repair-process-or-temporarily-use

Such facilitations exist now and will largely continue from 1^st Jan 21.

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 Day End Processing (Bond) | How is the data processed?

Moving goods to Northern Ireland

HMRC systems

Downtime planned

CHIEF

ATWD

EMCS