DORSET BUSINESS FOCUS / INTERNATIONAL TRADE
Importing problems on the horizon for 1st July
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Is there a huge headache for UK importers on the horizon with Postponed VAT, Duties and Declarations delayed until 1st July? International Trade Specialist, Frances Fawcett works with importers and exporters and there is cause for concern. Here, she explains why. The story so far… The impact of Brexit and the end of the transition period on 31st December has been widely felt and widely reported. Many of the niggles and challenges that we all saw in January have calmed down and goods are flowing more smoothly. It has taken some time, it has taken all parties getting to grips with new processes and, unfortunately, led to some businesses discovering new costs to doing business with EU suppliers and customers. Some of these are direct costs, other costs are in terms of time and administration. However, most regular exporters will probably have reached an understanding of the processes that are now required. I’d like to say that importers have reached the same clarity, but I fear not. This is because, whether they realise it or not, they haven’t been as exposed to some of the realities because of schemes in place to make things easier. Naturally we welcome these schemes, but they can sometimes leave things hidden and it’s critical that importers are aware.
2. Was the import declaration correct? •
You must check information such as goods value, Commodity Codes and Country of Origin because these are used to calculate the import fees due, and you will want them to be calculated accurately.
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It is possible to submit your own declarations, but most businesses use someone else to deal with customs for them. Customs Agents are extremely busy post-Brexit but fortunately this is a service provided by most Chambers of Commerce, so you may wish to start there.
Duties What do I need to do about it? For all goods that you have imported from the EU since 1st January 2021: 1. Check that you know the Country of Origin of the goods you have purchased. •
Delayed import declarations
Your suppliers should include this on their invoices, but you must check. Not all EU businesses were ready for the end of the transition period so may not have updated their documents.
What is it? Recognising that considerable changes might be needed post-Brexit and the end of the transition period, HMRC announced that importers could defer import declarations. All goods coming into the UK from overseas must enter the country with an import declaration. This was already the case for imports from outside of the EU and it is now also true for imports from the EU from 1st January 2021. In July of last year (2020), HMRC announced that UK importers could defer declarations until 1st July 2021. This was welcome news and offered a period of 6 months before declarations would be required However, traders are obliged to record goods in their own records so they can provided the information to HMRC later. There is also an obligation to account for duties and VAT, but more on that later.
2. You will also need to know the Commodity Code of the goods that you have imported.
What do I need to do about it?
1. Use the Commodity Code to verify whether import VAT applies. • It does apply to most goods at 20%.
For all goods that you have imported from the EU since 1st January 2021: 1. Has an import declaration been completed? • Transporters sometimes submit declarations if asked as part of the service they provide so you will need to find out if this was the case. If no one asked them to, they almost certainly didn’t. If an import declaration hasn’t been completed, ensure you have all the records you need about the goods you have imported. more news online - www.dorsetchamber.co.uk/news
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Again, you can check your supplier invoices, but you will also need to satisfy yourself that, if a Commodity Code is given, it is accurate.
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If none is given, you will need to determine the codes using the UK Trade Tariff.
3. If you do discover that you now have duties to pay, consider opening a Duty Deferment Account with HMRC. •
Opening an account is free of charge and cheaper than using a transporters deferment account as no fees apply.
Postponed VAT Accounting What do I need to do about it? For all goods that you have imported from the EU since 1st January 2021:
2. Access your Postponed VAT import statement. •
You will need your normal Government Gateway user ID.
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Statements show postponed VAT unless customs declarations were delayed.
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Note that statements are only available for 6 months – make sure you download and retain them!
Import VAT payable in the UK can be recovered by VAT registered businesses so although there is an administrative process here, there may not be a cost to your business. Do you know if a declaration has been made on your import? The Incoterms® rule determines whether you (the importer/buyer) or your supplier (the seller) are responsible for import procedures when goods arrive in the UK. Any rule other than DDP (Delivered Duty Paid) means that you, the buyer, are responsible. So, unless you are buying under DDP, you will need to make sure an import declaration is made. I recently met a business with an EU supplier taking care of the whole shipment to their door, so they assumed that included the import declaration. The Incoterm® rule quoted was EXW which is not suitable for an international trade transaction and clearly wasn’t the correct rule as the buyer had organised none of the shipment. They therefore had no idea whether an import declaration had been completed and could probably assume it hadn’t. Could import VAT be sitting waiting to be included on your next VAT return without you realising? PVA works so seamlessly that many transporters are assuming traders are using it – why wouldn’t they? There could, therefore, be a host of transactions sitting on a monthly statement that you didn’t even know existed. But surely someone will be catching this as the goods cross the border into the UK? This is a very dangerous assumption and I have seen enough to know that isn’t the case. The UK has taken a “low touch” approach to ease the changes faced by businesses after the end of the transition period. That means that just because the goods have arrived as expected, you cannot assume that all the correct processes were followed.
For more information please contact international@dorsetchamber.co.uk 41
