Category Archives: Border Control

VAT: New guidance on the border with the EU post-Brexit

By Marcus Ward 14 October 2020

This month the government have issued new guidance: The Border with the European Union Importing and Exporting Goods on the Border Operating Model. This provides comprehensive guidance on the movement of goods from 1 January 2021 and adds to previous guidance.

This is important information for any business moving goods between GB, the EU and NI and needs to be considered for tax planning and general preparation for Brexit. These rules will likely come into force regardless of whether the UK has negotiated an agreement with the EU.

The introduction comes in three stages:

Stage One – January 2021
Stage Two – April 2021
Stage Three – July 2021

Stage One

Business will need to:

understand the requirements of EU Member States. The necessary processes must have been done and documentation completed to comply with these requirements
obtain a GB EORI number to move goods to or from the UK
if undertaking any EU customs processes, businesses will need an EU EORI
importers; check which goods are on the controlled goods list- if they are on the controlled goods list, a full customs declaration is required
if importing non-controlled goods, decide whether to delay the customs declaration for up to six months or complete full customs declarations on import
decide how to complete customs formalities: Most businesses are expected to use a customs intermediary
consider obtaining a Duty Deferment Account (DDA). A DDA allows holders to delay customs duty, excise duty and import duty, to be paid once a month rather than on individual consignments
check to see if a facilitation would be of benefit. There are a number of facilitations, including the Common Transit Convention
if importing live animals or high-priority plants, business needs to be prepared for submitting additional documentation and checks taking place at point of destination
exporters; be prepared to submit customs export declarations
hauliers; be ready to use the “Check an HGV is ready” service

Stage Two

If businesses are importing Products of Animal Origin (POAO) or a regulated plant and plant product; they will need to:

to submit pre-notification and the relevant health documentation

Stage Three

Businesses must:

meet full customs requirements including submitting declarations, regardless of whether it is a controlled or a non-controlled good
pay VAT and excise duty where necessary
submit safety and security declarations
be prepared for customs compliance checks either at port or an inland site
be prepared for relevant SPS goods to enter GB via a Border Control Post either at port or an inland site, accompanied by sanitary and phytosanitary (SPS) documentary requirements

General

From 1 January 2021

Customs Declarations – Importers and exporters will have to complete UK and EU customs declarations after the end of the transition period. Some locations will require pre-lodgement of customs declarations prior to the movement of goods, which will particularly affect ‘roll on-roll off’ (RoRo) movements
Customs Duties – Importers will need to ensure that any customs duties applicable to their goods under the new UK Global Tariff are paid. Importers will need to determine the origin, classification and customs value of their goods. There are options available to defer any payment that is due
VAT will be levied on imports of goods from the EU, following the same rates and structures as are applied to Rest of World (RoW) imports. VAT registered importers will be able to use postponed VAT accounting. Non-VAT registered importers have the same options available to report and pay import VAT as they do for customs duties

Businesses will need to review their processes for dealing with cross-border goods, both between the EU and Northern Ireland. This includes; customs declarations, compliance, provision of data, obtaining a duty deferment account and GB/EU EORI numbers as necessary. We also advise liaising with suppliers and customers to ensure, as far as possible, that transactions are as seamless as possible in these challenging times.

VAT: New HMRC list of customs agents and fast parcel operators

By Marcus Ward 1 October 2020

HMRC has published a list of agents and fast parcel operators who can help submit customs declarations.

Most businesses use customs agents to deal with customs procedures on their behalf. This need will increase post-Brexit. This publication shows agents and fast parcel operators who can do this, although firms on the list are not approved or recommended by HMRC.

It can be complicated to submit import and export customs declarations, so it may be better to use a company which specialises in this area to avoid potentially costly errors and to ensure compliance. It may also be beneficial in terms of costs.

The lists include:

customs agents and brokers
freight forwarders
shipping companies
fast parcel operators (eg; couriers or next-day parcels services)
agents who specialise in a certain industry, eg; fresh foods or pharmaceuticals

Other preparations required for Brexit here.

VAT: New HMRC guidance for businesses trading with the EU

By Marcus Ward 1 October 2020

HMRC has produced some help for business which will trade with other EU Member States from 1 January 2021 after Brexit. This includes videos and other information. it is divided into the following categories:

The guidance sets out what a business needs to do if it:

exports goods to the EU (currently called dispatches)
imports goods from the EU (currently called acquisitions)
moves people, data and services between the UK and the EU

It is said that the videos (on You Tube) are to help a business understand more about the decisions and processes in dealing with other countries. The actions will be required regardless of the outcome of negotiations with the EU and whether or not the government secures a Free Trade Agreement.

VAT and Customs Duties: How to use a Customs Warehouse

By Marcus Ward 24 September 2020

With the reality of Brexit fast approaching, businesses should be planning for a No-deal outcome.

One result of Brexit is likely to be the increase in the number of importers using a Customs Warehouse (CW). If a business imports goods from outside the UK (which will include other EU Member States from 1 January 2020) and it wants to store the goods to delay duty payments, this can be done in a CW.

HMRC has, this month, as a result of the anticipated increase, updated guidance on the use of a CW. Interested parties may wish to consider this publication.

Overview

There are two types of customs warehouse where you can store your goods.

Public warehouse

This is a warehouse operated by a business whose purpose is to store other people’s goods. They are the warehousekeeper and you are the depositor.

Private warehouse

This is a warehouse operated by a business to store its own goods. That business is the warehousekeeper and the depositor.

Paying duty and import VAT

A business will need to pay any Customs Duty due and import VAT when it removes its goods from a CW to free circulation (not at the time the goods enter the UK). This a different procedure to duty deferment and often improves cashflow.

Placing goods in a CW

A business is responsible for:

correctly declaring the goods – if it uses an agent, it must give them clear written instructions about declaring the goods
ensuring that the goods are sent directly to the CW named on your declaration, within five days of Customs clearance
providing the warehousekeeper with all the details of the customs declaration
ensuring that the CW is approved for the type goods being deposited including chilled, frozen or requiring special storage needs, eg; chemicals
goods being correctly declared on removal from the warehouse

Removing goods from a CW

when a business releases goods to free circulation, it is ‘discharging’ or removing them from a CW and will pay any VAT and duty due

customs declaration will be required to remove the goods or declare them to another procedure

a business will be notified electronically of the entry number and it can remove the goods after it has made the declaration

there is also a simplified declaration which may be used to remove goods

Further details on managing a CW here.

VAT: Changes to duty-free and tax-free goods carried by individuals

By Marcus Ward 15 September 2020

Duty Free extended to the EU from January 2021

HMRC has announced changes to the treatment of excise duty and VAT of goods purchased by passengers for their own use and carried across borders luggage.

Passengers will be able to buy duty-free alcohol and tobacco products in British ports, airports, and international train stations, and aboard ships, trains and planes when travelling to EU countries.

Currently, the UK applies EU rules to these goods and there are differences between passengers traveling to and from EU member States and to and from countries outside the EU. From 1 January 2021 post Brexit the rules will change. These apply to GB rather than Northern Ireland and are:

the amount that passengers can bring back with them from non-EU Countries will also be increased, and extended to EU countries

tax-free sales in airports of goods such as electronics and clothing for passengers will end

VAT refunds for overseas visitors in British shops (the Retail Export Scheme – RES) will be removed. Currently, non-EU individuals can reclaim VAT incurred on retail purchases via the RES

however, overseas visitors will be able to buy items VAT-free in store but only if they have them sent direct to their overseas address. After 1 January 2020 this will be extended to EU countries

personal allowances will be:
- 18 litres of still wine
- 4 litres of spirits or 9 litres of sparkling wine, fortified wine or any alcoholic beverage less than 22% ABV
- 200 cigarettes or
- 100 cigarillos or
- 50 cigars or
- 250g tobacco or
- 200 sticks of tobacco for heating
- or any proportional combination of the above smoking products

UK excise duty will no longer be due on alcohol and tobacco bought when leaving GB. For example, alcohol purchased duty-free on the way to the EU

Commentary

Although sold by the government as applying our new freedoms and extending duty free, in reality, the current system permits bringing in alcohol and tobacco which was purchased for a cheaper price in other EU Member States (the duty being greatly lower than the UK and the goods themselves often cheaper) in almost unlimited quantities, so it is unlikely to be very beneficial for passengers.

Retailers will need to recognise the changes, particularly the removal of the RES and the end of tax-free sales of certain goods at airports.

VAT Planning – Why?

By Marcus Ward 20 August 2020

Why? How? Where? When? What? Who?

Why?

It is impossible for any business to do such a basic thing as set its prices properly unless it understands its VAT position and ensures that this is reflected in those prices, terms and contract terms etc. The aims of tax planning are:

compliance
business planning
avoiding unnecessary tax costs
maximising input tax claims
minimising VAT payable where possible
obtaining any refunds and retrospective claims due
avoiding penalties and interest

How?

The “How?” is dependent on the specific business and its needs. We offer a flexible and tailored service from start-ups to multi-national companies. We offer:

solutions to ad hoc issues
negotiation
structuring and restructuring
contractual arrangements
Dispute resolution (with HMRC, suppliers, customers etc)
full reviews and health checks
training of staff and management
assistance with international/cross-border supplies and purchases
due diligence
cost reduction exercises
income maximisation programmes
comprehensive land and property advice
advice on overseas indirect/GST matters both EC and non-EC
accounting and documentation advice

The VAT planning process – “The four As”

Ascertainment
Analysis
Alternatives
Action

More details of this approach here.

Where?

VAT, or its derivations applies in most countries around the world. So, the answer is probably “everywhere”. This is particularly relevant with cross-border transactions. A common issue is the “Place Of Supply” (POS) rules which dictate where a supply takes place and thus the VAT liability of it.

When?

Planning needs to be done in advance of transactions. Once a contract has been entered into without thought for the VAT consequences, the damage may have already been done.

Where there is a one-off transaction (eg; sale of premises, sale of know-how, issue of shares), this is, by definition, something of which the business has little experience. It is an occasion to assume that advice is needed, rather than to assume that the most obvious treatment is correct.

Since the impact of a change in the pattern of a business’ activities will continue down the years, rather than being restricted to a single occasion, it is doubly important to ensure that the correct treatment is identified from the outset.

Periodic reviews are a good time to look, not only at the future, but also at the past, to see whether developments in case law reveal past overpayments which may be reclaimed. This is particularly important since repayments are subject to the four-year capping provisions.

The essential step is to have some means of becoming aware of changes and monitoring these with VAT in mind. The means to be adopted are various and will depend on the size and type of the business.

What?

“Right tax, right time”. This means compliance with the relevant legislation but not paying any more VAT than is necessary. As one wag once said; “You must pay taxes. But there’s no law that says you have to leave a tip.”

Since VAT is a transaction-based tax, timing is often crucial and the objective is to legitimately defer payment to HMRC until the latest time possible, thus improving cash flow and retaining the use of VAT monies for as long as possible. The converse of this of course, is to obtain any repayments of VAT due from HMRC as soon as possible. We must also consider avoiding VAT representing an actual cost and taking advantage of any beneficial UK and EC legislation, determinations, guidance, case law and Business Briefs etc available.

VAT Planning objectives

improve cash flow
improve competitive position
legitimately reducing VAT payments or increasing repayments
minimise administration/management
avoid unnecessary tax or compliance costs
avoid penalties and interest

Who?

Marcus Ward Consultancy of course!

VAT: Post Brexit – low value consignments. New rules

By Marcus Ward 27 July 2020

From 1 January 2021 there will be changes to the VAT treatment of low value consignments (LVC). These are goods with a value up to £135 – the threshold for customs duty liability. The HMRC guidance states that VAT will be collected at the point of sale rather than on import.

The changes are intended to ensure that goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT free imports.

Brief summary

LVC Relief, which relieves import VAT on consignments of goods valued at £15 or less will be abolished
Online marketplaces, where they are involved in a sale, will be responsible for collecting and accounting for VAT
If no online marketplace is involved, the overseas seller will be required to register in the UK
LVC B2B sales will be subject to the new rules. However, where the business customer is VAT registered in the UK VAT will be accounted for by the customer by a reverse charge
Although the new rules mean that there will no longer be any VAT to collect at the border, Customs declarations will still be required at import, although these will be simplified
For goods imported by UK VAT registered businesses which are not covered by the provisions will be able to use postponed VAT accounting
Sales made by persons who are not in business are outside the scope of the new measures. This includes gifts and consignments sent from consumer to consumer

VAT: New government guide to imports and exports from/to the EU post Brexit

By Marcus Ward 20 July 2020

On 13 July 2020 the Government published new guidance which sets out procedures for businesses moving goods between GB and the EU from 1 January 2021. These do not cover the movement of goods between GB and Northern Ireland which are covered by different rules.

On 1 January 2021 the transition period with the EU will end, and the UK will become a “third country” and as such, it will be required to operate a full, external border, in a manner similar to the UK’s current position with the Rest of World (ROW). This means that controls will be placed on the movement of goods between GB and the EU for the first time in decades.

The principles of the so-called “Core Model” will apply to all goods movements between GB and the EU, regardless of the mode of transport of the movement.

HMRC has stated that, to afford industry extra time to make necessary arrangements, it has taken the decision to introduce the new border controls in three stages up until 1 July 2021.

The guidance covers the core process of;

customs declarations
customs duty
import VAT
safety and security declarations (imports and exports)

It sets out actions that businesses should take now (especially in light of the coronavirus position), as they will be required regardless of the outcome of continuing negotiations (which, let’s face it, are likely to amount to nothing).

Some other changes will affect only specific goods movements, eg; foodstuffs which will include the need for special certifications, entering the country via specific locations, and undergoing
additional checks at the border.

If not already in place, businesses need to:

apply for a GB eori number
apply for a duty deferment Account
prepare to pay or account for VAT on imported goods
ensure drivers have correct International Driving Permits
consider commercial arrangements
consider incoterms
obtain the Commodity Code of goods
establish the customs value of goods
consider how customs declarations to HMRC systems will be made and the use of an Customs intermediary

The EC has published a new version of the Guidance on Customs on 14 July 2020.

This a comprehensive guide is absolutely essential reading for any business which imports or exports goods cross border (transactions known as acquisitions and dispatches from/to the EU pre-Brexit). The publication demonstrates that there will be considerably more red tape and delays which will not reduce in the future. The marketability of GB goods in the EU is unlikely to increase and, if there is no alternative to importing goods from the EU, the cost and time taken to purchase will grow.

Good luck everybody!

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VAT: New EU Action Plan – The “Tax Package”

By Marcus Ward 16 July 2020

The EU has announced on 15 July 2020 a new Action Plan for fair and simple taxation. The Tax Action Plan is a set of 25 initiatives the European Commission will implement between now and 2024 to make tax “fairer, simpler and more adapted to modern technologies”. Full details of the ‘Tax Package” here.

The main areas may be summarised as:

a single EU VAT registration to replace non-resident registrations to eliminate the need for non-resident VAT registrations. The registration number would enable a taxpayer to provide services and/or sell goods anywhere in the EU
plans to complement existing national and international programmes on co-operative compliance including agreements with third-countries (including the UK post Brexit)
reforms of VAT on Financial Services including measures for e-digital economy (Fintech) and financial and insurance outsourcing
proposals to change Tour Operators Margin Scheme (TOMS) rules to simplify what is recognised as a complex and distortive VAT area
platform economy; a review of the role of marketplaces in collecting VAT on behalf of individuals on their platforms
simplification of the place of supply of passenger transport services (said to be for for greener taxation)
advances in e-payment facilities for VAT for small and medium sized businesses
extension of MOSS to all B2C sales across the EU (in addition to the proposals announced in respect of the 2021 extension for Distance Selling)
measures to combat cross-border VAT fraud including improved analysis of EU level data and a move to automated VAT data sharing
a reduction of the regulatory burden for e-commerce Distance Sales of goods subject to excise
consideration of the treatment of crypto-assets and e-money which is considered a threat to tax transparency and which poses “substantial risks for tax evasion”
proposals for reducing tax disputes and monitoring the effectiveness of the dispute resolution mechanisms in Member States

This list is not exhaustive and is a guide only.

The Commission says it aims “to lead the transition into a greener and more digital world that is compatible with the principles of our social market economy”. And that “Fair, efficient and sustainable taxation is central in delivering on those ambitions”. It added that this “will be even more important in the months and years ahead, as the EU and the global community seek to recover from the fallout of the COVID-19 crisis”.

Comment

How these intended changes impact the UK after Brexit remains to be seen, however, in an increasingly worldwide marketplace lead by technology, it is difficult to understand how the UK can live in isolation.

#VAT #Value-Added-Tax #marcus-ward #Marcus-ward-vat #VAT-business #VAT-place-of-supply #VAT-POS #business #VAT-supply #VAT-supply #penalty #VAT-penalty #VAT-penalties #VATable #HMRC #EC #EU #European-Union #VAT-Law #VAT-legislation #tax #GST #SME #start-up #new-business #newbiz #VAT-registration #tax-law #VAT-invoice #VAT-return #VAT-declaration #VAT-return #VAT-reporting #VAT-rules #EC-sales-list #VAT-cross-border #VAT-services #VAT-goods #VAT-international #International-tax #export #import #customs-duty #excise-duty #VAT-fraud #VAT-guide #VAT-MOSS #tax- digital #indirect-tax #tax-refund #VAT-refund #VAT-planning #tax-planning #VAT-compliance #tax-claim #VAT-claim #tax-legislation #VAT-financial-services #VAT-FS #VAT-agent #VAT-principal #VAT-agent-principal #VAT-input-tax #VAT-output-tax #VAT-underdeclaration #VAT-overclaim #VAT-online #VAT-digital #VAT-distance-selling #VAT-HMRC #Brexit

VAT: Latest on overseas claims from the UK

By Marcus Ward 15 July 2020

HMRC has announced in Revenue and Customs Brief 9 (2020) that there are delays in processing and refunding claims submitted under the Overseas Refund Scheme (EU 13th directive claims). These refunds are for VAT incurred in the UK by businesses belonging outside the EU and relate to the period ending 30 June 2019.

The delays are as a result of the COVID19 pandemic. HMRC say that they hope to make all payments 30 September 2020.

Certificate of status

HMRC says that it is aware that some overseas businesses may not be able to obtain the required certificate of status from their official issuing authorities due to the coronavirus.

If a business has submitted a claim without a certificate of status, it will not be rejected, but it will be put on hold until 31 December 2020.

If, in these circumstances, a business is unable to obtain the relevant certificate of status by 1 October 2020, it needs to write to HMRC to let them know and the specifics of the case will be considered.