INTRODUCTION OF THE BORDER OPERATING MODEL with Umbrella Companies Comparison
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 Umbrella CompaniesComparison 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.
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