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The UK has left the EU customs union, single market, and VAT area. The Trade and Cooperation Agreement (PDF 7.44MB) (TCA) sets out the terms of UK trade with the EU from 1 January 2021. Some constituency businesses and individual constituents find dealing with the amended import and export procedures challenging. Below are the main sources of information which may help people dealing with constituency casework questions about customs rules.
This document is intended to be a general overview of some of the issues arising from trade with the EU. It is not a comprehensive guide to all aspects of trading with the EU and does not cover the circumstances of any specific case.
Tariffs and rules of origin
The UK-EU TCA secures zero tariffs and quotas on goods moving between the EU and UK, provided those goods meet the rules of origin (RoO). The RoO determine the “economic nationality” of a good based on where the products or materials (or inputs) used in their production come from. They prevent goods manufactured in third countries being routed through the UK (or the EU) to avoid paying third country tariffs.
To benefit from the TCA zero tariff, businesses must show the origin of their goods. A product qualifies as ‘originating’, if it is ‘wholly obtained’ in the UK and EU, or has been substantially transformed in one or both markets. That is why, as reported by the Financial Times, businesses that re-export goods from third countries with little or no further processing, may still face tariffs when trading with EU Member States.
Rules of origin can be onerous. In some cases, the rules are specific to particular products. Some businesses cannot or do not wish to claim zero tariff because of complexity or cost of the paperwork. Research by the UK Trade Policy Observatory shows that during the first part of 2021, a substantial number of businesses did not claim zero tariffs when exporting to the EU.
Overview of UK-EU customs processes
The EU has introduced full customs controls from 1 January 2021. The UK Government is phasing in border controls for most goods imports over 2021 and 2022. On 14 September, it announced a new timetable for introducing import processes, with full customs controls effective from 1 January 2022. Some controls, including certificates and physical checks on agri-foods and plant imports, are being postponed till 1 July 2022.
The Government’s Border Operating Model gives a comprehensive overview of customs processes, both for imports from and exports to the EU. An Institute for Government explainer contains a timetable of customs formalities for UK-EU trade.
European Commission guidance Brexit: End of transition period. New rules on taxes & Customs answers the most common questions about EU customs rules. More detailed EU technical guidance is available.
First steps for businesses
Businesses need to familiarise themselves with new processes. These include: preparing to make customs declarations, knowing how to classify their goods correctly, and following safety and security requirements for their goods.
Get ready to make customs declarations
From 1 January 2022, traders must submit customs declarations for all goods exported from and imported into the UK (excluding those from Ireland). In some cases, a business may submit a simplified declaration.
Know how to classify goods
Traders are responsible for correct classification of goods and recording of the origin of goods. Incorrect commodity codes or inaccurate recording of origin in customs declarations may mean that the wrong amount of tax or duty will be charged. Traders may classify their goods themselves but HMRC often advises getting help from customs intermediaries to ensure that goods are classified correctly. More information is on GOV.UK: Claiming preferential rates of duty between the UK and EU.
Businesses importing goods can check the applicable UK tariff duties and VAT rates with the help of the HMRC Trade Tariff tool.
Follow safety and security requirements
The EU requires safety and security declarations on imports from and exports to the UK. The UK Government will introduce these declarations for imports from the EU starting from 1 July 2022. Exporting from the UK, a trader generally has to make an exit summary declaration.
Submitting customs declarations can be complex. The Government Border Operating Model (PDF 4.1MB) recommends (p30) that businesses get a contract with a customs intermediary who can do this on their customers’ behalf. HMRC has lists of customs agents and fast parcel operators.
Traders can find information on customs and tax rules through various UK government channels:
- Brexit: guidance for businesses leads to information on HMRC processes for importing and exporting.
- Customs & International Trade Helpline number is 0300 322 9434. See also GOV.UK Brexit transition helplines.
- The government has launched an Export support team hotline and online enquiry service for businesses exporting to the EU.
- HMRC offers webinars and short films about importing and exporting.
- Different rules apply to Northern Ireland. Businesses moving goods between Great Britain and Northern Ireland can use the free Trader Support Service, which provides information and can complete declarations on their behalf.
- A GOV.UK guide explains how businesses can export food, drink and agricultural products.
The European Commission has a Taxation and Customs information website. In individual cases it is advisable to consult the involved EU Member State’s customs authorities. Some authorities have a dedicated UK contact point that offers information in English.
The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.
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