Posted on: 01 March 2022

The 2021 Aviva Risk Insight report mentioned Brexit as one of the biggest risks faced by UK businesses.  Trading has become quite complicated, so many SMEs have shifted from EU suppliers to British suppliers in order to reduce costs and maintain quality. For those that continue to trade with EU countries, it’s important that they understand the latest changes to border custom controls and avoid any unnecessary business interruptions or delays.   

As of 1st January 2022, new custom controls came into effect regarding imports and exports between the UK and EU. However, the Federation of Small Businesses stated that some small traders in the UK do not have the resources to adjust to the new complex compliance regulations.  So, we have summarised the key insights and included important hyperlinks to help SMEs with the new rules.   

Customs Declaration  

Previously, if your goods were entering the United Kingdom from any EU country, you could delay your import declarations and tariffs for up to 175 days. However, this has changed, and businesses will now have to make declarations and pay relevant tariffs at the point of import.  

This rule has already come into effect and if you have been struggling to manage custom declarations, businesses should consider best practices such as hiring an intermediary to avoid interruptions in operations. It's imperative to have a robust strategy in place for paying tariffs and filing customs declarations on time to avoid fines.  

When completing customs declarations, businesses should also use the correct individual country codes relating to both the port of origin and the goods' final destination. This is in preparation for when the European Union (EU) country code will be removed from UK systems in the near future.  

Additionally, if businesses would like simplified declarations they can apply to Her Majesty’s Revenue and Customs (HMRC) through a Duty Deferment Account but it might take up to 60 days for the application to be processed. This will allow approved companies to have goods released directly to a specified customs procedure without a full declaration being required at the point of release.  

Border Controls 

The new rules also give ports and border locations the authority to control all the imports and exports being transported between the UK and EU. This means that if your goods do not have a valid declaration and have not been cleared by customs, they cannot be released into circulation. A noteworthy point here is that if the goods cannot be checked at the entry port or border, they will be directed to an inland border facility for further inspection.   

Businesses will also need to submit an ‘arrived’ export declaration if their shipments are transported through border locations that use the arrived exports process. Therefore, as a business you should make sure that you seek necessary assistance from couriers and freight forwarders to ensure the smooth transportation of your goods and avoid any unnecessary delays or interruptions.  

Rules of Origin – for imports and exports  

As the UK is not in the European Union anymore, there is a new trade agreement called the Trade and Cooperation Agreement (TCA) which enables businesses to benefit from a reduced rate of customs duty on their imports or exports.  

The most important information to follow is that as a business you need to be able to prove that the goods which are imported to the UK have originated from the EU and vice versa. ‘Originate’ here means that goods must have been produced or manufactured in the relevant locations (EU or UK) and not simply shipped or purchased there.  

Furthermore, to claim the preferred tariffs you can prove the origin of the goods through the following:  

  • a statement on origin – this must be made out by the exporter to confirm that the product originates in the UK or EU  
  • the importer’s knowledge – this option allows the importer to claim tariff preference based on their own knowledge of where the goods they’re importing originate from 

Businesses in the UK need to consider providing a supplier declaration in addition to the statement of origin, if they are exporting goods to European Union countries. You should also keep in mind that EU clients will be obliged to pay the full rate of Customs Duty if evidence of origin cannot be produced to EU customs officials, and further penalties may be imposed. 

Previously, businesses were authorised to export goods to the EU utilising tariff preference and get supplier declarations, afterwards. However, as of January 1, 2022, you must have supplier declarations in place (where applicable) when exporting your goods. 

Postponed VAT Accounting  

Registered importers can utilise the Postponed VAT Accounting (PVA) feature on their customs declarations which also includes supplementary declarations unless notified otherwise by HMRC. This policy enables businesses to postpone paying for their import VAT until next quarter’s VAT return, rather than paying for every single import. This was introduced to help customers maintain healthy cash flows while benefiting them in the short run.  

Commodity Codes 

There are commodity codes which are used throughout the world to classify goods which are imported and exported. These standard codes have 6 digits which are reviewed by the World Customs Organisation every 5 years. Therefore, following the last review, from 1st January 2022 the UK has new codes in place. Find out more about the new Commodity Codes here.  

Further changes will come into effect from 1st July 2022, which will include the following:  

  • Requirements will change regarding full safety and security for all imports. 
  • New requirements will come into effect for export health certificates. 
  • Rules will change for phytosanitary certificates. 
  • Physical checks at border control posts will be modified for sanitary and phytosanitary goods. 

For further information, you can click here for a step-by-step UK government guide on how to import goods into the UK and vice versa.  

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The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.