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Customs Clearance and Tax Duty After Brexit

Here at Speedy Freight, we have another article in our Preparing For Brexit series with this piece on Customs Clearance and Tax Duty after Brexit.

At Speedy Freight, we’re continuing to make sure our clients are as prepared as possible for Britain’s exit from the European Union and its impact on the movement of goods. All of our clients will need to have the correct procedures in place to deal with Customs and Tariffs changes following the deadline for Britain’s exit from the European Union, on the 1st January 2021. After this date, customs clearance and tax duty are likely to become critical areas of change, as a result of the fact that the UK will be leaving the EU Customs Union.

In this article from Speedy Freight, we’ll outline the central changes and likely impact on those exporting to and from the UK – and the steps you need to take to ensure you’re ahead of the curve.

What is customs clearance?

Customs clearance is the name given to the compulsory process and procedure for all goods leaving or entering the EU. Customs clearance allows HM Customs & Excise to account for any due charges, ensure correct documentation has been used and conformity to EU law. It also allows Customs to monitor which goods are coming into or leaving the UK, this will apply to movements to and from the EU from 1st January 2021.

UK Vat is currently at 20%, duty will be dependent on the goods being shipped.

It may be this exact process, including changes to clearance and tax duty, that businesses should be prepared to undergo after the 1st January. As negotiations are still ongoing at the time of writing, it is important to regularly check the status of customs clearance agreements as they are in a period of rapid change.

What is the UK’s current customs clearance agreement with the EU?

Currently, the UK does not have to undergo any customs clearance procedures as regards trading with the EU. The options for the UK’s future of trade with the EU are as follows:

  1. A Free Trade Deal – goods will not need duties to be paid against them, but will still require paperwork to check and control movement.
  2. What’s been termed as a ‘skinny’ deal – in which goods will need customs duties paid against them,  with some commodities rated as zero.
  3. A No-Deal option  – invoking World Trade Organisation rules. If no deal agreement is reached the UK will be abiding by WTO tariffs and regulation. The UK will therefore be operating under these trade rules with each separate member state (27 states), meaning that in addition to paperwork, duties and VAT will need paying on most goods being imported/exported to the UK.

What will I need for customs clearance and tax duty after Brexit?

After Britain’s official deadline for transitioning has passed, there will be a new procedure of customs clearance required for all import and export with the EU. Currently, the UK has not reached a deal with the EU – meaning that a no-deal Brexit is an increasingly likely possibility.

In this event, the UK will become a ‘third country’ for trading and import purposes with the EU. As a third country, the UK will have no trade agreement with the EU – meaning that any imports into the EU would be subject to the World Trade Organisation (WTO) tariff schedule.

In addition, in the event of becoming a third country, the UK’s participation with the EU VAT scheme will become invalid – meaning that VAT would have to be paid in the UK when exporting from the EU.

The customs clearance process outlined above requires an EORI number in order for you to make these changes – so if you haven’t already done so, register for your EORI number here. Your EORI number must start with ‘GB’ unless you are operating from Northern Ireland, in which case you will need a GB and XI EORI number.  For more information about EORI numbers and an overview of what you’ll need to do before the 1st January deadline, check out our essential guide here: Moving goods to and from the EU after Brexit.


Further Changes To Customs and Tax for Import and Export with the EU

Regardless of whether or not the UK is able to reach a trade agreement with the EU, there will be trade borders and customs formalities to deal with for importing and exporting goods with the EU.

Clients in doubt as to the rate of the tariff they will be required to pay can use the GOV.UK site to check the tariff, as well as finding the difference between what they pay now and what they will pay from the date given. Here at Speedy Freight, our experts will be on-hand to assist, please don’t hesitate to get in touch with us if you have any questions.

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