Preparing for Brexit Customs Declarations VAT and Duty Webinar Overview

Detailed webinar presented by Richard Taylor, VAT Manager at Albert Goodman, discussing changes in import procedures for EU movements, duties, VAT, customs declarations, and more post-Brexit transition period.

• Brexit
• Customs
• VAT
• Duty
• Webinar

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1. PREPARINGFOR BREXIT, CUSTOMS DECLARATIONS, VAT AND DUTY LIVE WEBINAR: 10.00AM 16 December 2020 PRESENTED BY: RICHARD TAYLOR VAT MANAGER AT ALBERT GOODMAN richard.taylor@albertgoodman.co.uk

2. Preparing for Brexit, Customs Declarations, VAT and Duty Format of webinar: Overview Changes to import procedures for EU movements Import Duty and VAT Import Declarations Duty Deferment Account & Special Procedures Exporting EU VAT e-commerce package Services Summary

3. Preparing for Brexit, Customs Declarations, VAT and Duty Overview Current transition period ends at 11pm on 31 December 2020 and the UK will leave EU Customs Union From 1 January 2021 the UK will operate a full external border and controls will be placed on the movement of goods to and from the EU Regardless of any Free Trade Agreement there will be changes

4. Preparing for Brexit, Customs Declarations, VAT and Duty Changes to Imports from EU Headline changes affecting goods arriving from the EU Import Declarations will be required VAT will be payable on standard or zero rated goods Supply VAT payable on imports of 135 or less VAT exemption for imports under 15 removed Duty may be payable if no Free Trade Agreement

5. Preparing for Brexit, Customs Declarations, VAT and Duty Duty & VAT Proposed duty rates are in UK Global Tariff Roughly 66% of Commodity codes have 0% duty Duty rates have been simplified many rounded down Import VAT will be payable on consignments over 135 VAT registered businesses can use Postponed VAT Accounting (PVA) to defer the payment of import VAT Unregistered business will have to pay VAT on importation

6. Preparing for Brexit, Customs Declarations, VAT and Duty Postponed VAT Accounting Can be used for all imports not just those from the EU Goods must be for business use No application required but import entry must show certain details Import VAT is paid and reclaimed (subject to normal rules) through same VAT return Import VAT shown in box 1 of VAT return, import VAT is reclaimed by entering in box 4 and net value in box 7 Online monthly statements will be available to download to show the total Import VAT postponed

7. Preparing for Brexit, Customs Declarations, VAT and Duty How will PVA help? Example of import in 1 July and VAT return ending 30 September Timings under current process import in July Credit Import VAT on return Pay Import VAT Reduced payment due on 7 Oct July Aug Sept Oct Timings under PVA Submit entry Pay import VAT and reclaim it Aug July Oct Sept

8. Preparing for Brexit, Customs Declarations, VAT and Duty Delay declarations for EU goods From 1 January to 30 June 2021 Import Declarations can be deferred for up to 175 days without HMRC approval Applies to standard goods only, not controlled goods such as alcohol, fish or chemicals, in free circulation in EU Record details of the import in own records showing specific details VAT registered business must declare VAT using PVA at time of entry Supplementary Declaration must be made using the Simplified Declaration procedure which requires HMRC authorisation and a Duty Deferment account Duty payment, and VAT if not VAT registered, paid when supplementary declaration is made

9. Preparing for Brexit, Customs Declarations, VAT and Duty Simplified Customs Declarations Simplified initial declaration either to HMRC or in records A Supplementary Declaration is made to HMRC in following month Must have: a Duty Deferment Account HMRC Authorisation Specific software to make the declaration

10. Preparing for Brexit, Customs Declarations, VAT and Duty Non-Freight imports Merchandise in baggage (commercial goods imported in luggage or small vehicles) Value not exceeding 1500 and weighing 1,000kg or less, a simple online declaration before the goods arrive Standard declaration for higher value consignments, excise, or restricted goods or goods that require a license. In both cases, oral declarations at the point of import using a Red Point/Channel, if one exists, can be made. Royal Mail and Parcel Carriers can use CN22/23 forms for standard goods not exceeding 900 For parcel imports RMG & parcel operators can make customs declarations

11. Preparing for Brexit, Customs Declarations, VAT and Duty Low value consignments For commercial imports of goods in consignments not exceeding 135 UK VAT will be payable by the seller so VAT invoices should be issued (Not NI) If UK VAT registered business gives seller VAT number at time of purchase VAT will be paid by UK business under reverse charge rules For non-commercial consignments, excise goods & some consignments from Jersey & Guernsey

12. Preparing for Brexit, Customs Declarations, VAT and Duty Duty Deferment Account Can be used to pay various import taxes, incl VAT, Customs Duty & Excise Duty Deferred taxes are added to DDA and paid on 15th day of following month by Direct Debit Some cash flow benefit and quicker release of goods Requires an application and HMRC approval May require financial guarantee but can be waived

13. Preparing for Brexit, Customs Declarations, VAT and Duty Special Procedures Temporary admission - specific categories of goods & occasional imports of other goods Inward Processing ships, aircraft, fish, cheese, bicycles Customs Warehousing taxes payable when goods removed to home use Outward processing for goods temporarily exported, e.g. for repair Returned Goods Relief

14. Preparing for Brexit, Customs Declarations, VAT and Duty Exports to the EU From 1 January 2021 Export Declarations have to be made for goods moving into the EU The declaration must include a significant amount of details such as: the Customs Procedure Code Commodity Code for the goods departure point and destination consignee and consignor nature, amount, and packaging of the good transport method and costs Can apply to make simplified declarations HMRC approval & CHIEF access

15. Preparing for Brexit, Customs Declarations, VAT and Duty Exports to the EU For freight exports an entry has to be submitted to HMRC electronically using the National Export System (NES) Time limits apply and vary according mode of transport Additional documents required may include: Commercial invoice (incl extra detail such as EORI nos, Incoterms, Commodity Code, reason for export etc) Commercial paperwork origin declarations etc Export licences Phytosanitary certificates

16. Preparing for Brexit, Customs Declarations, VAT and Duty Non-Freight Exports to the EU Post and parcels rules on export declarations similar to those for imports Carriers are preparing e.g. the Parcel Force website says: Electronic customs content data includes information on the sender, the recipient, the parcel s contents (description, weight, value, etc.) and a Trade Tariff (or HS) Code. You will need to provide this data in addition to a Customs Declaration (CN23 or Commercial Invoice) to meet new customs requirements and ensure continued shipping of overseas parcels without restriction from 1st January 2021. For retail sales is your carrier prepared to manage the importation into the EU and potentially pay the import VAT on consumers behalf Merchandise in baggage again rules for commercial exports mirror those for imports

17. Preparing for Brexit, Customs Declarations, VAT and Duty Export Evidence Goods exported to the EU can be zero rated Conditions do apply, e.g. goods normally have to be removed within 3 months of sale Vital proper evidence is held as set out in HMRC Notice 703 Official evidence copy of UK Customs NES Goods Departed Message or CHIEF declaration showing status of Entry code 8 and ICS code 60 or Commercial Transport evidence, e.g. authenticated sea waybills, fully completed International Consignment Note (CMR) plus Supplementary evidence orders, correspondence, evidence of payment

18. Preparing for Brexit, Customs Declarations, VAT and Duty EU Import VAT implications Import entry into EU will be required EU Import VAT and Duty may be payable Who will be shown as Importer of record and who will pay VAT and Duty For sales to consumers terms such as DDP, where import taxes are charged to seller, can be attractive due to improved customer experience If customer is a business who can reclaim any import VAT perhaps not so attractive If UK business is shown as Importer of Record may be able to submit claims for repayment of input tax under 13th Directive in a few countries, otherwise reclaiming VAT likely to require VAT registration

19. Preparing for Brexit, Customs Declarations, VAT and Duty EU VAT e-commerce package Come into force from 1 July 2021 22 VAT-free import relief will be abolished Seller will become responsible for paying VAT on sales not exceeding 150 to consumers Introduction of an Import One Stop Shop allows seller to declare VAT to EU through a single quarterly return, or Customs declarant can collect VAT from customer Simplified customs declaration for goods not exceeding 150

20. Preparing for Brexit, Customs Declarations, VAT and Duty Other changes Retail Export Scheme will end on 31 December 2020 Margin schemes cannot be used for goods purchased in EU (possibly under review) EU VAT refunds - paper not digital claims, claims for 2020 can be submitted digitally before 11pm on 31 March 2021

21. Preparing for Brexit, Customs Declarations, VAT and Duty Services B2B little change place of supply where customer belongs B2C outside EU replaced by Outside UK advertising, consultants legal etc no UK VAT Digital Services supplied to EU consumers will need to register in EU for MOSS scheme includes web-hosting, supply of music, telecoms etc Tour Operators Margin Scheme margin on EU holidays will be zero-rated

22. Preparing for Brexit, Customs Declarations, VAT and Duty Key Messages Make sure you have an EORI (normally GBVATNos000) Consider who will submit customs entries If using a freight forwarder or customs agent discuss the changes with them Discuss the changes with EU suppliers or customers Consider applying for a Duty Deferment Account Are there any Customs Special Procedures that may help Are you eligible for an HMRC grant

23. Preparing for Brexit, Customs Declarations, VAT and Duty QUESTIONS & ANSWERS