On 10 February 2020, the UK government confirmed plans to introduce post-Brexit import controls.

The Government announced that the policy easements put in place for a potential no deal exit will not be reintroduced as businesses have time to prepare:

  • The transitional simplified procedures (TSP) (initially introduced by HMRC to reduce congestion at customs checkpoints by allowing businesses to defer full import declarations until a later date);
  • Deferred import VAT accounting (this refers to the payment of import VAT on the VAT return, rather than at the time of release of goods into the UK, mitigating the cash flow impact of imports and replicating the treatment for goods moved within the EU); and
  • Temporary tariff easement measures (various measures, including transitional simplified procedures above, which were designed to support businesses to comply with new requirements in a no-deal scenario).

The withdrawal of the above measures will have administration and cost implications for businesses importing goods into the UK from the EU with effect from 1 January 2021. In particular there will be a cash flow impact for businesses who import goods into the UK from the EU, as unlike the current position businesses will generally need to pay 20% import VAT at the time the goods are declared in the UK, and will only be able to recover this VAT on the next VAT return after holding the necessary documentation.

However, there are certain mitigation actions that can be taken such as utilising customs simplified procedures and obtaining “Simplified Import VAT Accounting” (SIVA), which is a procedure that enables a company or agent to operate a VAT and duty deferment account without a guarantee for the VAT element, therefore reducing the compliance cost to the business.

The press release is available here.