No more Transition at the UK Border means more paperwork for businesses

Author
Catherine Stephens
Head of International Trade Services | Business West
4th August 2020

The UK left the European Union on 31st January 2020, and the transition period comes to an end in December this year. It is vital that businesses take action now to get ready for a new border operating environment from 1st January 2021.

Until the new border operating model was published on 12th July, we could only speculate on how goods would be controlled at our borders once we left the EU. It’s now clear – and the new model brings this into stark reality – that businesses need to prepare for a significantly higher level of customs declarations and associated administration. It candidly states "customs declarations are complicated".

Declaration volumes will grow from 55 million now, to almost 300 million next year. The cost to business is estimated at around £7bn per annum, and the customs intermediary market lacks the necessary capacity to deal with the increase.

The detail

New border procedures for importing and exporting goods to and from the EU will be in place. Traders importing ‘standard goods’ – covering everything from clothes to electronics – will need to prepare for new customs paperwork. You will need to keep specific records of imported goods and you can opt to take up to six months to submit a full customs declarations for goods arriving from the EU.

Taxes will need to be paid on all imports, but payments can be deferred for up to six months until July. This will help trader cash flow until the end of 2021, but only if you or your agent have the correct approvals in place to use simplified procedures. Full customs requirements will apply to controlled goods from 1st January 2021 whether they arrive from the EU or elsewhere.

Businesses will be able to account for VAT on goods imports using Postponed VAT Accounting from the start of the new year. This means that once the staged introduction period ends, payment of VAT due on imported goods can be delayed until the next VAT return.

What does this mean for business?

Despite the much-needed clarity on customs procedures, and a welcome delay through staged introduction of full customs controls, big challenges remain for most businesses. Declarations volumes will increase, costs will rise, traders need to skill up to deal with new procedures and time is incredibly short.

Companies trading across the globe will need to make a choice. Should they take advantage of the staged introduction of measures for EU imports and gain a cashflow advantage through delayed duty and VAT payments? Or, stick with the systems and processes they already know, and use the newly introduced postponed VAT accounting and guarantee free deferment accounts to delay border taxes by up to six months? Whatever you decide, businesses that export and import goods have change coming and it’s inevitable.

The wise amongst you will wake up to change and plan your level of readiness. There is much to do and qualified and compliance led customs experts are becoming a rare commodity. 

The expert team at Business West ChamberCustoms, with our international trade training programmes and our overseas connections, makes us an ideal customs partner. 

As your business gets ready for the end of the transition period, our customs agents are ready to help you clear your goods at the border.

With customs declarations raising from 50 million to around the 300 million mark at the end of the transition period, there is a real concern that there is a lack of resource in the freight industry and traders will have difficulty sourcing a customs broker to process their import and export declarations. Traders need to ensure that they are ready and set up to trade with the EU from 1st January 2021. Engage with Business West ChamberCustoms now so your goods can travel with ease into and out of Europe without delays.

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