In the August edition of the ASI Newsletter
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ASI Certifications update
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Brexit Business Readiness Weekly Bulletin
Brexit Business Readiness Forum Q&A
8 August 2019
What will happen with VAT deferment at point of entry on EU imports? Currently no VAT due, but I have seen conflicting reports as to what will happen?
In the event the UK leaves the EU without a deal, the government will introduce postponed accounting for import VAT on goods brought into the UK, from both EU and non-EU countries. This means that UK VAT registered businesses importing goods to the UK will be able to simultaneously declare and reclaim import VAT on their VAT returns, rather than paying import VAT on or soon after the time that the goods arrive at the UK border.
Please don’t tell new importers that Duty deferment is effectively a direct debit as businesses are getting confused and not applying for Deferment Numbers thinking they can just pay by DD?
A duty deferment account allows you to pay your customs duties, import VAT and excise duties monthly by direct debit, rather than having to pay immediately each time you clear your goods through customs.
If you have customs duties, excise duties or import VAT to pay, you’ll need to have a duty deferment account to import goods using either:
• transitional simplified procedures
• customs freight simplified procedures
You do not need a deferment account for your import VAT if you’re accounting for it on your VAT Return.
Further information is available at: https://www.gov.uk/guidance/customs-procedures-if-the-uk-leaves-the-eu-without-a-deal#dut-der
Which forms should be completed to apply for a duty deferment account without a CCG.
Information on applying for a duty deferment account is available at: https://www.gov.uk/government/publications/apply-to-defer-payment-of-customs-duties-import-vat-and-excise-duties
Please explain how a shipment that arrives in Calais but destined to Rotterdam. Will that require transit?
Currently, goods that arrive in the EU from outside the EU can either be declared to free circulation in the EU member state of arrival and then travel in free circulation to the final EU member state of destination, or can be declared to a transit procedure on arrival in the first EU member state and travel under the transit procedure to the final EU member state of destination, where the transit procedure is discharged and the goods declared to another customs procedure as appropriate. In the event of the UK leaving the EU without a deal it is expected that EU customs requirements and procedures in (what would then be) the remaining 27 EU member states in respect of imports from outside the EU27 would remain as they are now, but you are advised to check this with the appropriate tax/customs authorities in the EU.
Will TSP cause issues for the collection of trade data for imports?
In the event of the UK leaving the EU without a deal Intrastat will continue to be used to collect data on trade in goods between the EU and the UK.
Are grants for software and customs training being made available again?
The application period for Customs training and IT grants closed on 31/05/2019, and you can no longer apply for these grants. HMRC will continue to review the impact of these grants and its wider support and guidance offer for traders to help them adapt to future customs requirements.
Do you have any recommendations for customs software?
HMRC does not make recommendations in respect of third-party software providers.
Does the EU EORI have to come from the first country of export?
Businesses can obtain an EU EORI from any EU member state. For businesses that are established within the EU, they should request an EORI number from the member state in which they are established.
Those businesses not established in the EU should request an EORI number with the customs authority of the EU member state where they make their first declaration.
Normally, businesses should not hold more than one EORI at a time, as an EU EORI issued by any member state is currently valid across the entire union. However, to help businesses prepare for the UK’s exit from the EU, businesses are able to apply for a UK EORI in addition to their existing EU EORI.
What checks will be done on the driver of goods coming into the UK and will these be done before boarding, on board, on disembarkation?
HMRC will prioritise flow at the border while maintaining security, and will continue to apply an automated, risk based approach to customs checks. This means any increase in the number of checks will be kept to a minimum.
HMRC’s approach to compliance in the event of a no-deal scenario will focus on supporting businesses in meeting their obligations at the border. Any financial penalties applied will be reserved for those who are able to comply but who deliberately choose not to.
This would not change HMRC’s commitment to promoting compliance and tackling avoidance and evasion to support a level and competitive playing field for law abiding UK businesses.
Easement of CCG requirement for Deferment etc.
1. How does this work with companies who already have a CCG in place? Will they be given 100% discount?
2. If I applied today (not D1) would I need a guarantee?
HMRC previously announced it will give importing businesses a period of grace to get a guarantee in place to cover any additional duties that they need to defer. HMRC’s current approach is to deliver the no deal customs, VAT and excise arrangements for 31 October that were in place for 12 April. This means that our expectation is that the previously announced easements will be available to traders should the UK leave the EU without a deal in October for at least as long as previously announced.
After this, a duty deferment account will need to be backed by a guarantee but this will not need to be a CCG. Traders could instead go to their bank to guarantee their duty deferment account without the need for a CCG. HMRC previously announced it will provide 12 months’ notice if the CCG requirement is to be reintroduced.
3. How does CHIEF correlate between TSP and guarantee status?
Guarantee status can be checked by reference to the declarant’s Deferment Account Number entered on the declaration/CHIEF.
4. Also the other procedures – does the same apply?
For at least 12 months after exit, there will be suspension of the mandatory requirement for businesses to provide a guarantee in order to be authorised to declare goods for:
• inward processing procedure;
• outward processing procedure;
• temporary admission procedure;
• authorised use procedure;
• temporary storage; or
• to operate a customs warehouse.
This relates to member in NI and Ireland. When they pick customers work up for processing but that work might go across the Irish border 3/4 times in the course of a day
• We cannot provide specific advice – they may want to speak to an agent
• Inwards and outwards processing may be a good place to start
• A customs agent would be able to provide more specific answers
Easements – and in particular using TSP and is it still, the case that users using TSP will be able to defer submitting supplementary declarations
That is the case for standard goods but we will confirm in regards to controlled goods. HMRC’s current approach is to deliver the no deal customs, VAT and excise arrangements for 31 October that
were in place for 12 April. This means that our expectation is that the previously announced easements will be available to traders should the UK leave the EU without a deal in October for at least as long as previously announced.
Professor John Loughhead, Chief Scientific Advisor & Director General from BEIS has contacted ALFED CEO Tom Jones to seek information regarding level of preparedness ALFED & our members may have in place to mitigate disruptions to, or price fluctuations in, the global trade in rare earth materials and products. Be sure to contact Tom with your thoughts or leave us a reply at the bottom of this post.
Rare Earth Materials and Products
Rare earth elements are materials of increasing importance in the production of high-performance magnets, materials, semi-conductors and catalysts. Over recent decades China has been the dominant source of the minerals from which they are extracted, but more recently also a mass manufacturer of the magnets, alloys and components based on such materials. Recently China has signalled that it may restrict trade in its rare earth materials and products. Many UK manufacturers rely on a range of these materials to create products such as jet engines, catalytic converters, semiconductors and high-grade alloys. It is unclear whether China will act on their threat but there is precedence from 2010 when they imposed rare earth export quotas on Japan.
Disruption in global supply would have an indirect effect on the UK but there is a risk of commodity price volatility and of disruption to supply-chains to the detriment of the UK’s manufacturing and research sectors, as well as our ambitions to transition to a low carbon economy. The impact on the UK is difficult to predict but it could slow the transition to electric vehicles and the decarbonisation of the energy supply with renewable energy. The EU imports 100% of its rare earth elements, 40% of which come from China and less than 1% are recycled. The UK has historically taken the view that market forces will ensure a secure supply of materials and there should be a limited role for the UK Government in managing risks, as many are the responsibility of businesses.
I am writing out to a collection of companies and organisations, such as yours, to seek information regarding level of preparedness your company may have in place to mitigate disruptions to, or price fluctuations in, the global trade in rare earth materials and products. We wish to develop a more informed picture of the UK exposure to this potential global trade risk.
Therefore, we are particularly interested to know:-
The Government will use the information gathered in this consultation to understand whether there is more we could do to engage with or support UK businesses in this area.
Professor John Loughhead CB OBE FREng FTSE
Chief Scientific Adviser, BEIS
Brand new for MACH 2021 the exhibition will be hosting an Aluminium Pavilion in association with the Aluminium Federation.
MACH is a fantastic event for both exhibitors and visitors. Showcasing live, digital production systems in one space, under one roof, hundreds of millions of pounds worth of business is discussed, secured and completed at the event.
Attracting 25,000 visitors and in excess of 600 exhibitors, MACH is the platform to connect UK manufacturing engineers, decision makers, buyers and specifiers with suppliers of new technology, equipment, services and processes.
James Fudge, MTA Head of Events commented:
“We are delighted to be able to welcome the Aluminium Federation and their members to MACH, aluminium is a key part of modern manufacturing and advanced engineering and we are very glad to be working with ALFED to get it represented at the show.”
Contact us for more information about exhibiting with us and members’ discounted stand rates.
Author Dianna Kinch
Editor James Burgess
London — UK Steel, the trade association for UK steelmakers and manufacturers, is urging the British government to secure tariff-free access to EU markets and more competitive electricity prices in the run-up to the UK’s exit from the EU.
This framework is necessary to ensure future investment by the steel industry and, potentially, the sector’s survival, the association warned.
The UK steel industry will no longer be protected by the EU steel imports safeguards system in the event of a no-deal Brexit. This could significantly raise costs and impede UK steelmakers’ ability to export to their natural market in the EU, unless tariff-free access is gained, UK Steel said in a paper sent to the new Secretary of State for Business, Energy and Industrial Strategy, Andrea Leadsom.
“Outside the EU, the UK would be subjected to the EU’s safeguard measures which apply 25% tariffs to all steel imports above specified quota levels,” UK Steel said in the paper.
It noted the cost of paying these tariffs once quotas are filled, which has occurred rapidly, would probably need to be borne by UK steelmakers.
“The UK government must therefore reach an agreement with the EU Commission to ensure tariff-free quotas in the event of a no-deal Brexit,” it said. “In the longer term it must be a negotiating objective during the transition period to ensure the UK and EU have the ability to exempt each other from safeguarding measures on the grounds of close economic integration, as is currently the case for Norway and Iceland.”
The EU introduced import safeguard quotas last year to ward off trade flow deviation, in response to the US’ introduction in March 2018 of Section 232 import tariffs of around 25% on most steel imports. Steel imports into the EU still rose to nearly 30 million mt last year, accounting for nearly a quarter of total consumption in some quarters.
UK steel exports to the EU have recently run at 2.6 million mt/year, around a third of its total production. UK Steel estimates thatregardless of what tariffs system might be adopted, the extra checks and administration of exporting to the EU after Brexit would increase costs by 4%-5% — an estimated GBP70 million ($84.91 million) cost to the industry each year.
The UK government must also take decisive action to align UK industrial electricity prices with those of the UK’s key competitors in France and Germany, UK Steel said in the paper, listing this as the second of six key demands it is making of government. It also requests changes or cooperation in the areas of business rates, public procurement policies, carbon costs and R&D.
“The UK’s electricity prices for large industrial energy users are higher than in any EU country,” the paper said. “In 2018/19 UK steel producers paid 51% more than German producers and 110% more than French producers, even after the compensation and exemption schemesalready provided by the Government. This amounts to a GBP55 million/year additional expense for the UK steel sector.”
The UK Aluminium Federation, ALFED, whose members have significant trading links with Europe too — including for processing steps in the aluminum production chain — also spoke out strongly this week over the dangers to the metals industry of a no-deal Brexit. European businesses are calling for this scenario to be averted immediately to avoid major disruption of supply chains across all industries and to protect jobs, it said.
“A no-deal Brexit will have disastrous consequences for businesses and citizens on both sides of the Channel,” Alfed CEO Tom Jones said in a statement. “EU and UK companies have benefited from over 40 years of economic integration and 25 years of the single market. As a result, value chains have become so closely intertwined that a no-deal Brexit will lead to chaos.
“Delays at customs and disrupted supply of all goods … will affect communities and incur significant costs for businesses and governments alike,” he said. “In many areas, businesses do not yet know the trading conditions they will be operating in and smaller companies are already experiencing cash flow problems in the face of this uncertainty.”
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