EU-UK Readiness post 1st Jan 2021 (UK 1st Jan 2021)

Yesterday, 13 July, the UK published its Border Operating Model (206 page Policy Paper) that will apply from 1st Jan 2021 for GB trade with the EU – here.

In addition, HMRC information for traders importing or exporting goods between Britain (GB) and the EU after 1st Jan 2021 is published – here.

HMRC also has guidance on declaring goods brought into GB from the EU after 1st Jan 2021 (update from 10 July) – here.

Specific instructions –

(1) Plants and plant products (update from 10 June) – here

(2) Animals, animal products and high-risk food and feed not of animal origin (update from 10 June) – here

In addition, the Forestry Commission’s guidance on importing wood, wood products or bark from non-EU countries is updated – here.

Protocols for GB trade with NI, and NI trade with the EU (including Ireland) will be published later this month (the UK government said yesterday 13 July).

I Blog posted a few days ago on EU-UK Readiness on the EU side.

UK-EU Future Relations (UK)

Today sees the publication by the UK of a number of trade relevant documents –

(1) the UK Global Tariff (UKGT) that will replace the EU’s Common External Tariff from 1st January 2021 – here

(2) the draft UK legal texts in the ongoing trade talks with the EU – here

The UKGT will apply to all goods imported into the UK unless:

• an exception applies, such as a relief or tariff suspension

• the goods come from countries that are part of the Generalised Scheme of Preferences

• the country imported from has a trade agreement with the UK

This Blog does not focus on Trade or Customs. Note – commencing in July 2020, we (Cardinal Environment Limited) will be putting some staff through the UK Customs Academy Level 4 qualification, this is in order to improve our services in the areas of Trade and Customs, that impinge on goods movement.

Trade talks are underway with the EU and the US.

The UK Government will announce shortly it’s proposals for how Northern Ireland based traders will benefit from the UKGT. The Withdrawal Agreement Ireland-Northern Ireland Protocol creates special arrangements for Northern Ireland. I will Blog post separately at that point.

Environmental Taxes (UK)

The Finance Bill 2020 increases existing environmental taxes, amends the carbon emissions tax that is not commenced, and provides for a new packaging tax.

Vehicle Excise and Registration Tax

The government announced at Budget 2017 it would introduce a new regime for calculating a car’s CO2 emissions, known as the Worldwide Harmonised Light vehicles Test Procedure (WLTP). The WLTP applied from 1st September 2017. All EC certificates of conformity or UK approval certificates for new cars show CO2 emissions figures based upon the WLTP test procedure, in addition to those based upon the existing methodology (NEDC).

Schedule 1 to Vehicle Excise and Registration Act (VERA) 1994 provides the legislation for annual rates of duty. The Finance Bill 2020 amends VERA to facilitate implementation of the WLTP regime.

VERA is also amended to exempt all registered zero-emission light passenger vehicles registered from 1 April 2017 from the Vehicle Excise Duty (VED) supplement for light passenger vehicles with a list price exceeding £40,000, when their licence is renewed on or after 1 April 2020.

Air Passenger Duty (APD)

The rates for APD are set out in section 30 of the Finance Act 1994. The rates of APD for flights to Band A destinations are unchanged. Band B destination APD is increased – in force 1st April 2021.

Climate Change Levy (CCL)

The main rates of Climate Change Levy (CCL) are amended with effect from 1 April 2020. The reduced rate percentages that apply to the main rates of CCL payable by participants in the Climate Change Agreement (CCA) scheme, are also amended with effect from 1 April 2020.

The main rates of Climate Change Levy (CCL) are amended with effect from 1 April 2021. The reduced rate percentages that apply to the Climate Change Levy (CCL) main rates payable by participants in the Climate Change Agreement (CCA) scheme, are also amended with effect from 1 April 2021.

[ Budget 2016 announced that, from 1 April 2019, rates would become subject to ‘rebalancing’ to reflect changes in the fuel mix used in electricity generation. The increase in rates, from 1 April 2019, also sought to recover the tax revenues lost by closing the Carbon Reduction Commitment Energy Efficiency Scheme.

Budget 2016 announced that, alongside the rates increase from 1 April 2019, the reduced rates of CCL for qualifying businesses in the CCA scheme would be amended so that participants did not pay more in CCL than they would have if the rates were increased in line with the Retail Prices Index (RPI) as in previous years.]

[ Budget 2017 announced that in order to ensure a better consistency between portable fuels in the off-gas grid market, the CCL rate for liquefied petroleum gas (LPG) would be frozen at the 2019-20 level in the years 2020-21 and 2021-22. For this reason, the reduced rate for LPG will remain set at 23 percent for the years 2020-21 and 2021-22.]

[ Budget 2018 reaffirmed the government’s commitment to continue with the rebalancing and the CCL rates with effect from 1 April 2020 reflect this.

Budget 2018 announced the amended reduced rates for 2020-21 would limit the impact on CCA scheme participants to an RPI increase similar to that in the year 2019-20.

Budget 2018 announced the amended reduced rates for 2021 to 2022 would limit the impact on CCA scheme participants to an RPI increase.]

Landfill Tax

Sections 42(1)(a) and 42(2) of the Finance Act 1996 to increase both rates of Landfill tax (the standard and the reduced rate) in line with inflation (rounded to the nearest 5 pence). The increased rates apply to any disposal of relevant materials made (or treated as made) at a landfill site in England or Northern Ireland on or after 1 April 2020. The increased standard rate also applies from the same date to any disposal of relevant materials made (or treated as made) at an unauthorized waste site in England or Northern Ireland. The standard rate will increase to £94.15 per tonne and the lower rate to £3.00 per tonne.

Carbon Emissions Tax

Part 3 of the Finance Act 2019 (which established the Carbon Emissions Tax – not commenced) is amended. If the Government decides to use the tax as its carbon pricing policy after the Transition Period, the tax would be commenced on 1 January 2021.

The UK remains in the EU Emissions Trading System (ETS) until 31 December 2020. As set out in the UK’s Approach to Negotiations, the UK would be open to considering a link between any future UK Emissions Trading System (ETS) and the EU ETS, if it suited both sides’ interests.

In the event that there is no link agreed between a UK ETS and the EU ETS the UK would introduce an alternative carbon pricing policy.

The Government is therefore preparing both a standalone emissions trading system and a Carbon Emissions Tax.

Budget 2020 announced that legislation would be included in Finance Bill 2020 to: provide a charging power to establish a UK ETS linked to the EU ETS or a standalone UK ETS; and update the existing legislation relating to Carbon Emissions Tax.

The Finance Bill 2020 amends Finance Act 2019 to ensure that the tax would be ready to be operational from at the end of the Transition Period, if needed.

UK permit holders operating stationary installations would be set a tax emission allowance and be taxed on all emissions that exceeded this allowance on a carbon equivalent basis. The first emissions reports would cover 1 January to 31 December 2021 and the tax would be collected by HMRC annually. It is intended that the bills relating to the first reports would be issued in summer 2022. The tax would rely on data supplied by taxable installations under existing (and continuing) emissions reporting arrangements.

The EU ETS requires participants to obtain permits to emit and then to submit a report annually providing details of their activities across the previous calendar year, from which their emissions across the period are calculated. All greenhouse gas emissions are calculated on a carbon equivalent basis. The data on emissions will continue to be collected following the UK’s departure from the EU.

Much of the existing legislation supporting the EU ETS would, under a Carbon Emissions Tax, continue to provide the legal basis for the monitoring, reporting and verification of emissions, and the permitting of installations.

The Finance Bill 2020 also allows HM Treasury to make regulations which provide for the allocation of emissions allowances in return for payment under any future UK Emissions Trading System (UK ETS).

These include the powers for HM Treasury to establish a UK Emissions Trading System (ETS). This means that emissions allowances can be auctioned in any future UK ETS, as defined in regulations.

The Finance Bill 2020 also allows for the potential implementation of additional market stability mechanisms in a standalone UK ETS. As set out in the consultation, this could include a Cost Containment Mechanism (CCM) to respond to any significant short- term price spikes and an Auction Reserve Price (ARP). If implemented, the ARP would set a minimum price for which allowances can be sold at auction to provide a minimum carbon price signal.

[A response to last summer’s consultation on the Future of UK Carbon Pricing will be published over the coming months.]

Packaging Tax

The Finance Bill 2020 enables HM Revenue and Customs (HMRC) to prepare for the introduction of a tax on plastic packaging before it is formally provided for in law.

[At Budget 2018, the Government announced the introduction of a new tax on plastic packaging which has less than 30% recycled plastic.]

Moving Goods from Ireland to Northern Ireland (Northern Ireland Brexit)

Exit day is 31st October (this date is in a Statutory instrument)

[this Blog does not focus on Customs or VAT, this post is made only because the changes are substantive]

Today HMRC updated (in a major way) and reissued its guidance on customs procedures applying in Northern Ireland.

Here

Goods moving between Ireland and Northern Ireland will face different procedures compared to other UK-EU trade.

You will not need to:

• get a customs agent or an Economic Operator Registration and Identification (EORI) number

• pay Customs Duty or make import or export declarations to HMRC

You should also consider advice issued by the Irish government about their requirements for goods moving into or out of Ireland.

This was the case in the March instructions (see Blog post then).

What is added is information about moving controlled and licensed goods, transitional simplified procedures and moving goods under transit.

HMRC also issued updated instructions on excise duty applying to exports to Ireland and imports from Ireland.

Export – here.

Import – here.

Customs and VAT processes in Northern Ireland will also change if there is an orderly exit. I will be issuing further Blog posts.

EORI Numbers (UK Brexit)

Exit day is 31st October 2019

Because only some of the traders who import/export goods to/from the EU have registered for their GB EORI number, HMG is auto-enrolling now.

Here

An EU country specific EORI number is also required.

EORI numbers are not required for UK/Ireland trade across the Irish Border.

If a trader does not have the relevant EORI numbers, their goods will not clear borders.

HMRC Brexit Videos for Importers/Exporters (UK Brexit)

The Exit day is 12th April (the day after tomorrow) – the exit time is 12.00 CET

HMRC has updated its Brexit promotional materials with a 10-steps video for Importers, and a 10-steps video for Exporters. There are also leaflets.

Here

[the Exit day may change, please keep following this Blog]

Goods Moving between Ireland & Northern Ireland (UK Brexit)

I posted before about the international border on the island of Ireland.

Exit day is 12th April 2019.

[A] From Ireland (EU) to Northern Ireland (UK) after 12th April 2019

* No new requirements or checks on goods moving between Northern Ireland and Great Britain.

* Northern Irish traders must make declarations if they trade in dangerous chemicals, ozone depleting substances or F-gases (as the rest of UK – rUK).

* Northern Irish traders must use Belfast International Airport as the designated point of entry into Northern Ireland for endangered species.

* Northern Irish companies must have a licence to export dual-use goods (as rUK).

* Northern Irish companies must make declarations if they import animals and animal products from outside the EU that have not been checked in the EU. [this is different to rUK – for rUK see here]

* Northern Irish companies must follow rUK rules for importing plant products from Ireland – see here.

These are the only new processes which will be introduced.

Information on the temporary special Customs arrangements is here. This Blog does not focus on Customs, Tariffs or VAT aspects of borders.

[B] From Northern Ireland (UK) to Ireland (UK) after 12th April 2019

No announcements are yet made on the Irish Border specifics.

Follow this site for information on the Irish arrangements for its trade with the UK – here.

[the exit day may change, please keep following this Blog]

I will Blog again on this subject when further information is available.

HMRC (Imports) Customs Simplifications (UK Brexit)

Disclaimer : this Blog is not focused on Customs arrangements per se.

UPDATE (19 Feb 2019) : further easements – here.

UPDATE (4 Feb 2019) : these are now published – here. Transitional simplified procedures – here.

UPDATE : these do not apply to trade across the international border on the island of Ireland. These are initial plans from the UK side, they are not worked through with the EU (or agreed with the EU). In no deal, EU agreement is not needed, the EU is just supplied with the documentation they need for their processes.

HMRC has a Customs Partnership Pack, it’s in its third edition. Here.

I am hearing about substantial simplifications planned for EU/UK trade. Also for RoRo traffic. Available for undefined time but 12 months’ notice will be given if changes planned. These are not yet published. I will update this post, as necessary.

(1) Customs declarations and pre-notifications still required but various simplifications available to avoid congestion. Traders able to lodge them ahead of goods arriving at the border or into company’s records.

(2) Initial declaration submitted in the company’s own commercial records. Once the goods arrive in the UK a supplementary declaration is lodged.

(3) Transitional arrangements very similar to the two existing customs procedures Customs Freight Simplified Procedures (CFSP) and Entry in Declarants Records (EIDR).

(4) Brokers able to use own CFSP authorizations without being jointly liable for customs duties. Only importer liable to encourage brokers to use own CFSP. Unlike now. This simplification available for all trade, not only EU-UK.

(5) Relaxation of comprehensive guarantee requirement. Simpler version of the guarantee available for all traders without the need to meet the current CCG requirements. Sufficient time given to provide a guarantee.

(6) Only anti-smuggling (Border Force) checks at the border on selected shipments based on risk-analysis. Reminder -this is what currently happens. Even goods from other EU countries currently undergo these checks.

(7) Special simplifications for customs formalities also for traders of controlled goods (requiring a licence or a certificate).

[my thanks to Dr Anna Jerzewska, trade expert, for the above information]

Customs Transit Procedures (Brexit UK)

The Customs Transit Procedures (EU Exit) Regulations 2018 (SI 1258) are enacted. These will come into force when separately determined by Treasury Regulations (not enacted yet), these separate Treasury regulations will be made under the (Brexit) Taxation (Cross-border) Trade Act 2018. The Regulations are here.

These Regulations make provision for the international movements of goods, with import duty suspended, under the internationally recognised common transit procedure and TIR Carnet system, with provision for such movements within the United Kingdom. They also provide for such movements of goods under arrangements for NATO forces.

When enacted, they will ensure that these customs procedures operate as before once the United Kingdom exits the European Union.

Draft Notices to be made under these Regulations are here.

Detailed following of the new Customs arrangements is beyond the scope of this Blog. HMRC continue to publish guidance and instructions. Please follow HMRC for these.

Grants for Customs Declarations (Brexit)

The UK Government has today announced grants for companies and individuals carrying out customs declarations, the details are here.

– Up to £750 for each employee receiving training

– Up to €200,000 for new software (the maximum under EU state aid rules)

PricewaterhouseCoopers (PwC) is administering the grants for HMRC.

More information about the grants is on PwC’s website. The link to apply will be published on the government link above in early December 2018.

Ireland and the Netherlands have been offering grants for some time – here.