Claiming tariff quotas to reduce import duties

Tariff quotas are a special mechanism for importing limited supplies of specific goods at a lower rate of customs duty than would normally apply. The quotas usually apply to imports from specific countries. Most tariff quotas operate on a first come first serve basis and when the quota runs out, the duty rate returns to normal.

There is no requirement to claim a tariff quota if there is a lower option or if the same rate of duty available under:

  • other preference arrangements
  • an import duty suspension

There are online tools available to check which goods are covered and a claim should ideally be made when the goods are entering free circulation. In certain circumstances it is possible to make a backdated claim up to 3 years after the goods have been imported but only if the tariff quota remains available. 

HMRC’s new guidance on claiming quotas states that they can be:

  • open – the quota is not expected to exhaust for some time and a lower rate of duty can be given automatically to any valid claim.
  • critical – the quota may be nearing exhaustion or there is no information to base a prediction of how quickly it will be used up.
  • quota exhausted – all claims will be rejected.

Getting prepared to use Freeport customs sites

In the Spring Budget earlier this year, the chancellor announced that eight Freeport locations would be created in England. The Freeports will be in the East Midlands Airport, Felixstowe and Harwich, the Humber region, Liverpool City Region, Plymouth, the Solent, the Thames, and Teesside. 

Freeports are a special kind of port where normal tax and customs rules do not apply rather there are simplified customs procedures and duty suspensions on goods. This will allow firms to import components and other pre-manufactured goods into a Freeport without paying taxes. The goods would then be processed into a finished product to be built in the UK.

In these new Freeport areas, no duties will be charged on goods or materials until they leave the zone as a finished product for the UK domestic market. There should be no UK tariffs payable when the finished product is re-exported directly from the Freeport.

HMRC has published new guidance to help businesses get ready to use a Freeport site. You cannot currently use the Freeport customs special procedure to import or export excise goods. HMRC’s guidance will be updated with details when this becomes possible. 

Find customs agent to help with import/export declarations

If you are moving goods to or from the UK then you need to ensure that you have all the correct procedures in place. This is a complex area, and you may need to consider the support of a customs agent to help with your import and / or export declarations. 

Customs declarations can be difficult and time consuming to complete.

Most businesses use a specialist such as a customs agent, broker, freight forwarder or fast parcel operator to submit import and export customs declarations on their behalf. HMRC publishes a regularly updated list of customs agents and fast parcel operators who may be able to help. The list if known as the register of customs agents and fast parcel operators. It should be noted that businesses on these lists are not vetted, approved or recommended by HMRC and proper due diligence should be used in selecting an adviser from the list. 

HMRC’s guidance is clear that if your goods do not have the right paperwork or if information is incorrect or missing, your goods may be seized and you may face delays and have to pay extra charges. 

If you are moving goods between Great Britain and Northern Ireland, the free Trader Support Service can help guide you through the necessary processes. This service can also help businesses who import goods into Northern Ireland from the rest of the world. The use of this service is optional. 

Getting ready for Customs Declaration Service

The Customs Declaration Service (CDS) has been designed to modernise the process for completing customs declarations for businesses that import or export goods from the UK. A phased launch of the service started in August 2018 and more than one million declarations have been made since then. The CDS system is currently used for Northern Ireland and Rest of World declarations.

HMRC has now confirmed that all businesses will need to declare goods through the CDS from 31 March 2023. This will result in the closure of the Customs Handling of Import and Export Freight (CHIEF) service. The CHIEF system is over 25 years old and has struggled to cope with complex reporting requirements that could not easily or cost-effectively be accommodated within the existing service. 

HMRC has confirmed that ahead of the 31 March 2023 complete closure, services on CHIEF will be withdrawn in two stages:

  • 30 September 2022: import declarations close on CHIEF
  • 31 March 2023: export declarations close on CHIEF / National Exports System (NES)

The decision to introduce the CDS was system driven to provide a more secure and stable platform and predated Britain’s vote to leave the EU. Importers and exporters should by now be well aware of the CDS system, and they or their agent should be starting to prepare for the further rollout and eventual replacement of the CHIEF system.

The joint Directors General for Borders and Trade at HMRC, said:

‘CDS is a key part of the government’s plans for a world-leading fully digitised border that will help UK businesses to trade and to prosper. This announcement will provide clarity for traders and the border industry. We are committed to making the switch-over as smooth as possible and are working to ensure traders are fully supported with the new processes.'

Looking for a customs agent?

The Brexit transition period has come to an end and a new customs border has been created between the UK and EU. If you are moving goods to or from the UK then you need to ensure that you have all the correct procedures in place.

One of the most important areas that businesses must consider is how to make customs declarations. Customs declarations can be difficult and time consuming to complete. Businesses can make their own customs declarations; however, this is complex and requires specialist skills and software. 

Most businesses use a specialist such as a customs agent, broker, freight forwarder or fast parcel operator to submit import and export customs declarations on their behalf. HMRC publishes a regularly updated list of customs agents and fast parcel operators who may be able to help.

Since 1 January 2021, customs agents can make simplified declarations for you using their own authorisation, so you don’t need to be authorised. They can only do this if:

  • your business is established in the United Kingdom
  • your business imports goods into Great Britain (England, Scotland and Wales)
  • the customs agent has the appropriate authorisation

HMRC’s guidance is clear that if your goods do not have the right paperwork, or if information is incorrect or missing, your goods may be seized, and you may face delays and have to pay extra charges. 

If you are moving goods between Great Britain and Northern Ireland, the free Trader Support Service can help guide you through new processes. Under the Northern Ireland Protocol, all Northern Ireland businesses will continue to have unfettered access to the whole UK market. 

£50m extra funding for Customs Intermediary Grant Scheme

Over the past few months, HMRC has unveiled a package of measures to accelerate the growth of the UK's customs intermediary sector. These announcements included £50 million of new funding to support businesses with recruitment, training and supplying IT equipment to handle customs declarations as the transition period comes to an end on 31 December 2020.

The application process for the £50 million of additional funding opened on 29 July 2020. HMRC, which is running the scheme, is encouraging customs intermediaries (including customs brokers, freight forwarders and express parcel operators) and traders who make their own declarations to take advantage of the funding now. Grants will be issued on a first come, first served basis. Applications will close on 30 June 2021, or earlier if all funding is allocated.

The grant can be used to cover salary costs for new or redeployed staff, up to a limit of £12,000 per person and £3,000 to meet recruitment costs for new employees. This will help businesses recruit new staff and train them ahead of July 2021, when all traders moving goods will have to make declarations.

Prior to the launch of this additional £50 million of funding, HMRC has already invested £34 million which has been used to fund more than 20,000 training courses, nearly 15,000 units of IT and the recruitment of almost 600 new customs agents.

The government also intends to change rules which will remove the financial liability from intermediaries operating on behalf of their clients and to allow parcel operators to continue declaring multiple consignments in a single customs declaration.

Customs declarations for exporters of goods from 1 January 2021

The Brexit transition period is due to end 31 December 2020. The UK and EU have agreed there will not be any further extensions, although with the COVID-19 outbreak nothing appears certain. As things currently stand, no formal trade deal has been reached with the EU. Consequently, it seems likely that the process for exporting goods to the EU will change from 1 January 2021.

Current guidance published by HMRC states that from 1 January 2021, businesses will need to make customs declarations when exporting goods to the EU. These rules currently apply to exporting goods to the rest of the world, including Switzerland, Norway, Iceland and Liechtenstein. Businesses, especially those that only trade with EU, should be making the necessary preparations for how they will trade with the EU next year. Businesses can make customs declarations themselves or hire a third-party such as a courier, freight forwarder or customs agent.

Some important points to bear in mind are as follows:

  1. Make sure you have an EORI number that starts with GB. You will need an Economic Operator Registration and Identification (EORI) number starting with GB to import/export goods from 1 January 2021.
  2. Check the rules for your type of goods. For example, check what import/export licences or certificates you need, check the labelling and marketing standards for food, plant seeds and manufactured goods and check the rules for importing/exporting alcohol, tobacco and certain oils.
  3. Find out if you can charge VAT at 0% on goods exported to the EU.
  4. There are likely to be different rules if you are exporting goods from Northern Ireland to Ireland.

Controls for importing goods from July 2021

As we reported previously, the UK government has confirmed that it will neither accept nor seek any extension to the Brexit transition period which expires on 31 December 2020. The EU has formally accepted this position.

The UK has taken the decision to introduce the new border controls in three stages from 1 January 2021. Controls for importing goods will now apply from July 2021. This means that traders moving goods will have to make declarations at the point of importation and pay relevant tariffs.

HMRC has unveiled a package of measures to accelerate growth of the UK’s customs intermediary sector. This includes £50 million to support businesses with recruitment, training and supplying IT equipment to handle customs declarations.  The government also intends to change rules which will remove the financial liability from intermediaries operating on behalf of their clients and allow parcel operators to continue declaring multiple consignments in a single customs declaration.