VAT News

New Customs Legislation from 1st May


On 29th December, while most of us were still eating cold turkey and mince pies (hopefully not together), the European Commission finally published the implementing legislation for the new Union Customs Code: Regulations 2015/2446 and 2015/2447.  While we still have not digested the whole 893 pages, there are a number of changes which we would like to highlight for you.

 Firstly, this new legislation, which replaces all the current customs law throughout the EU, will to some degree affect every importer and exporter.  For some, the changes may be minimal and not even noticed as the freight forwarder, acting on behalf of the principal in the transaction, has to make the adjustments to his systems and processes.  But for many importers, there are changes ahead which are likely to result in increased costs, maybe not on 1stMay this year but over the next couple of years as we transition fully to the new legislation.  For example, unless an importer already has a binding contract in place stating otherwise, after 30th April import charges will be assessed against the sale of the goods that occurs immediately prior to importation; there will no longer be the option of declaring goods against a prior sale with a lower value.  Also, any trademark royalty attached to the goods will become dutiable, as could many more royalty and licence fee payments that are connected to the supply or the sale of imported goods.

 All importers using simplified procedures, which may range from having a customs warehouse to just using a deferment account, will be required to provide new guarantees and jump through a few extra hoops to continue to enjoy these benefits.  HM Revenue & Customs will be writing to all traders about these new arrangements.

 Of course, it is not all bad news and, hopefully by 2020, there will be some benefits available to importers. A Registered Exporter Scheme will operate in countries which currently benefit from having the Generalised System of Preferences, which will mean that EU importers will no longer be required to submit paper GSP A forms to obtain preferential tariffs at import.  There should also be the potential for self-assessment of import duties and taxes and, for those that are interested, a centralised system of import clearance which should enable goods to enter the EU through any port but be reported through one hub.    

 The whole thrust of the new legislation is to make all communications between customs and traders electronic and to create a more level playing field in the EU for all importers and exporters.  While we continue to try to decipher the meaning of the new legislation, we are also aware that the Commission is drawing up guidelines on how it expects certain procedures to operate – but unfortunately these will not be available for a few months yet.  However, if you have any questions in the meantime, we would be happy to put you in touch with Barbara Scott of Customs Associates Ltd on 020 8866 0950.

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