Free trade of goods
Under the Brexit deal, the Trade and Cooperation Act, the trade of goods between the UK and EU will remain tariff and quota-free. This means that goods crossing the border into or out of the UK will not be subject to direct import taxes or quantity restrictions.
Crucially, this free movement of goods only applies to products that originate from the UK or EU. This means the products must be ‘wholly obtained’ from the UK or EU or ‘substantially transformed’ in the UK or EU in a way that adds value to them. Goods that are made outside these jurisdictions and pass through them will therefore be subject to tariffs and quotas. For more information on this requirement, please see the government website.
What is the new border plan?
The UK government has set out its plan for a new border in the south of England to carry out the necessary customs procedures and inspections on goods entering the UK. If your business involves transporting goods across the border with Europe by road, some of the key changes expected to take place from 1 January 2021 are as follows:
all Heavy Goods Vehicles (HGVs) should obtain a Kent Access Permit before they depart for Dover to transport goods across the border, this is a digitally-acquired certificate required to enter Kent with the intention of transporting goods into the EU
drivers must have a valid passport to cross the border as national identity cards will no longer be accepted as a valid form of identification
businesses should check what customs declarations they need to make in order to transport their goods
businesses should obtain the necessary EORI number, starting with GB (Get an EORI number), this is an identification number required for transporting goods into the EU
How does the Smart Freight System work?
To help businesses prepare, the government has created a Smart Freight System. This is an online portal allowing businesses to register the movement of their goods and check that their hauliers have the required documentation before departure. Drivers will be tracked by number-plate recognition technology and may face on-the-spot fines of £300 if they are travelling without the correct documentation.
New checks on the UK side of the border will be phased in over a six-month period from the start of 2021, allowing businesses and customs authorities the time to prepare. However, from 1 January 2021, the EU will treat imports from the UK as it would imports from any other non-member, meaning inspections and tariffs will apply immediately.
Which goods require customs declarations?
From 1 January 2021, businesses must declare the import or export of certain goods by a customs declaration. The government has provided advice on the goods that require specific licences or certificates to be imported or exported across the border.
Businesses importing goods across the border should:
Businesses exporting goods across the border should:
How will VAT change?
VAT is a tax levied on goods and services that are consumed in the UK and EU. In 2021, VAT can only be levied on goods and services consumed in the UK, meaning most goods being exported to the EU should be charged at 0% VAT.
Any goods and services being imported from the EU into the UK may require payment of customs duties and VAT. You should: