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Government outlines future Customs Bill

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The government’s plans for post-Brexit customs, VAT and excise regimes are set out in a new white paper outlining the approach to legislation in the forthcoming Customs Bill. The paper also contains preparations for a ‘contingency scenario’, where the UK leaves the EU without a negotiated outcome. The approach in the new paper reflects feedback received from businesses and stakeholders on the ‘future partnership paper’ published in August, which contained two main models: a ‘highly streamlined’ customs arrangement, continuing some existing procedures; and a new customs partnership with the EU.

After the UK has left the EU, it will need new primary legislation, irrespective of any agreements reached with the EU, to create a standalone customs regime, and to amend the VAT and excise regimes as required. The Customs Bill and associated secondary legislation must be in place with sufficient notice to support the new regime on the day the UK leaves the EU.

The Customs Bill will base customs legislation on the Union Customs Code. Administration of the VAT and excise regimes will remain largely the same as today. However, the Bill will contain delegated powers giving the government the flexibility to deliver certain aspects of a negotiated outcome. It will provide for the UK to implement tax-related elements of the ‘highly streamlined’ customs arrangement set out in the future partnership paper. Additional primary legislation may be required to implement the new customs partnership.

The Bill will allow the government to:

  • create a standalone customs regime if required;
  • ensure existing treatments/authorisations of traders or goods can continue under UK law where appropriate;
  • accommodate most tax-related negotiated outcomes;
  • put appropriate mechanisms in place for the transition of existing trade remedy measures relevant to UK companies; and
  • make provision for consequential amendments to the Customs and Excise Management Act (CEMA) 1979.

Regarding VAT and excise, the Bill will give the government the flexibility to:

  • give effect to an agreement with the EU on supplies or movements in progress on the day of EU exit and thereafter;
  • deal with VAT on movements of goods and services between the UK and EU;
  • allow HMRC to adapt IT systems; and
  • vary the UK information sharing obligations to allow continued exchange of information with EU member states to tackle avoidance and evasion.

The Customs Bill would also allow the government to implement interim arrangements, such as a time-limited customs union between the UK and the EU customs union. The government is keen to look at interim options based on a shared external tariff and without customs processes and duties between the UK and the EU.

The ‘contingency scenario’, where the UK leaves the EU without a negotiated outcome, would involve:

  • a standalone customs regime from day one;
  • applying the same customs duty to every country with which the UK does not have a trade deal (set out in secondary legislation before the UK leaves the EU); and
  • traders with the EU registering and obtaining an EORI number for making customs declarations.

For roll-on roll-off ports, the Bill will enable the government to require that consignments are pre-notified to customs, to avoid having to hold vehicles for any amount of time.

The government would not extend to EU countries the current rules on low value goods, giving relief from import VAT on parcels from non-EU countries valued at £15 or less. It is also exploring alternative collection mechanisms for collection of customs duty on parcels valued below £135.

The government has suggested a number of areas on which it would like to receive feedback from businesses, preferably before 3 November, although no strict deadline is imposed. See

Joe Owen, senior researcher on Brexit for the Institute for Government, commented that the latest customs white paper ‘is the first of the government’s Brexit publications to touch on the “no deal” scenario in any real detail’. The government’s contingency scenario is, he said, ‘the most extreme change in the shortest period of time’.

Owen noted that when relatively straightforward changes have been made to the customs system in the past, businesses have been given 18 months to adapt. ‘They now have less than that to prepare for a no deal scenario,’ he said.

The government has also published a trade white paper (see on the background to the forthcoming Trade Bill. Feedback is invited by 6 November both on the specific legal powers proposed to support the UK’s future trading framework and on the broader developing approach.

Issue: 1372
Categories: News , Indirect taxes , VAT