Tax traps threaten European supply chains
While Dover may remain quiet, the delays are taking place at loading points and the half-dozen inland border facilities that are discharging and issuing transit documents for drivers arriving and departing for mainland Europe.
Even in this ‘quiet’ time we have witnessed significant problems, which are likely to get worse, before they improve. Ashford, the closest inland border facility to Dover, is already experiencing delays of five hours to print documentation and we are seeing a lot of uncertainty about requirements and processes.
The Common Transit Convention (CTC) allows importers to make customs declarations and pay import taxes and duties, when goods travelling under TAD arrive at their final destination in the EU (or UK).
Traders exporting goods under transit need to provide a guarantee to cover any potential customs duties and import VAT, which is why it is critical that the TAD is discharged at destination.
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All goods with a UK or EU origin require a declaration of origin included on the commercial invoice to benefit from preferential tariff rates and failure to provide this origin declaration means that the importer is liable for duty at the prevailing rate.
It is critical for shippers to understand that simply originating in the UK or EU is insufficient to benefit from the terms of the FTA. If goods are not manufactured or processed sufficiently in the UK/EU duty may apply.
The following is HMRC’s preferred suppliers’ declarations for products having preferential origin status:
I, the undersigned, declare that the goods listed on this document….…….…..…..(1) originate in…..…..…..…..(2) and satisfy the rules of origin governing preferential trade with…..…..…..…..(3):
I declare that (4):
Cumulation applied with…………………….(name of the country/countries)
No cumulation applied
I undertake to make available to the Customs authorities any further supporting documents they require:
1) If only some of the goods listed on the document are concerned, they shall be clearly indicated or marked and this marking entered in the declaration as follows:
‘….. listed on this invoice and marked ….. originate in …..’
2) The UK, EU, country, group of countries or territory, from which the goods originate
3) Country, group of countries or territory concerned
4) To be completed only where goods are being exported to a country in the Pan-Euro-Med zone. Delete as appropriate
5) Place and date
6) Name and position in the company
The existing rules for imports from non-EU countries now apply to imports from the EU, but with ‘postponed accounting’ for import VAT on goods brought into the UK with effect from 1 January 2021.
For exports UK businesses continue to zero-rate sales and EU member states will treat goods from the UK as goods entering from other non-EU countries, which means import VAT and any customs duties (tariffs) are due when the goods arrive in the EU.
British and EU exporters must register to pay VAT in their respective territories, which has prompted a number of companies to halt their cross-border trade, until the processes are clearly defined and understood.
Early sharing of information will do more than anything to resolve the issues outlined above, which is why we must have all documentation and data in advance of movement, so that we can prepare and present the correct import or export customs formalities.
For every movement, regardless of import or export, we need:
- EORI Numbers
- Commercial invoice, incorporating an origin declaration, values and description of goods
- Packing lists/CMR with gross and nett weights
- Commodity codes