Reminder of changes to the Merchandise in Baggage exports process from July 2021
This is a reminder that from 1 July 2021, there will be changes to how you export commercial goods out of Great Britain (England, Wales and Scotland) in their accompanied baggage or small vehicle (also known as Merchandise in Baggage).
When a full export declaration is submitted, the goods will be automatically ‘arrived’. This means traders will no longer need to present their goods to a Border Force officer at airports or ports of departure with red channels. Ports without red channels will no longer require completion of a C1601 for the National Clearance Hub (NCH) to arrive the goods.
This change only applies to CHIEF users. The process for traders on the Customs Declaration Service will remain the same for the time being, however these changes will be made for Customs Declaration Service at a later date.
You must submit a full export declaration before you leave Great Britain if your goods:
- have a value of more than £1,500
- weigh more than 1,000kg
- are restricted goods
- are alcohol, tobacco or fuel (excise goods)
- need a licence (controlled goods)
- are being put into a customs special procedure
If you do not need to make a full declaration, you can make an online declaration in the 5 days before you leave with your goods. You can also add goods to a declaration you’ve already made as long as all the goods combined do not exceed the total value of £1,500, weigh less than 1000 kilograms and are not controlled goods.
If you want to know more about the rules for Merchandise in Baggage, you can watch HMRC new video and read our travellers’ communications pack. For more information, read the full Taking commercial goods out of Great Britain in your baggage guidance.
Postponed VAT accounting – cash flow help for VAT registered importers
Postponed VAT accounting was introduced in January 2021 to allow UK VAT registered importers to account for and recover import VAT on the same VAT return, subject to the normal rules on input tax deduction.
Postponed VAT accounting is available permanently and we expect most businesses will choose to use it, because it provides significant cash flow benefits compared to the alternative of paying the import VAT when the goods are imported. In certain circumstances, for example when importers delay their declarations, they must use postponed VAT accounting.
Steps an importer must follow:
- Consider getting someone to do declarations for you, such as a customs agent, freight forwarder or fast parcel operator.
- Find out when you are able to use postponed VAT accounting and when you must do so.
- Find out how to account for import VAT on the customs declaration and complete your VAT Return to account for import VAT.
- Talk to your tax adviser or anyone who helps you maintain your VAT records and complete your VAT return.
- Access the Customs declaration service to get your postponed import VAT statements that you need to complete your VAT return. Even if someone does all the VAT return work for you, they will not be able to access your postponed import VAT statements. You will have to access statements yourself and send them on.
How importers can avoid pitfalls
Make sure you use postponed VAT accounting when it’s compulsory. You must use postponed VAT accounting if you import non-controlled goods from the EU to GB between 1 January 2021 and 31 December 2021 and use delayed declarations, or use the simplified customs declaration process (if authorised) and make a declaration in your own records. Do not miss out on the cashflow advantage. Using postponed VAT accounting provides significant cash flow benefits compared to paying the import VAT when the goods are imported.
Take care when selecting how to account for import VAT on the customs declaration. It cannot be changed once the declaration has been submitted.
If someone else is doing the customs declarations for you, make sure they know you want to use postponed VAT accounting. If anyone, such as a freight forwarder, customs agent, broker or fast parcel operator acts on your behalf, keep a written record of what is agreed.
Make sure you have the information you need to get access to Customs Declaration Service to view your statements. You will need:
- the Government Gateway user ID and password connected to the EORI number for the business or subsidiary making the Customs declarations – if you cannot remember your Government Gateway credentials you can get help at HMRC services: sign in or register
- your Unique Taxpayer Reference (UTR) – you can find a lost UTR number
- National Insurance number (if you’re an individual or sole trader)
- the address and postcode that match the details held by HMRC or a business address, which must match Companies House
- the date you started your business
Check you have entered the details correctly before submitting. Take a screen grab of any error messages you receive.
Do not leave it too late. Make sure you get access to Customs Declaration Service to view and download the statements in time to complete your VAT return. You’ll only be able to access a statement for 6 months from the date it is published, so you must download and keep a copy of each statement in your records. The statements that were produced at the start of 2021 will not be available for much longer.
Check your statements. In the same way that you would check your bank statements, you should compare the entries on your statements to your other import records. Make sure that you recognise all the entries and they appear as you expect.
Check you are using the correct statements. There were some problems with the production of January 2021 and February 2021 statements. There is guidance on how to complete your VAT return if you have problems with your monthly statements. If you take reasonable care to follow the guidance but make an error completing your VAT return, there will be no penalty.
If you have made a mistake put it right as soon as you can.
Help your clients identify customs authorisations
HMRC have created an online tool to help businesses check which customs authorisations they might be eligible for. Applying for authorisations could make the process of declaring goods quicker, simpler or even less costly. For example, a business importing goods temporarily for manufacturing or repair purposes may not need to pay duty on these.