• Date

    18 May 2022
  • Category

    Customs and Excise Duties, VAT & Indirect Tax

Customs duty changes as we move towards ‘full Brexit’

We have now had more than a full year of post-Brexit trading with the EU, but it is fair to say that we have not yet experienced the effect of a ‘full Brexit’ in the form of full customs formalities for imports into the UK. Lucy Sutcliffe Head of Customs, outlines some of the key customs duty changes as we move towards ‘full Brexit’.

Temporary Relief

The UK’s initial focus was to facilitate and streamline the importation process and ease the associated documentary demands. This was achieved by introducing temporary customs easements, such as deferred (customs) declarations, extensions to the UK Conformity Assessed (UKCA) safety marking of products, product labelling and delays to health certification requirements.

While some of these easements have now come to an end, such as the deferred declaration system, the withdrawal of others, including the requirement for further Sanitary and Phytosanitary (SPS) checks, safety and security declarations, health certification and prohibitions and restrictions on chilled meats for EU imports, have recently been further extended into 2023.

Importers have undoubtedly felt the benefits of the UK’s initial approach, but unfortunately, these forms of easements were not reciprocated by the EU, which has meant that UK exporters to the EU have been faced with extra documentary and tariff burdens from day one.

New Systems

We have also seen the introduction of several new systems since the beginning of 2021. These have included Postponed Import VAT Accounting (PIVA), which provides a 20% cash-flow saving for businesses who use this system to account for import VAT.

The Goods Vehicle Movement Service (GVMS) for hauliers and carriers moving goods through UK ports was also introduced. This has meant that hauliers and carriers have had to register for the GVMS system or face the possibility of not being able to clear goods through customs controls.

EU-UK Trade and Cooperation Agreement

Businesses have also had to get to grips with the requirements under the EU-UK Trade and Cooperation Agreement. One of the main challenges faced by UK businesses has centred around establishing the ‘origin’ status of goods that form part of their supply chains. Establishing and evidencing the origin status of goods is key to being able to apply a tariff preference under this agreement. Additionally, in January 2022, an added consideration was the introduction of supplier declarations to support proof of origin for goods.

The Northern Ireland Protocol

Businesses with a supply chain footprint which extends to Northern Ireland, will be aware that The Northern Ireland Protocol is again the subject of ongoing discussions. The outcome of this negotiation phase may bring about a variation to existing procedures or the implementation of new ones.  

Plastic Packaging Tax

From 1st April this year, we saw the introduction of other measures that included the Plastic Packaging Tax (PPT). This domestic tax applies to plastic packaging manufactured in or imported into the UK that does not contain at least 30% recycled plastic above a threshold of 10 tonnes over a 12-month period. On the plus side, there are some exemptions for manufacturers and importers depending on their supply chain and business activity. However, many businesses may still need to register and report for PPT purposes, even if the tax is not levied.

Red Diesel and Rebated Biofuels

Changes to the entitlement criteria to use red diesel and rebated biofuels was introduced from 1st April. These changes were intended to restrict the use of red diesel and rebated fuels in many business sectors. The entitlement to use both is now restricted to specific qualifying measures, which include vehicles and machinery used in agriculture, horticulture, fish farming, forestry, and heating and electricity generation on non-commercial premises. If your business activity does not fall under the qualifying measures, your duty costs will have likely increased since the introduction of this reform.

Customs Declaration Service

Looking forward into 2022, we anticipate the phased replacement of Customs Handling of Import and Export Freight (CHIEF) with the new Customs Declaration Service (CDS) system. CHIEF is expected to be replaced by CDS for imports in September this year and exports in March 2023. Businesses will need to be prepared to provide further information to support CDS declarations, which will look different to the existing CHIEF declarations with a move away from boxes to data fields.

HM Revenue & Customs

As a result of the UK’s move away from intra-EU trade to international trade with the EU post-Brexit, HMRC will inevitably seek to assure business compliance with the new measures, procedures, and customs obligations. To that end, we can anticipate more verifications and checks to be undertaken by HMRC with an added focus on assuring the appropriate application of the rules of origin and tariff preference claims.


From a customs perspective, businesses must obtain and retain customs documentation which corresponds to their end-to-end supply chains. For example, supplier declarations (as appropriate), customs declarations (import and export), customs commercial invoices, contracts, confirmation of the origin status of goods purchased or supplied, confirmation of any processing or transformation of the goods by the business and clear instructions to customs agents (acting on behalf of the business) regarding how they should declare goods to HMRC.

The adaptability and flexibility of your business within your supply chain may be the key to successfully responding to any further changes or new measures introduced to your specific business sector. Investing some time in preparing for any changes, whilst balancing competing business demands, would be time well spent.

Get in touch

If you need some support or guidance to navigate any changes, please get in touch with your local Azets advisor or Lucy Sutcliffe, Partner and Head of Customs.

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