As of 31st December 2020, the UK officially completed its ‘transition’ out of the EU bringing new rules affecting our industry, impacting trading, duty and more. The UK Government spent many months briefing businesses to get prepared for change, putting the onus firmly on the shoulders of SME’s to unravel to the new rules and how they apply to your business, customers, and trade.
With the news before Christmas that the Government has negotiated a deal, many resources are still being updated on the links below. We are updating notes as information becomes available.
Here, we recap many of the most frequently asked questions and with a helpful address book for links and resources to help every business find the right information fast.
Export and Origin queries top the list
The BPMA is fielding a large number of queries from members relating to export, origin, duty and VAT. Below, we are adding to our information as quickly as possible.
Where to start
With the deal done, the ‘transition checklist’ service online is a great place to check what you need for your specific business. It is worth noting that every business has different needs and requirements. Found on www.gov.uk/transition, follow the steps to Transition enlightenment. With over 50% of UK businesses declaring they are not ready for the majority of the measures and immediate concerns directed at lockdown and tiers, breaking down the information and tasks to be done is best approached step by step.
Where possible, dedicate someone in your business to understand the rules. Don’t forget there is still funding for customs training available and excellent online courses available via The Institute of Export & International Trade.
The Government department central to Transition changes is the Department for Business, Energy, and Industrial Strategy or BEIS for short. All found via Gov.uk, most information businesses need can be located here but is not always easy to find. It is important to note all information, links and resource are subject to any changes from the Government. The BPMA recommends you check Government sources for the most up to date information.
You can download and read The Trade and Cooperation Agreement (TCA) below.
- Webinars and recent recordings
- Export and Import
- Origin of Goods
- VAT and EU VAT
- Postal routes and temporary rules
- Customs documents
- Export compliance
- UKCA & CE
- Conformity assessments
- Brexit Transition address book
What the deal contained
Agreeing a tariff- and quota-free trade deal had been the primary objective of the negotiations.
The FTA achieves this goal, allowing traders to move goods between the UK and EU without paying duties, so long as they comply with ‘Rules of Origin’ included in the deal.
|Rules of Origin |
Rules of Origin determine the economic nationality of a good and are often a key component of FTAs signed between countries.
Under the agreement, companies will be able to self-certify the origin of their goods and where the processing takes place will also count towards this.
|New Customs procedures |
New customs and VAT rules will apply for UK and EU trade – including the requirement for companies to complete customs declarations.
However, the FTA includes a protocol for UK-EU cooperation when it comes to combatting VAT, customs and excise fraud. The UK can instruct the EU to recover unpaid UK tax from EU companies on its behalf and the EU may make the same request.
|SPS rules |
Whilst less relevant to BPMA members, in a chapter on human, animal and plant life and health, the agreement states that the UK and EU may set and implement their own independent sanitary and phytosanitary (SPS) rules and controls.
This will require companies trading affected goods – agri-food producers and grocery retailers in particular – to attain new certification and comply with border checks.
The UK’s access to European financial markets was not finalised in the deal, with the UK still seeking ‘equivalence’ status from the EU. The EU has not yet decided whether the UK’s financial regulatory framework and implementation is as rigorous as its own.
The UK and EU have stated that they will codify a framework for regulatory cooperation in a Memorandum of Understanding.
The UK can now set its own rules in areas such as environmental standards or labour law.
However, if either the UK or EU strays too far from each other’s standards, there is a “rebalancing mechanism” whereby one party can impose tariffs should it deem that its own businesses are put at an unfair disadvantage by the divergence.
This mechanism will be governed by international law rather than UK or EU law.
The UK government can also set its own subsidies for its domestic industries and businesses.
According to the government’s own summary of the agreement: “each Party will have in place its own independent system of subsidy control and that neither Party is bound to follow the rules of the other.”
However, companies in the EU can challenge government state-aid in the UK’s courts and UK companies can do the same in the EU.
The UK and EU will recognise each other’s AEO (Authorised Economic Operator) schemes, allowing for AEO-approved firms to move goods more easily between the UK and EU. The principles of the WTO’s Trade Facilitation Agreement (TFA) and the Revised Kyoto Convention will also apply in the deal, meaning both parties will cooperate on expediting the movement, release and clearance of goods, including those that are in transit.
Road haulage operators moving goods between the UK and EU will continue to do so without new permit requirements.
UK hauliers will be subject to similar standards they already comply with when operating internationally, including restrictions on driver hours, requirement for professional qualifications as well as vehicle weight and dimension limits.
However, British truckers will be limited to a single drop-off and a single pick-up when in Europe – a downgrade on the three pick-ups they could do within EU countries before.
Short-term business visits to the EU will be allowed for up to 90 days in any 180-day month period.
Take the transition checklist online now to understand what steps and action your business needs to take.
Brexit Transition webinars
Latest information webinars
Several dates are offered with each session. Please use the links to register for each webinar. The BPMA is gathering information from each session to post on these pages for members.
Institute of Export UK Trade Deal Webinar
- Exporting: staged border controls, zero-rated VAT, customs declaration, using an intermediary as well as licences, certificates, and authorisations that you’ll need. Register for this session here if you are planning to export.
- Trader Responsibilities: If you import or export goods between the UK and the EU your business will need to complete import or export declarations, or both. As this is a complicated process a lot of businesses choose to use an intermediary to do these for them. Register for this session here if you are planning to import and export.
- Explaining customs import declarations: If you import goods, you’ll need to prepare for making customs import declarations on controlled goods from 1 January, and by the end of June on all goods. This webinar will help you to understand what they are in more detail. This includes what is needed for simplified declarations, supplementary declarations, making import declarations without authorisation, and delayed import declarations. Please register for this session here if you plan to import.
- Importing: Staged controls Recognising the impact of coronavirus on businesses’ ability to prepare for the 31 December 2020 deadline, the UK in introducing the new border controls in three stages up until 1 July 2021. This flexible approach will give you extra time to make necessary arrangements. Please register for this session here if you plan to import.
A selection of useful subjects can be found below.
- Asking a third party to deal with customs – watch here
- Regulation of manufactured goods – watch here
- Changes in IP – watch here
- Consumer goods – watch here
- REACH compliance – watch here
- Export Action Plan – visit OpentoExport here
Export and Import – what’s changed for you and your customers
When exporting to a third country, the merchandise needs to be declared to the customs authority of the country the goods will leave.
When importing to a third country, the merchandise needs to be declared to the customs authority of the receiving country.
Usually the information will be transferred electronically before the actual import of the merchandise.
Trader Support Service (TSS)
Free-to-use service for Northern Ireland. Find more here.
Further information is listed below covering export declarations, the origin of goods, VAT and more.
Origin of Goods
The video posted on this page from The Institute of Export features a useful explanation of the origin of goods.
UK exporters have been given a year’s grace period on certifying the origin of components that make up their manufactured goods. This Rules of Origin waiver is part of the UK’s trade deal with the EU (the ‘Trade and Cooperation Agreement’) which came into force on 31 December at 11pm GMT (12 midnight CET).
The deal took effect at the same time as the UK formally left the EU Customs Union and Single Market, becoming a ‘third country’ in trade and customs terms. Customs checks began taking place on goods movement between the EU and UK on Friday 1 January.
Under the UK-EU trade agreement, companies will be able to self-certify the origin of their goods and where the processing takes place will also count towards this.
Another trade deal easement is the year-long waiver for UK manufacturers on completing Rules of Origin certification for parts sourced outside the EU.
Preferential and non-preferential origin
There are two types of origin, preferential and non-preferential. Non-preferential applies when countries wish to identify the origin of goods for statistical, trade control or political purposes, has national legal basis and is mandatory for products on import and export.
Preferential origin is used solely to provide duty benefits through a Free Trade Agreement and is optional.
Before you work out whether your items qualify you will need to obtain the 4-digit tariff heading that covers your product. This you can obtain from the HMRC Trade Tariff database.
You will also need to locate Customs Notice 828 as you will need to refer to the lists contained.
You then need to determine if your product is wholly produced in one country, with no involvement from any other country. Even the smallest amount of materials or processing from another country will disqualify the product from being wholly produced. Wholly produced generally means items that are grown, born and bred or mined. See Section 4 of Customs Notice 828 for the list of allowable wholly produced items.
If you have determined that your product does qualify at this stage, then this is the ‘nationality’ or country of origin of your product. If not, you will need to complete the following steps.
Last, Substantial, Economic, Process
The origin definition for preferential and non-preferential is quite simple and easy to remember:
- Last – The very last place that processes took place.
- Substantial – The processing done is of a reasonable level, above that detailed in the minimum lists (Section 9 of Notice 828).
- Economic – The processing involved should add value to the finished product.
- Process – The product should undergo a level of manufacture which transforms the combined materials to that of the finished product often changing tariff heading.
(reproduced from The Institute of Export & International Trade)
If your product has passed those 4 rules, the ‘nationality’ (non-preferential origin) of your product will be listed in 1. ‘Last’. i.e. GB, FR, IE. This is your country of origin.
The same rules above apply to determine the origin definition for preferential purposes too, however you must ensure the following also applies:
- Transport Rule – goods must be shipped direct between the preference giving countries. They can pass through other countries but only for transit purposes. They must not undergo any operation other than the usual for transportation purposes or those which may be used to keep them in good condition.
- The origin rule, as stated in Section 6 of Customs Notice 828.
- Ensure there is a Free Trade Agreement between the EU and the destination country.
There are funded courses for Rules of Origin. You can view this information here.
VAT and Export
Public Postal Operators (PPOs) interact on a global level to exchange mail and parcels. Where no customs unions exist, merchandise needs to be customs cleared. Private people and companies can send merchandise to third countries (e.g. to UK after a No Deal or hard Brexit) through a postal operator and have the merchandise customs cleared in the destination country.
In this process, the recipient (importer) of the merchandise will pay VAT, customs duties and a handling fee upon delivery.
New VAT rules for overseas firms selling goods into the UK are leading some EU businesses to stop trade with the UK. We are hearing increasing reports of refusal to export to the UK due to the complications. The BPMA has reported these and numerous challenges members are facing to Government contacts.
Please note, VAT is now collected by HMRC at the point of sale rather than the point of importation, requiring overseas sellers to register with HMRC and account for VAT themselves, when the sale is lower than a value of £135.
The Government published updated advice about the new rules on 3 December 2020.
International shipping companies – including FedEx and TNT – are also levying additional charges on shipments between the UK and EU to cover new administrative charges as a result of the end of the transition period.
We are aware TNT is now imposing a surcharge of £4.31 on all shipments between the UK and the EU. The company is owned by Federal Express, which has also updated its charges. DHL and UPS have taken similar measures.
It is important to note that the BPMA cannot advise on this area with any accuracy however we are compiling information which will be published shortly. Please visit the European Union website here to view by topic.
Postal customers will need
- CN22 or CN33 customs document
- Invoice (with copies) with each item
- Sending companies need to enter the customs codes on CN22/CN23 forms to identify content
- More help and advice available here
If you import goods in consignments not exceeding £135 in value
Further guidance will be provided on the VAT treatment of goods in consignments not exceeding £135 in value in updates expected from HMRC. Please check here for further information.
The Exporter needs to prove to the local customs authorities that the merchandise item has been exported to a third country, i.e. Export from the UK to a third country or Export from the EU to a third country.
- Export proof document
- Customs authorities also may accept alternative export proof information for example Airwaybills, Track and Trace Information or Invoices.
- The details depend on the requirements of the national customs authority.
If the customs authority has accepted the export proof document, the exporter of the goods can VAT zero rate the sale.
Sending parcels between Great Britain and Northern Ireland from 1 January 2021
Updated guidance released 31st December can be found here.
HMRC is adopting a temporary approach to applying declaration requirements for the movement of goods in parcels by express carriers and the Royal Mail Group. This recognises the unique circumstances of Northern Ireland, the impacts of any disruption to parcel movements in the context of the COVID-19 pandemic, and specific challenges for operators moving express consignments.
This guidance sets out the detail of this approach, including that declarations continue to be required from 1 January 2021 for prohibited and restricted goods as well as excise goods.
Controls through the Goods Vehicle Movement Service and inventory systems at ports will remain in place through the period that these arrangements are in force. Similarly, VAT requirements will continue to apply. Further, HMRC is working with express carriers and Royal Mail to monitor the flow of goods from 1 January.
VAT and Import
- The Exporter pays VAT together with any customs duties to customs authorities in destination country (usually via a customs broker).
- The Importer of the item pays VAT, customs duties, handling fees and in some cases excise duties upon receipt of the merchandise (usually to the postman, the usual process for merchandise items sent via a public postal operator including customs clearance in the destination country)
- Where no customs unions exist, goods needs to be customs cleared when moved to a third country.
- For shipments with a value exceeding the postal clearance limits the commercial customs clearance process is utilised. Companies can send goods to third countries (e.g. to UK after a hard Brexit) and have the merchandise customs cleared by a customs broker.
- Companies who want to import from the EU (or other third countries) into the UK post-Brexit will require a UK EORI number.
- Companies who want to import goods into the EU from the UK (or other third countries) will require an EU EORI number
- If you have a subsidiary in the UK and you export goods from France to your subsidiary, you will need to complete an export declaration in France and an import declaration in the UK. You will need an EU EORI number and a GB EORI number.
- Some commercial agreements stipulate that either the buyer or the seller is responsible for both the import declaration and the export declaration.
- The choice of Incoterms often determines each party’s responsibilities in an agreement.
- If your business completes both declarations, you will need an EU EORI number and a GB EORI number. More information here www.gov.uk/eori
Getting through customs: what customs documents do you need?
- Invoice + Copy (Trade or Proforma)
- Export declaration (if value over 1000,- EUR)
- Transport documentation (Airwaybill (AWB), CMR**, CN22/23)
- Proof of Export (for VAT purposes)
- Invoice (Trade or Proforma)
- Preference (EUR1, Form A, Certificate of origin***)
- Transport documentation (e.g. AWB, CMR, CN22/23)
- Licenses and Approvals (e.g. for pharmaceutical products )
Declarations for exports
*Depending on the customs clearance process and national customs authority, the required customs documents may vary. This chart gives a general overview on documents which may be required. **CMR = Standardised document for cross-border transport of cargo by road, in force in the European Union. ***A certificate of origin (often abbreviated to C/O or CO) is a document widely used in international trade transactions which attests that the product listed therein has met certain criteria to be considered as originating in a particular country. A certificate of origin is generally prepared and completed by the exporter or the manufacturer and may be subject to official certification by an authorised third party like e.g. a Chamber of commerce. It is often submitted to a customs authority of the importing country to justify the product’s eligibility for entry and/or its entitlement to preferential treatment.
Whose invoice should feature on exports from the UK?
We are often asked which invoice should feature, especially when sending under plain cover. Always check your specific export scenario.
- The commercial invoice is the primary document used in international trade to provide information about a shipment or transaction and identify products being shipped. It is used to support customs declarations in valuation and duty determination, and when submitting certificates of origin or other documents for certification.
- In many cases, a commercial invoice will be the same as a sales invoice, although specific version, containing particular information may be required in certain circumstances, or when trading with specific countries.
- The completed invoice and any licences or certificates must travel with the goods.
- When filling in the value of your goods on the invoice, use the price you’re selling them for.
- If you’re not selling the goods, use the market value of the goods. List any freight or export insurance you included in the price separately.
- You may need proof of origin if exporting to a country where your goods have a reduced or zero rate of duty.
Visit the Export section on Gov.uk here.
Three factors have to be taken into consideration to calculate the customs duties to be paid when trading goods:
- The value of the goods
Customs duties and value added tax (VAT) are calculated as a percentage of the goods’ value.
Tariffs & Commodity Codes
You’ll need a commodity code to make your customs declaration when you bring goods in or send goods out of the UK. This includes goods sent to you from abroad.
If you classify your goods correctly you’ll know what rate of duty and import VAT you should pay, and if:
- the duty is suspended
- you need a licence to move your goods
- your goods are covered by:
- Agricultural Policy
- anti-dumping duties
- tariff quotas
Many promotional merchandise items are classified under ‘Hard to Classify’ and it’s important to find the right codes. See which areas are covered here.
You must send one email for each of the goods you’re asking advice on if you cannot find the Codes you need.
Items packaged as a set
If your items are packaged in a set to sell and be used together, you should classify them to the most significant item in that set or, if that’s not identifiable, under the commodity code with the highest numerical value.
You must classify the items separately if they’re either:
- not packaged as a set for retail sale
- not to be used together
If an item is made of more than one substance
As a general rule, if you have an item made of 2 substances (for example, clothing that is 60% cotton and 40% polyester) you’d usually classify the item using the higher percentage content. There are exceptions, so check the relevant section and chapter notes for your goods.
Formal legally binding decision
You can apply for a Binding Tariff Information decision in Northern Ireland or an Advanced Tariff Ruling in Great Britain. This is a legally binding decision on the commodity code to use for your goods and can take between 30 and 60 days to be processed. Use this method if:
- your goods are hard to classify and informal advice is inappropriate for you or your business
- your goods are a new type
- you need a longer lasting and legally binding decision for your goods
The customs tariff to be applied
Check your TARIC (Integrated Tariff of the European Communities) check the applicable code number.
The origin of the goods
Preferential origin is conferred on goods from particular countries, which have fulfilled certain criteria allowing preferential rates of duty to be claimed. There will be no preferential origin of goods manufactured in the UK* when entering the European Union after a No Deal Brexit
*https://ec.europa.eu/taxation_customs/sites/taxation/files/notice-to-stakeholders-brexit-preferential-origin-final_en.pdf Source and further information: https://ec.europa.eu/taxation_customs/business/calculation-customs-duties_en
|Customs declarations will be required for all EU traffic||A CN22 or CN23 form will be required for all items/goods(excluding personal correspondence),attached to the outside of parcels or letters|
|Customs data will need to be submitted electronically||Provide electronic customer data for all export items/goods via an approved shipping solution.|
|Customs clearance fees may be payable on items/goods (entering the EU from the UK||You will need to understand clearance fees and what VAT and duties are applicable (and how the recipient will pay these)|
|It will be mandatory to have an Economic Operator Registration and Identification (EORI) number to send to the EU from the UK||If you do not have an EORI number you will need to register with the HMRC for your unique business number|
|Items valued at under £22 which are currently part of the Low Value Consignment Relief (LVCR) scheme are not subject to VAT or duties||Items values at under £22 will remain part of the LVCR scheme for items sent into the EU and not be subject to VAT until 1st July 2021 (subject to EU negs)|
|Commercial items/goods sent to the EU over £22 and below £150 may be taxed at the border any may incur a customs clearance fee in the receiving country||You will need to under clearance fees and what VAT and duties are applicable|
|Commercial items/goods sent to the EU over£150 may attract VAT, duties and a customs clearance fee||You will need to under clearance fees and what VAT and duties are applicable|
|Register to pay VAT using the Import One Stop Shop Scheme(IOSS) applicable from July 2021 for exporters sending commercial items/goods under £150 to the EU, where you pay VAT (where applicable) on behalf of the buyer||More information on|
ec.europa.eu/taxation_customs/business_en and search for Import One Stop Shop
Placing goods on the market: CE / UKCA
New approach: Goods with a CE-marking may be placed on the UK market until 1 January 2022 e.g. Toys, PPE, machinery.
Old approach: Changes to existing standalone regulation models depend on specific goods
Non-Harmonised Goods: mutual recognition will no longer apply to non-harmonised goods in GB
- If you self-certify or use an EU Notified Body, you can still use the CE marking until 1January 2022 for goods placed on the GB market (more in some cases). In this case, you can continue to use your EU Declaration of Conformity.
- The CE marking will still be required for products placed on the EU market.
- You can place the UKCA and CE marking on the same product if it is destined for both the GB and EU so long as the product meets the rules for both markets.
- From 1 January 2021 new approach products assessed against GB rules by a GB ‘Approved Body’ will need the UKCA marking. In this case, you will need to use a UK Declaration of Conformity.
- If you currently self-certify for the CE mark you can also do so for the UKCA mark.
- From 1 January 2021 the essential requirements and standards that can be used to demonstrate compliance to the UKCA marking will be the same as they are now for the CE marking
Do you need a conformity assessment?
Placing new approach goods on the GB market
All UK-based ‘notified bodies’ will automatically become UK approved bodies from 1 January 2021. You can find details of UK notified bodies on the EU NANDO database or the UKAS website. UKCA marking will become mandatory for most goods currently requiring the CE mark from 1 January 2022. If your product requires third-party conformity assessment this will need to be done by a UK-recognised body from 1 January 2022 (in most cases). The CE marking will still be required for products placed on the EU market.
Placing new approach goods on the EU market
From 1 January 2021 mandatory conformity assessments by UK bodies will no longer be recognised in the EU (unless agreed otherwise in negotiations). Businesses should speak to their existing certification bodies to discuss options.
Arrange for separate certificates for the UK and EU markets to be ready well in advance of 1 January 2022. There may be a requirement for a level of re-assessment before the second certificate is issued so you should start planning as soon as possible. Contact your notified bodies as soon as possible to understand your options for conformity assessments for the UK and EU markets.
Who is responsible for being compliant?
A UK-based distributor of EU goods may become an ‘importer’ – and vice-versa. Compared to distributors, importers have a stronger duty to ensure products are compliant and often must ensure their address is on a product. Review guidance on the responsibilities of importers by searching for ‘placing goods on the GB market’ on gov.uk Authorised Representatives for the GB market must be based in GB or NI. GB-based Authorised Representatives will also no longer be recognised in EU.
EU legislation coming into force on 16 July 2021 may mean you need to appoint an EU representative if there is no other economic operator in place.
- Both the UK and EU would operate REACH, but the two systems would not be linked in any way
- Businesses will need to take steps to ensure regulatory requirements are fulfilled on both sides of the Channel in order to maintain continuity of supply chains
- Companies from both markets would have ‘third country’ status in the other > UK companies procuring chemicals directly from EU/EEA suppliers, will change from downstream users to importers under UK REACH.
UK companies procuring chemicals directly from EU/EEA suppliers, will change from downstream users to importers under UK REACH. Existing UK-held EU REACH registrants have 120 days to provide UK authorities with some initial information. DEFRA have extended the deadline for importers of substances from EU based registrants by a further 120 days. These registrants now have 300 days to provide UK authorities with some initial information. Companies then have 2, 4 or 6 years beginning after those 300 days for full registrations to be completed. These deadlines are dependent on tonnage bands and hazard profile, with the highest tonnage and most hazardous chemicals first
Maintaining EU/EEA Market Access and Making New Registrations
REACH registrations and existing EU authorisations decisions held by UK entities would no longer be valid under EU REACH after the Transition Period. UK registration holders would need to transfer their registration to an EU-27/EEA Legal Entity. Alternatively, EU/EEA companies may register the substance themselves as an importer.To register a new chemical for the EU/EEA and UK markets businesses would need to register with both REACH regimes. register with both REACH regimes.
REACH actions to take
- Identify the chemicals you manufacture, sell or use and their regulatory responsibilities with respect to that chemical in the UK market.
- Check plans across your supply chain to understand what information you may need to provide to maintain UK and EU market access.
- Consider appropriate actions if the status of existing EU REACH registrations or authorisations could change.
More information can be found here: REACH-IT@defra.gov.uk
Tariff Checks: know your numbers
UK Global Tariff will apply to all goods from 1st January 2021 unless you have an exception
- Developing country that pays less or no duty because its part of a generalised scheme of preferences
- Has a trade agreement with the UK
- Has a tariff suspension
The UK Global Tariff replaces the current common external tariff and EU trade agreements will no longer apply to the UK. It is looking now unlikely we will reproduce the effects of a trading agreement and we will go to WTO terms.
Every business will need to know the right commodity codes for import and export to avoid issues and delays. It is recommended to check the guidance for ‘hard to classify’ goods to check the duty and if you need a license. Use the Tariff Tool to find the right information especially if you send out a variety of goods.
Transition Address Book
In this section are various links to help members navigate to the right information via Government and other sites. The BPMA is not responsible for the content on these sites and provides this resource linked to general information members may need.
If you would like to suggest an addition to this page or useful link other members may need, please contact firstname.lastname@example.org
The BPMA has provided this resource to signpost its members to information sources. The information contained here does not constitute formal , legal or regulatory advice. All sources of information are subject to change. The BPMA is not responsible for the content on these sites and provides this resource linked to general information members may need.
Please contact the BPMA with any queries on 01372 371184 or email us on email@example.com