Keep your goods moving in and out of the UK: frequently asked questions

Original content provided by BDO UK

If you are a UK importer or exporter of record, you are responsible to ensure that all your paperwork, proof of due diligence, origin, VAT, and duty payments are in order and filed ready for HMRC inspection. Failure to comply could result in delays to shipments as well as penalties and may affect your ability to apply for customs authorisations in the future.

At 12.01am on 1st January 2022, the new importer and exporter border control processes came into force, and with Plastic Packaging Tax being effective from 1 April 2022, further disruptions could lay ahead.

Businesses will want to ensure frictionless trade by implementing successful compliance strategies to ensure they remain in control of their supply chain.

In the latest of our quarterly webinars we were joined by HMRC to examine and explain the new Border Operating Model giving a comprehensive overview of customs processes as well as the Plastic Packaging Tax. Below were some questions raised:  

Do we have a timetable for how long we can continue to use ‘Importer's knowledge’ as proof or origin?

The facility to use importer’s knowledge as an alternative to a statement of origin from the exporter is written into Art 54 of the Trade and Cooperation Agreement (TCA). There is no time limit or expiry on this. Any change would likely require a renegotiation of the TCA.

Is there a requirement to evidence importer's knowledge?

Yes. You must hold sufficient records to prove that the goods originate in the exporting territory. TCA article 59 states this. More detailed guidance can be found on GOV.UK.

Is transporting materials/equipment using our own van for them to be used to perform services abroad (UK/NI, UK/EU or vice versa) subject to any customs and declaration changes?

Depending on several factors - the type of equipment, the time that it will spend outside GB and the exact purpose of the equipment, etc. – customs controls might apply. To avoid paying unnecessary duties, customs procedures may be utilised in the form of an ATA Carnet, Temporary Admission and Returned Goods Relief. 

If the duties on import into the EU are nil for a certain product, are you still required to produce a statement of origin?

A statement of origin will not be required to claim preferential origin if the tariff is 0%. However, the importer might ask for statement of origin for different purposes, e.g. the goods are imported for processing or manufacturing and the goods will be re-exported again or will be incorporated into another product. The importer will need proof from the supplier about the origin of that product. The supplier has control and the knowledge of the originating status over the delivered goods and, therefore, the supplier is in the best position to give information about the originating status of the goods.

As a retailer we arrange for manufacture of goods in the EU. These goods are shipped to our UK distribution centre. When we export these goods back to the EU, do they have UK, Eu or no known origin? This obviously has an impact on the EU import duty payable for our end clients/customers.

This is a complicated area. Under the TCA, the general principle is that if goods that are manufactured in one Party meet the relevant origin rules, they obtain preferential origin status for that Party - i.e. EU. It is the 'preferential' status which allows for their duty-free import into the other Party, i.e. UK. If goods are not further processed in the UK and are subsequently returned to the EU in the same state, they would, in principle, still be considered to be of EU origin, but they lose their 'preferential' status so that duty does become due on 're-import' into the EU. There may be solutions to this issue, but they are subject to supply chain criteria. We would be happy to discuss in more detail.

If two items are sent to EU, one UK origin and one not UK origin, how should that be declared? And how will it be treated by EU customs?

It depends on whether preferential origin rules are met and whether preferential origin is claimed or not during importation. For example, if. only one of the products meets the preferential origin rules and the other doesn't, then that product should be declared as claiming preferential origin and the other just as a normal import (which might be subject to customs duty payments if the goods are subject to positive duty rate).

With regard to Long-term Supplier’s Declarations (LTSD) for goods having preferential origin status, where goods are of UK origin can a UK company issue an LTSD to a UK company for evidence or should they be issuing a statement of origin?

It depends on the circumstances. A supplier’s declaration is issued for single consignments and must be repeated for each consignment.

If regular supplies are made, then an LTSD can be issued. It is a one-off declaration valid for supplies delivered during a period up to a maximum of 2 years and valid for all the goods mentioned in the supplier’s declaration that are delivered within the specified period. The LTSD should be reviewed regularly, and any changes must be communicated immediately to all parties involved.

If you import e.g. single items such as metal pens and each pen has a plastic sheath to prevent scratching, is this exempt or not?

The sheath may be liable to PPT as an import if the weight of the sheaths exceeds the 10 tonnes PPT annual registration threshold. If the sheath contains more than 30% recycled plastic content, it may qualify for the exemption. Even if exempt, records must be kept for HMRC inspection to prove the recycled content exceeds 30%.

Our packaging is a mix of cardboard and plastic, so what is the proportion of plastic vs cardboard by weight permitted to be exempt of the plastic tax?

If a plastic packaging component is made from multiple materials but contains more plastic by weight (including additives which form part of the plastic) than any other substance, it will be classed as a plastic packaging component for the purposes of the tax.

As a trader in the UK, we send goods to the EU. Sometimes we use polystyrene chips or bubble wrap inside the box, is this still subject to tax? If so, are we responsible to pay this?

You will be liable to the tax if you manufacture the polystyrene chips or bubble wrap that you place in the boxes. If you buy the Polystyrene chips and bubble wrap as packaging and then use it, you do not have to pay the tax as it falls due on the manufacturer (although the cost will probably be passed on to customers in the costs of the packaging). However, if the supplier defaults on their payment of the PPT then you may have a liability under the joint and several liability rule. To avoid a charge in this scenario, you should undertake regular supplier checks that they have paid the tax and evidence this for production to HMRC. If you are exporting, then there may be an exemption applicable if certain time limits are met and evidenced.

When we receive goods from China and the EU, they are packed in polystyrene in the boxes. Who is responsible for the Tax? Us or our supplier?

As importer you should consider whether a charge to PPT applies on the import. When assessing whether or not a charge applies, you should consider how this packaging is used, rather than the type of packaging it is, when determining if the exemption can apply. If it is used to both transport multiple sales units or grouped packaging and prevent damage during transportation, then there should be no charge to the tax.

Get in touch with a member of our tax team if you have any queries.

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