Import/Export: Customs Tariffs, Duties and VAT

VAT Arguably the biggest change for businesses arising from Brexit is that all arrivals and departures of goods to and from the UK will become ‘imports’ and ‘exports’ from a VAT and Customs Duty perspective. Currently, only goods whose origin or destination is outside the EU are considered “imports” or “exports”. The importance of this distinction is that imports attract Import VAT – which is recoverable subject to the usual rules on VAT recovery – and Customs Duty, which is not recoverable. Crucially, as the Duty is not recoverable this will unfortunately represent an additional cost of doing the same business.

Customs Duty As Customs Duty is an absolute cost, it will be very important to assess the type of goods arriving and categorise them correctly - as this will drive the rate of Duty - and also understand how to correctly value imports for Duty purposes and take advantage of any Duty reliefs. Equally important, as hold-ups at borders could be commercially extremely damaging, is exploring any possible deferment options, which allow goods to move freely with the Duty paid retrospectively. Businesses may also wish to assess their supply chains in order to understand whether creating a business presence in the EU may be beneficial in mitigating these increased absolute financial and administrative commitments.