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UK-EU trade subject to Brexit VAT and customs changes

When the UK’s Brexit transition period ends on 31 December 2020, goods moving between the UK and EU will be subject to import VAT, customs declarations, potential tariffs and regulatory checks.  It is possible to apply to HMRC for a Duty Deferment account which can postpone the payment of customs duties and VAT until month end.

The bill for all the month’s imports is then settled by bank Direct Debit. You may alternatively use the Postponed Accounting scheme to avoid import VAT payments altogether.

To obtain this deferment, you will need to provide a guarantee. There are varying types: individual for small number of movements; or comprehensive guarantee for large numbers of movements.

UK relaxes Duty Deferment account guarantee for Brexit

The UK has recently confirmed it will relax the expensive comprehensive guarantee requirement from 1 January 2021 to help cushion the effects Brexit. This is done though a guarantee waiver application. The individual guarantee will come with no cost. For most businesses this will mean you can apply for a guarantee waiver and, subject to compliance and solvency checks, means you will not need to provide a guarantee. If you already hold a duty deferment account you can also apply for a guarantee waiver for this account.  There are two schemes:

  • approval for a guarantee waiver to defer customs duty, import VAT and excise up to £10,000 per month
  • approval for a guarantee waiver to defer customs duty, import VAT and excise up to a specified amount over £10,000 per month

Non-resident businesses will be able to apply for a Duty Deferment Account from 2021, but will have to provide a financial guarantee.


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