GB-EU Border Control: Everything you need to know about VAT

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Fine-tuning the UK-EU border control is one of the ways the UK Government is ramping up its preparations for the end of the transition period. The guide provides further details on how the GB-EU border will work and the actions that traders, hauliers and passengers need to take.

With 30 days to go until the Brexit transition period ends, many UK officials are urging UK businesses to prepare themselves for guaranteed changes around importing, exporting and business operations.

UK Secretary of State for Business, Energy & Industrial Strategy Alok Sharma said: “Unless you take action, there is a risk business operations will be interrupted. You should also check with your suppliers and customers that they are taking action. Businesses will play an essential role in ensuring a smooth end to the transition period, and the government and I will be there to support you as we embark on the UK’s new start,” he said in his statement published on HMRC’s website. 

Chancellor of the Duchy of Lancaster, Michael Gove, said: “With fewer than 3 months to go, businesses need to prepare now for new procedures whether or not we reach a trade agreement with the EU, so that they can seize the significant opportunities that lie ahead.”

Since its release in July of 2020, the GB-EU Border Control model, hasn’t undergone many changes. There are just some additional points around processes, site inspections, delayed customs declarations and liabilities.

The GB-EU Border Control guide titled, “The Border with the European Union” also explains the many VAT implications that will come into effect post the transition period. This is very important for those businesses importing and exporting between the EU.

The Phased approach of the GB-EU Border Control Model

The UK’s new border controls will be rolled out in three stages from 1 January 2021 until 1 July 2021. This flexible approach will give industry extra time to make necessary arrangements. The stages are described by HMRC as follows:

Stage 1:

From January 2021: Traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods, and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination or other approved premises on all high-risk live animals and plants.

Stage 2:

From April 2021: All products of animal origin (POAO) – for example meat, pet food, honey, milk or egg products – and all regulated plants and plant products will also require pre-notification and the relevant health documentation.

Stage 3:

From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for SPS commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.

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VAT implications of the GB-EU Border Control and VAT

Below we outline some of the important VAT implications that companies will need to be aware of and start preparing for. These have been summarised and collated directly from the Imports and Exports guide provided by HMRC:

VAT on imports Post Brexit transition period

VAT (Imports) VAT will be levied on imports of goods from the EU, following the same rates and structures as are applied to RoW imports. Registered importers will be able to use postponed VAT accounting, however, unless they are eligible to defer their supplementary declarations, will not be compelled to do so. Non-VAT registered importers have the same options available to report and pay import VAT as they do for customs duties. VAT treatment of goods imported in consignments not exceeding £135 in value will be treated differently to those goods in consignments exceeding £135.

Accounting for Import VAT

VAT registered traders will be able to account for import VAT on their VAT return by using postponed VAT accounting from 1 January 2021. Unless they are eligible to defer their supplementary declarations, they will not be compelled to use postponed VAT accounting. Non-VAT registered traders (and any VAT registered traders not using postponed VAT accounting) will need to report and pay import VAT through the customs processes. Within this context, VAT payments can be deferred using a duty deferment account DDA (more on this below).

Regardless of the method of accounting for VAT on imported goods, checks to ensure that the data on the customs declarations is accurate will continue to be highly important for VAT purposes, for all imports. This will be the primary means to ensure that the correct import VAT is accounted for and paid.

Applying for a GB EORI number

This is required for all businesses moving goods into or out of GB, including those deferring their import declarations. It can take up to a week to get an EORI number, and around 5-10 minutes to apply. VAT registered businesses with EU trade were previously enrolled with an EORI number, so should check whether they already have a number before applying.

Applying for a Duties Deferment Account 

Traders who import goods regularly may benefit from having a duty deferment account (DDA). This enables customs charges including customs duty, excise duty, and import VAT to be paid once a month through Direct Debit instead of being paid on individual consignments. VAT registered traders can instead account for import VAT on their VAT return using postponed VAT accounting, as detailed below. To set up a DDA, traders, or their representatives, apply for a deferment account number (DAN) and will need to be authorised by HMRC. New rules are being introduced which will allow most traders to use duty deferment without a Customs Comprehensive Guarantee (CCG).

After July 2020 (Phase 3): Duties and Import VAT 

Import VAT will be levied on all imports of goods valued over £135 from the EU following the same rates and structures as are applied to RoW imports. VAT registered traders will be able (but not compelled) to account for import VAT on their VAT return by using postponed VAT accounting.

Non-VAT registered traders (and any VAT registered traders not using postponed VAT accounting) will need to report and pay import VAT through the customs processes. As is possible for customs duties, traders and agents can use duty deferment to defer payment of import VAT until a prescribed date, delaying payment for an average of 30 days.

Transport Options Import VAT requirements are not impacted by transport into GB or point of arrival. Systems Import VAT for freight will continue to be handled through CHIEF / CDS. Checks The UK already undertakes intelligence-led checks on both EU and RoW movements, which will continue.

Special procedures for duties and VAT relief 

Businesses can use HMRC’s Customs Special Procedures to suspend, reduce or claim relief on the payment of customs duties and VAT under specified conditions. Those include:

  • Customs Warehousing – allows for goods not in free circulation to be stored without payment of customs duty, and where appropriate excise duty or import VAT, in a customs warehouse.
  • Inward Processing – allows for the payment of customs duties and import VAT to be suspended on imported goods whilst processing is taking place. • Outward Processing – allows for the temporary export of goods for processing or repair, and to re-import the processed products whilst retaining domestic status or with partial relief from import duties.
  • Temporary Admission – allows for businesses and individuals who are established outside of the UK to be authorised to import goods with total or partial relief from customs duties and other charges because of the specific use to which the goods will be put.
  • Authorised Use – allows for reduced or nil rates of Customs duty on certain imported goods, provided they are put to a prescribed end use.

What happens if the exporter wants to zero-rate the supply for export (VAT) 

Evidence of export is one of the proofs that can be provided in order to zero rate the supply of goods for VAT in an exporter’s records. Crossing the border without the correct customs declarations means that the person responsible for the goods will have to pay VAT both in the EU territory and the UK, in addition to a possible customs penalty at the border.


There is a lot to take in regarding the GB-EU Border Control model but businesses must start preparing for the changes that are afoot if they want to remain compliant post the transition period.


Disclaimer: Reproduced/Adapted with permission from VATGlobal.

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