Policy paper

The Customs and Excise Border Procedures (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2021

Published 1 December 2021

1. Who is likely to be affected

Businesses and intermediaries importing or exporting goods through mainland Great Britain (England, Scotland and Wales) border locations that do not have sufficient space to apply full customs controls and implement the traditional temporary storage model, border location operators, carriers, drivers and hauliers involved in the movement of such goods.

2. General description of the measure

This measure replaces a previous measure, introducing legislative changes that will allow customs procedures to continue to operate efficiently and will help facilitate the movement of goods between Great Britain and the European Union (EU) once staged customs controls have ended. This includes:

• ending temporary easements to customs controls at border locations which did not have customs control systems at the end of transition
• applying full customs controls to goods imported at border locations where declarations need to be pre-lodged in advance of arrival and to goods exported at border locations without space to operate normal export processes
• allowing goods with pre-lodged temporary storage declarations to be imported via border locations without temporary storage facilities and transported directly to an inland temporary storage facility (TSF)

This measure also includes penalties for failure to comply with regulations where checks on imported goods need to be done inland and for failure to comply with instructions given by an HMRC officer.

3. Policy objective

To ensure that the United Kingdom (UK) maintains an effective system of customs controls, including simplifications of customs requirements where appropriate.

4. Background to the measure

A letter from the Select Committee on Statutory Instruments noted that the powers used for the Customs and Excise Border Procedures (Miscellaneous Amendments) (EU Exit) Regulations 2021 (SI 2021/830), laid on 12 July 2021, did not cover the penalty provisions in regulation 4.

Border controls for EU goods imported into Great Britain were introduced at the end of the transition period in stages to give businesses affected by COVID-19 more time to prepare. Until 1 January 2022, border locations without existing customs control systems at the end of the transition period are not required to control goods on the basis of declarations. Whereas from 1 January 2022, full customs controls will apply to all border locations in GB which move goods destined for imports and exports. At some locations checks on imported goods will need to be done inland.

The government announced in the Border Operating Model (dated 8 October 2020) that goods with pre-lodged temporary storage declarations may be imported via GB border locations without existing customs control systems and transported to a TSF in Great Britain provided they meet specific requirements. Existing legislation is sufficient to provide cover in the short term only.

HMRC remains in frequent contact with importers, exporters and their representatives in relation to customs matters, including changes to the customs legislations.

5. Detailed proposal

5.1 Operative date

This instrument will take effect from 1 January 2022. However, changes relating to the listing process of locations will take effect on 22 December 2021.

5.2 Current law

The instrument is made under the Taxation (Cross-Border Trade) Act 2018 (TCTA). This Act, and the regulations made under it, provide the basis of the UK’s customs rules.

Legislation listing roll on roll off (RoRo) and other locations and the requirements for pre-lodgement of customs declarations is in Part 13 and Part 13C of the Customs (Import Duty) (EU Exit) Regulations 2018. Legislation for notification of importation and acceptance of declarations at RoRo and other listed locations is in Part 2 of the same regulations.

Legislation on goods exported from RoRo listed locations is in Part 6 of the Customs (Export) (EU Exit) Regulations 2019. Legislation on modified export controls is in Part 2 of the Customs (Declarations) (Amendment and Modification) (EU Exit) Regulations 2020.

Legislation on temporary storage is in Part 3 of the Customs (Import Duty) (EU Exit) Regulations 2018.

Legislation on penalties for failure to comply with rules relating to customs duty is in the Customs (Contravention of a Relevant Rule) Regulations 2003.

Legislation on HMRC powers to make regulations on the unloading, landing, movement and removal of goods on their importation is in the Customs and Excise Management Act 1979. Legislation on obligations relating to goods imported at border locations where pre-lodgement of declarations is required and where such goods are required to undergo checks carried out inland (because there is insufficient physical capacity to conduct checks at the border location) is in the Customs Importation (Miscellaneous Provisions and Amendment) (EU Exit) Regulations 2021. Legislation defining goods being subject to the control of an HMRC officer and that good are subject to control as soon as they are imported is in TCTA.

5.3 Proposed revisions

This measure revokes the Customs and Excise Border Procedures (Miscellaneous Amendments) (EU Exit) Regulations 2021 and replaces the provisions in that measure with identical provisions (including the minor correction of references) made under the correct powers:

• This removes Part 2 of the Customs (Declarations) (Amendment and Modification) (EU Exit) Regulations 2020 and makes amendments to the Customs (Import Duty) (EU Exit) Regulations 2018 and the Customs (Export) (EU Exit) Regulations 2019.
• Where pre-lodgement of declarations is required carriers will be required to notify HMRC when the vessel, aircraft or train carrying the goods has embarked for GB. This must be done at the latest point of no return as part of operating the Goods Vehicle Movement Service (GVMS), or an equivalent system.
• For controlled goods, such as alcohol and tobacco, there will no longer be a requirement on businesses to notify HMRC by its IT system by 23:59 the day after the day on which the goods were imported, or to make an entry to the Excise Movement and Control System for excise duty suspended goods.
• Where pre-lodgement is required at “other” listed locations, declarations must be made before goods are loaded rather than before the goods are imported, and after this time declarations cannot be amended or withdrawn without permission, except for information specified in a notice.
• This allows other locations where HMRC considers that the location does not have sufficient physical space in which to operate the processes for full customs controls used at all other border locations (the standard export procedure) to be listed so that RoRo export modifications will apply to non-RoRo locations which lack space.
• Where RoRo export modifications apply, carriers will be required to verify that all goods permitted to be loaded for export onto vessels, aircraft and trains have Permission to Progress.
• Messages will need to be sent to HMRC confirming that goods have left GB for all goods exported from such locations, but this will be done automatically by GVMS (or an alternative equivalent system) and require no action by exporters. This means that where excise duty suspended goods (such as alcohol or tobacco products) are exported through these locations, traders or the location will no longer need to confirm manually to HMRC that the goods have left GB.
• Where required, those involved in moving goods through these locations, and declarants, may still need to provide evidence a declaration has been made.
• Where certain goods are exported through RoRo listed locations and are declared by conduct (for example, vehicles and containers), the processes laid down in the regulations are modified to take account of the particular challenges of those locations, such as lack of space or infrastructure to carry out declarations. This allows HMRC to apply those modifications at other export locations with similar issues.
• For exports that depart from border locations without space to operate customs checks at the port’s premises, goods will be subject to customs compliance checks at an inland border facility when required.
• Where pre-lodgement of declarations is required business will be able to import temporary storage goods through border locations without TSF by pre-lodging a temporary storage declaration into the relevant inventory system and transporting them directly to an inland TSF.
• This also makes minor changes to process by which HMRC Commissioners issue lists of RoRo and other border locations.

In addition, this measure also includes penalties for failure to comply with regulations where checks on imported goods need to be done inland and for failure to comply with instructions given by an HMRC officer.

6. Summary of impacts

6.1 Exchequer impact (£m)

2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027
Empty	Empty	Empty	Empty	Empty	Empty

Costings, where required, will be subject to the scrutiny by the Office for Budget Responsibility and included in their forecasts at a future fiscal event.

6.2 Economic impact

This measure is not expected to have any significant economic impacts.

6.3 Impact on individuals, households and families

There is expected to be no impact on individuals as this measure only affects businesses, including individuals in a business capacity (such as employees). This is detailed in the impact on businesses section.

This measure is not expected to impact on family formation, stability or breakdown.

6.4 Equalities impacts

It is not anticipated that there will be impacts for those in groups sharing protected characteristics.

6.5 Impact on business including civil society organisations

This measure is expected to have a negligible impact on businesses involved in border locations, carrier and haulage companies and those who import or export goods through these locations. Information requirements for this measure are the same as for temporary storage and it is anticipated that the process for submitting this information will not be more burdensome.

The changes provide an alternative process of clearing goods through locations without temporary storage facilities aimed at maintaining the flow of goods and is optional depending on the requirements of each border location.

One-off costs for businesses will include familiarisation with the changes. Drivers or hauliers may also need to register for the GVMS service, which is a web-based free to use service provided by HMRC. Port operators and carriers who decide to use the service may have to opt into the changes and modify and update their IT systems to be compatible with the HMRC system, this will be supported by HMRC’s IT department. All businesses affected by the change may need to provide training for their staff to be able to use the new systems and ensure they know what they need to do.

Continuing costs may include having to monitor for updates to the system and update their systems and processes as they arise. Businesses will receive support for this from HMRC.

Penalties could apply to businesses, or individuals employed as drivers, but only if they were transporting goods which failed to arrive for checks or were tampered with, or for failure to comply with instructions given by an HMRC officer. HMRC is working with external stakeholders to build awareness and capability across the driver community in order to create a culture of compliance. The penalties are intended to be a deterrent and provide reassurance to compliant drivers and hauliers.

This measure could improve businesses experience of dealing with HMRC as it is an optional alternative to the temporary storage customs control model which some ports do not have the facilities to support. In addition, the solution developed is in direct response to needs highlighted by stakeholder engagement.

There is expected to be no impact on civil society organisations.

6.6 Operational impact (£m) (HMRC or other)

HMRC will implement this change at no extra cost. Border Force will incur one-off costs communicating changes to operational staff.

6.7 Other impacts

Other impacts have been considered and none have been identified.

7. Monitoring and evaluation

This measure will be monitored through information collected through Border Force and HMRC IT systems and will be kept under review through communication with affected taxpayer groups and other government departments.

8. Further advice

If you have any questions about this change, please contact Hayley Harris in the Customs Control policy team by email: [email protected].

9. Declaration

The Right Honourable Lucy Frazer QC MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.