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Guarantee rules post-EU Exit


This article outlines some of the changes to the guarantee requirement introduced by UK legislation replacing the Union Customs Code and EU Law


It is November and at last a clearer picture of what is awaiting freight forwarders in 2021 is emerging from a flurry of government guidance and legislation. In this article we will focus on one of the more important aspects relative to operations: the guarantee requirements for special procedures, temporary storage and transit. The fact that the UK is leaving the EU


Customs Union and the Single Market has always been equivalent to the re-introduction of customs formalities for goods moving between two, now separate, customs territories. Early on this fact was identified as a major source of concern, but the emphasis was mainly on the administrative burden relative to the requirement for submission of customs declarations. An even more important issue of cashflow was identified as a potential deal-breaker as traders used to simply selling or buying goods could now be required to apply for deferment accounts or special procedure authorisations. All of these, under the current regime, would require a Customs Comprehensive Guarantee (CCG).


Government guidance Pragmatically the government addressed a number of these concerns in the statutory instruments regarding customs procedures and the guidance that followed. In the case of special procedures, The


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Customs (Import Duty) (EU Exit) Regulations 2018, Part 10, Regulation 101 says that, in principle, a guarantee will not be required to become authorised for use of inward or outward processing or temporary admission. The legislation does, however, specify that in certain cases a guarantee may still be required in order to obtain authorisation, although we understand this will be limited mainly to traders with a poor compliance history. A single guarantee will still be required where goods are declared to be a special procedure using the Authorisation by Declaration method. What is more significant is that under the


current guidance, traders will not need a customs comprehensive guarantee to operate a temporary storage facility in Britain unless they are told that one is required. The scenarios mentioned above relate to


potential duty and Members may realise that in many cases we are moving back to the status quo before the introduction of the Union Customs Code (UCC). But the future legislation goes even further


and at least as a temporary measure a comprehensive guarantee waiver will also apply to actual debt – in other words duty deferment accounts. From 1 January, traders with AEO(C) status will automatically be able to use duty deferment without providing a guarantee. Other compliant and solvent businesses will be able to


defer customs duty, import VAT and/or excise duty up to £10,000 per month without needing to provide a guarantee. Traders wanting to defer amounts above this


monthly limit will still be able to do so if they prove they have sufficient financial resources for the amount they are seeking to defer. Existing Duty Deferment Account holders with AEO(C) status or Simplified Import VAT Accounting (SIVA) approval will be auto-enrolled for a guarantee waiver. A new application process for duty deferment


accounts was available from 31 October 2020, and as of 1 January existing CCG holders will be able to cancel their guarantees unless specifically advised otherwise by HM Revenue & Customs.


Biggest winners This is a significant change and will certainly benefit businesses of all sizes, although the biggest winners will be SMEs without a history of customs compliance. There are, however, caveats to bear in mind.


One is relative to the transit procedure, which will still require a comprehensive guarantee as this is a requirement of the actual convention and cannot be changed unilaterally. The other is the fact that the above described


waivers and facilitations will certainly be available to traders operating in Britain, but there is no clarity at the time of writing whether they would also be available for Northern Irish traders. And lastly, it is important to remember that


traders with a history of non-compliance may still have to provide a guarantee, For the rest, however, the entry barrier will certainly be lower. More information can be found at: www.gov.uk/ government/publications/the-border-operating- model


November 2020


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