www.bifa.org


Policy & Compliance From BIFA Members’ viewpoint, the most


significant issue that will stem from this deferral of the implementation is the significant risk of import non-compliance stemming from extending the delayed declaration scheme. The following quote from a Member sums up


the situation: “The extension of EIDR, is going to result in yet another nine months of non- compliance; traders are not aware that their goods have been entered to EIDR, groupage operators and transport companies, blatantly, ignoring the rules and freight forwarders like ourselves fighting to keep our customers compliant.” The problem is that to ensure a smooth


journey from the EU to UK, EU-based shippers and hauliers are ‘assuming’ that the UK importer is declaring the goods to HM Revenue & Customs using EIDR, when in fact they are not. This is resulting in large quantities of goods being imported into the UK which have not been properly declared. The full scale of the problem is unclear but it is


very significant and, despite repeated requests, at the time of writing, government departments have not answered BIFA’s specific concerns about how to discourage such non-compliance and how to regularise such shipments when received in the UK.


Deteriorating situation Extending the period during which declarations can be deferred is likely to make this problem worse – which will cost money in lost Customs revenue. The Office of Budget Responsibility estimated


that the original timescale of six months to allow for delayed declarations would cost the Treasury £200 million. There is no calculation for the impact of the


additional six-month delay in implementing frontier Customs declarations. Also, the mandatory requirement to use the Goods Vehicle Movement Service (GVMS), which would have linked pre-lodged customs and safety and security reference numbers, and would have helped alleviate import linking non-compliance, has been deferred. It was acknowledged that not all parties,


particularly those who had commenced building infrastructure projects, would be pleased by the delay to the timetable that had initially been detailed in the Border Operating Model. Also, beyond cost there are other disadvantages that we have detailed in this article. Time will tell whether or not it was the correct


decision to make; however, many believe that it will make it much more difficult for government to regain control of, and credibility at, the border.


May 2021


BIFAlink


Clarification regarding Public Notice 744B


Further to various Member enquiries and the confusion surrounding some of the text in Public Notice 744B ‘Freight Transport and associated services’, BIFA sought clarity from HM Revenue & Customs’ VAT policy team on whether customs intermediary charges can be zero or should be standard rated. Below is the verbatim reply


“Thank you for your recent correspondence seeking clarity on VAT Notice 744B ‘Freight transport and associated services’, in particular regarding the use of Customs intermediaries. To give one example, a UK-based freight


forwarder A has been contracted by customer B (UK established business) to arrange the import of a shipment of furniture by road from Paris to London. A customs clearance is required at Dover; the freight forwarder A appoints Customs Intermediary C, who clears the goods and then invoices freight forwarder A for providing customs clearance services. In this scenario, the supply from A to B is a


business to business (B2B) supply of freight transport. As such, paragraph 3.2 of Notice 744B confirms that the place of supply is where the customer belongs, in this case the UK. As the place of supply is the UK, the supply of the freight transport is within the scope of UK VAT.


Place of supply With regards to Customs Intermediary C, paragraph 3.4 of the notice states that where you are a sub-contractor supplying freight transport or related services to a main contractor, the place of supply of your services is determined by the status of your immediate customer. Section 6 of Notice 744B sets out those


services which are considered to be ‘related services’. Whilst not expressly stated, the services of a Customs intermediary would


normally fall within the services set out here, so would qualify as related services. The Customs intermediary’s immediate


customer in this case is the UK-based freight forwarder, so its services are within the scope of UK VAT. Paragraph 4.1 of the notice states that the supply of transportation or related services connected with an import into, or an export from, the UK is zero rated. As such, the Customs intermediary services


may be zero rated as services with a place of supply of the UK, which are connected to an import into the UK.


International movement As for your second example: A second example is when a UK-based importer A arranges the movement of a shipment from Paris to London via Dover directly with a haulier. The importer A appoints a customs intermediary B to act on its behalf to clear the goods when they reach Dover. In our view, in this scenario, B may zero rate the invoice to A because B’s role is to provide a service to A relative to an international movement. Also, there is a direct contractual arrangement between A and B. Presumably the importer A is in business, so


normal B2B rules apply. The place of supply is where the customer belongs for both the haulage contract and that with B (the UK). If B’s intermediary services are connected with an import into or an export from the UK, they are zero-rated for VAT.”


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