Customs (& Brexit) Considerations in 2019

The session from David Miller from The Customs People covered the main customs considerations for universities and the challenges faced in applying the rules correctly. He also briefly covered what the customs implications of Brexit were likely to be.

The Union Customs Code (‘UCC’) has been with us for three years now and HMRC expect organisations to be up to speed with the rules. The main challenges for universities are that there are large numbers of staff making purchases who often have limited knowledge of the rules. Customs duty is also generally seen as a low priority. It is imperative that the correct commodity codes are applied to the goods being imported and the correct value. Duty is calculated on the Cost of the imported goods plus Insurance and Freight (the CIF value). VAT is calculated on the CIF value plus the duty. Any special procedures conferring relief should be notified to the shipping agent handling the import.

David outlined the main duty reliefs available:

• Imports of scientific instruments for non-commercial use - apply for an individual certificate or now possible to obtain blanket certificates valid for 6 months. Danger with blanket certificate is it might be used when it does not apply.
• Inward Processing - allowed three times per year by declaration, otherwise you need to apply for full authorisation (have to provide a guarantee and complete some detailed questionnaires on processes). In practice HMRC allow more than three but if getting to seven or more you should apply for full authorisation. 
• Temporary admission – have to pay VAT and duty up front and then re-claim once goods have been re-exported.
• Returned Goods Relief.
• Outward Processing.

David recommended subscribing to MSS data from HMRC for £240 p.a. to monitor imports and having a named point of contact for Customs Duty Issues and developing a Customs Manual.

As for the impact of Brexit, we can only speculate until we know what is happening! Under Transitional Simplified Procedures (TSP) it will be possible to defer payment of duty for six months. This will require setting up a deferment account, it could then be extremely difficult to allocate costs correctly to departments. 

David's Thoughts

David himself provided the following key messages to BUFDG after the conference:

-          Given that the UCC is now three years old, HMRC are expecting any organisations which import to be ‘customs competent’ and at least have an awareness of the, often complex, rules.

-          Whilst Customs matters may not be the highest priority for universities, it is worth formulating a plan for dealing with customs matters. This is particularly so given that universities’ interaction with imports and exports tends to:

• Be low value but often high volumes;
• Involve big ticket items [and even medium ticket items] which are often unusual due to what universities do – they are not ‘run of the mill’ imports;
• Often involve a duty and/or VAT relief being claimed. 

-          In formulating a plan, it is with the aim of:

• Satisfying HMRC that the university is trying to be compliant by taking proactive steps;
• Minimising any potential losses by heightening awareness of customs rules.

-          The plan should/could include:

• Whilst not necessarily becoming ‘customs experts’, Finance [or another nominated party within the university] should be the focal point for queries/dealing with customs matters;

• This could include Finance obtaining and retaining the NIRU Certificate for duty relief on scientific equipment – blanket ones for 6 months can be obtained;

• Support is available from Customs Consultants for more technical queries / big ticket items / planning

• Many universities have a Customs Handbook or Bible which sets out key points for the university buyers – bearing in mind that there may often be a disconnect between knowledge by the buyers and the need to purchase items, such a document can at least point people in the right direction – this should include explaining both the basics as well as common and key reliefs and how to communicate with freight agents or courier companies given there are recurring and ‘common’ themes with imports for universities;

• There should be a level of ‘qualification’ to try and monitor and as appropriate try and control imports, especially where high value items are subject to some kind of relief;

• This qualification can be by subscribing to HMRC’s MSS data which costs £240 plus VAT per annum and provides lots of useful information that allows test checking to be undertaken;

• Again, whilst not expecting every university to become a customs expert, HMRC would consider it reasonable that some test checking be undertaken to ensure the integrity of imports made, especially where a relief is used or a high value item involved. MSS data is the starting point to facilitate such test checking, be it based on value, relief used, commodity code or any other factors.

Brexit

Whilst TSP may not be for every university (as it requires a deferment account), it is available. In addition, check out the list of Temporary Customs Duty Rates which are applicable under a no Deal Brexit as this would effectively remove duty on many items (albeit that import VAT is the bigger issue [even under postponed VAT accounting]).

You can find the slides from the session here.