TAXATION (CROSS-BORDER TRADE) BILL (THE CUSTOMS BILL)
This Bill was published on 20 November 2017. This followed publication of a
Future Partnership Papers on Customs in August 2017, and both a Customs
White Paper and a Trade White Paper in October 2017.
The Bill as introduced is an enabling measure, to allow the government to create
a functioning Customs, VAT and excise regime after Brexit. It also contains trade
defence measures and provisions on trade preferences.
It would enable the UK to create a standalone Customs regime. The express aim
is to be flexible enough to accommodate a full range of possible outcomes from
the present trade talks with the EU. It allows for divergence from EU law in the
future, but aims for similarity and alignment with EU law at the outset.
The Bill would enable the UK to charge Customs duty on goods, including goods
imported from the EU, and would confer the powers necessary to set UK tariffs in
place of the EU’s Common External Tariff, and UK Customs duties in place of the
EU Union Customs Code.
The Bill’s provisions would allow the UK, in place of the EU, to apply anti-
dumping, anti-subsidy and ‘countervailing’ duties to protect UK businesses from
such activities as other countries’ dumping’ goods at lower than their true
production costs. At present, any action against such dumping is taken at EU
level and through EU Regulations, for example against imports of steel from
China. There are reported to be “differing views” on how straightforward it will
be to achieve “grandfathering” of EU trade defence measures.
The EU’s current General Scheme of Preferences allows for some preferential
trade access to be granted to certain developing countries. The Bill’s provisions
would allow the UK to apply reduced tariffs to certain goods from around 70
developing countries, and allows for trade agreements with developing
VAT and excise duties
The Bill would abolish in the UK EU acquisition VAT (applicable to business-to-
business intra EU movements of goods), and replace it with import VAT levied on
all imports from outside the UK. It would enable UK VAT and excise to operate
whatever the outcome of negotiations, replacing the EU Principal VAT Directive
and the Excise Directive. There would be significant amendment of existing laws
such as the Customs and Excise Management Act 1979, the Value Added Tax Act
1994, and related primary and secondary legislation.
The EU customs tariff contains more than 17,000 different goods, and about half
a million separate customs codes are needed once reduced tariffs for some
trading partners are taken into account.
In common with other Brexit legislation, very wide, and politically controversial,
delegated powers are proposed in the Bill for statutory changes to be made by
means of Statutory Instruments rather than further primary legislation – this
time with the benefit of 174 pages of Treasury briefing notes justifying the use of
Customs Declaration Service
Major changes are in prospect from the Customs Handling of Import and Export
Freight system known as CHIEF to the CDS or Customs Declaration Service, and
these are due to take effect in January 2019. It has been noted with concern by,
amongst others, the Public Accounts Committee and the Institute for
Government, that this is only two months before the UK is due to leave the EU,
and that the consequences of any lack of readiness by HM Customs & Excise to
operate the new system could have ‘catastrophic’ impacts on arrangements for
import and export. As it is, it has been estimated that the number of declarations
from UK businesses could rise from 55 million to 255 million, and that 132,000
traders will need to make declarations for the first time. Representatives of the
Port of Dover gave evidence to one such inquiry that the Port handled 10,000
freight vehicles every day except Christmas Day, which was potentially
equivalent to a 180 kilometre queue.
For further information about Wyeside Consulting Ltd Brexit Briefings,
please contact William Wilson, Barrister- Director, at
firstname.lastname@example.org or tel. +44(0)1225-730- 407