Traders Must Be Established in UK to Continue Simplified Procedures After No-Deal Brexit, HMRC Says

Companies not established in the United Kingdom will not be able to use most simplified procedures and customs facilitations in the U.K. should the country leave the European Union with no trade deal in place, the U.K.’s HM Revenue and Customs (HMRC) said In a guidance document issued March 6. That means that, to keep using the procedures, companies must either be a sole trader resident in the U.K.; have a registered office in the U.K.; or have a permanent place of business in the U.K. to carry out business activities, HMRC said.

Companies that have already been authorized to place goods into a customs special procedure in the U.K. -- inward processing, outward processing, temporary admission, authorized use and customs warehousing -- can carry on both importing goods into the U.K. and “suspending customs duties and import [value added tax] or in certain circumstances, relieving some or all of the customs duty,” HMRC said. “You’ll also be able to use your authorisation to import goods from the EU along with any you already import from non-EU countries,” it said.

Authorizations issued by HMRC to use special procedures in the EU will also still be valid after a no-deal Brexit, but for use in the U.K. only, the agency said. “This means that you can carry on importing goods into the UK under the authorised procedure after 29 March,” it said. On the other hand, “Current guidance issued by the EU is that authorisations for customs simplifications or procedures, such as customs warehousing, issued by the UK will no longer be valid in the EU after” that date, HMRC said.

Authorizations by other EU customs authorities outside the U.K., on the other hand, will no longer be valid in the U.K. after March 29. “For example, to import goods for processing from the EU whilst duty is suspended or relieved, you’ll need a separate authorisation from HMRC,” the agency said. Goods already in a customs special procedure on or before March 29 will have one year until March 29, 2020, to be discharged, either by export, making a declaration into a U.K. special procedure, or by putting them into “free circulation” in the U.K., HMRC said.

Importers will also have a grace period of at least 12 months before guarantees must be deposited to cover customs duties and import VATs when using special customs procedures, HMRC said. “HMRC will give 12 months’ notice before reintroducing guarantees,” it said.

HMRC-issued authorizations for transit simplifications, including authorized consignor and consignee status, may still be used after March 29, though more demand is expected and authorized consignors and consignees may want to expand their capacity to deal with this possible increase. “You may need temporary storage authorisation to expand your transit facilities or open new facilities,” HMRC said. Customs freight simplified procedures authorized by HMRC before March 29 may also be used after that date, the agency said.

Authorized Economic Operators given that status by HMRC will continue as AEOs in the U.K. only after March 29, assuming a no-deal Brexit. “This will be a new UK status and will replace your existing EU status for your UK customs operations,” HMRC said. The new U.K. status will not apply to branches and permanent business establishments in other member states of the EU, and separate applications will have to be made in those member states for each. The EU will no longer recognize U.K. AEOs, and vice versa, the guidance said.