Preparing for final exit from the EU and tariff implications

Preparing for final exit from the EU and tariff implications

Fri 19 Jun 2020

The UK Government has published the global tariffs on goods imported to the UK,   that will apply from 1 January 2021.    This is useful information for those businesses importing goods from the EU, which now have time to consider the implications for their pricing policies after 31 December 2020. 

As attention will be focussed on systems for managing import tariff compliance, it is also a useful prompt for businesses to consider the tax governance in this area.  The notice on .GOV on civil penalties applying for contraventions of customs law, indicates penalties are £2,500 per contravention for the more significant irregularities and £1,000 per contravention for others.  Customs and excise duties are taxes that come within the ambit of the senior accounting officer (SAO) rules.

Please get in touch with a member of the Mazars indirect tax or tax investigation team for further advice on how to approach clients concerning tariff changes or application of the SAO rules

Background on the tariff system and the implications on leaving the EU

The Institute for Government produced a short summary of the implications of customs union (see here).  There is also a parliamentary paper on tariffs (here).  In summary while currently there are no tariffs applied on goods moving between the EU and the UK, on 1 January 2021 this ‘tariff-free’ situation will end.

For example, while currently there is no tariff applicable to olive oil imported into the UK from the EU from 1 January 2021 there will be a zero rate applied to imports of crude olive oils and blends (tariff reference 15100010), but a charge of £104/100kg on extra virgin olive oil obtained by physical means (tariff reference 15091020).  Frozen orange juice, whether or not containing added sugar or sweetener (tariff reference 20091119), would attract a 30% tariff, whereas currently there is no tariff.   

The .GOV communication on tariffs noted above does highlight some items which (if imported from outside the EU currently) should be cheaper as a result of zero tariffs.  These include:   Dishwashers, copper alloy tubes, screws and bolts, bike inner tubes.  The list of tariffs can be accessed here.  

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