Concerns Over Extra VAT and Customs Duty Charges Post Brexit

UK – EUROPE – Confusion reigns over the VAT and Customs duty status of many goods arriving In the UK from the European Union post Brexit.

This week the Guardian ran a piece on the extra costs personal and business importers of goods from the EU are facing before they can have their items delivered. Despite some sites offering free international delivery with no extra charges, many customers are facing bills from the parcel carriers running into hundreds of pounds.

According to the UK government’s interpretation of the regulations European companies supplying goods valued at up to £135 direct to British buyers are supposed to collect VAT at the item’s current rate, normally 20%, as with the UK. Amazon, and various other market sites, have got the jump on those selling directly as the price they offer includes a collection of VAT on the retailers behalf.

The situation is complicated in that many sites do not identify where the goods are to emanate from, this means many importers are ordering goods directly from the EU and are unaware that they may then face import duties if the value exceeds £135. This means that, in addition to a potential 20% hike due to VAT on the value of the goods themselves, VAT is also due on any duty applicable, boosting the figure even higher.

The situation has apparently led to several companies refusing to offer goods as any extra charges render them uneconomic. In addition, and as we have outlined previously, from 1 March the EU’s Import Control System 2 (ICS2) will come into effect, and indeed France and Germany seem to have already begun the scheme in some instances.

ICS2 is intended to create an integrated EU approach to reinforce customs risk management and safety under the common risk management framework (CRMF) and will mean that all Economic Operators (EOs) must declare goods to be shipped using the new advance cargo information system via an Entry Summary Declaration (ENS). This Factsheet contains the details.

From 1 March the scheme will apply to all Postal Air and Air Express cargo pre-loading and will extend in two further stages up to 2024 to include all freight by every mode (post, air, sea, road and rail). Failure to comply may result in items being refused and returned at sender’s expense.