Guarantees for Customs Special Procedures
Following the introduction of the Union Customs Code in 2016, there was a requirement for traders to provide guarantees to support potential import duties and VAT liabilities to customs. Potential liabilities can arise from customs special procedures such as Customs Warehousing and Inward Processing. Liabilities are also due for goods in Transit, whereby for authorised consignors or consignees, the start or end movement of the goods can be at your own premises as opposed to the customs office.
The new requirements are covered by what we know as a Customs Comprehensive Guarantee, which in turn has to be supported by a bank guarantee, unless the trader is an Authorised Economic Operator which benefits from guarantee waivers. We also know as reported in an earlier article this week that from the end of the transition period, traders will not require a guarantee for most special procedures, except Transit!
Whilst it is not entirely clear what will arise after the end of the Brexit transition period, it is likely that:
- Transit will increase in popularity, and
- There will still be a requirement for a bank guarantee to support use of Transit
- The amount of the liability under the Customs Comprehensive Guarantee will increase once we additionally factor in the potential scenarios that could arise after the UK leaves the Customs Union
Transit is especially important as for some businesses it will represent a Brexit solution, for example for goods moving from:
- Europe to Ireland through the UK
- Ireland to Europe through the UK, and
- Possibly goods moving from the UK to other parts of the EU when transiting through France
Indeed, freight forwarders can provide services to facilitate transit and you should contact your forwarder to discuss these services. Traders can also carry out their own transit procedures.
What Does This Mean for Traders using Transit?
Traders should consider the circumstances when Transit could be of benefit to their business as an Authorised Consignor or Authorised Consignee, and as appropriate to the nature of their supply chains for exported and imported goods.
After having considered the merits of Transit, consideration is required as to the value of the guarantee required.
What You Can Do as Learners Studying Qualifications at the UK Customs Academy
You should familiarise yourself with how Transit operates and potential benefits for your business. Please review the learning materials and reflect on the information provided on Transit. Consider this in the widest sense for example:
- For goods that move through non-EU countries such as Switzerland.
- For non-Union goods entering the EU.
- The location of your production, manufacturing and distribution facilities.
If you require, we can provide you with further explanations of Transit, please let us know if this would be of benefit for you. This is a key topic in terms of international trade as a whole, and not just how businesses operate after the end of the transition period.
Finally, please see below a table we have produced based on a recent Government announcement with respect to the operation of Transit from 1st January 2021.
| Area of Customs | Impacts (from 1st January 2021) | Actions for Businesses |
| Transit simplifications | Businesses can carry on using HMRC issued authorisations for transit simplifications, including authorised consignor and consignee status. In effect transit simplifications continue to operate as they do currently, and the requirements for guarantees continues to apply. | If you act as an authorised consignor or consignee for your own business or on behalf of other businesses, you may wish to expand capacity in order to deal with possible increase in demand. Contact the National Simplifications team in the Central Community Transit to find out the type of approval process needed for expanding your existing consignor or consignee facilities, or for opening new facilities. You may need temporary storage authorisation to expand your transit facilities or open new facilities, and you may also need to increase the value of your guarantee. |