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What is Customs Transit and why is it going to be so important?

Being part of a customs union, the UK has enjoyed the free movement of goods between the UK and EU member states for ‘free circulation’ goods imported into the union (including goods imported into the UK as a member state) where duties and taxes have been paid.

From 11pm on 31st December 2020 traders moving goods from the UK into the EU will need to consider that movement more closely as the UK becomes a 3rd country and UK supplied goods into the EU become subject to duty and VAT on import into the EU.

Example:

A UK trader moving goods through Dover to Calais with the delivery site being Germany would need to think where exactly it would be beneficial for the import to be made.

Technically without the use of a transit procedure the import would be made on entry into the first member state, in this instance France where duty and VAT would be payable.

That the French VAT will be payable and likely irrecoverable should be noted.  There may be other implications on the trader, depending on the delivery terms used.

 

Definition

Customs transit is a customs procedure that is used to move goods that are not in free circulation (in this instance UK supplied goods into the EU) between two points of a customs territory via another customs territory; or between two or more different customs territories.

Using the Customs Transit procedure allows for the temporary suspension of duties, taxes and commercial policy measures that are applicable at import.  From 1st January 2021 “Free Circulation of Goods” will no longer apply for UK goods being supplied to EU Member States for consignments that will transit through an EU Member States to reach their final destination

 

NCTS and Transit – What is NCTS?

NCTS is an electronic declaration used to control a transit movement. It is used by (and can be used for movements in between) the UK, all member states of the EU and all signatories of the Common Transit Convention

 

How does NCTS work?

A Transit Declaration is completed using the NCTS[1] system[2] either at an authorised office of transit or at a business site where an HMRC ‘Authorised Consignor’ status is held. The declaration output is a Transit Accompanying Document (TAD) which travels with the goods and is referenced on the customs paperwork. At the final destination the TAD is presented at an authorised office of destination or at the business site of an Authorised Consignee.  This closes the transit movement, the customs import entry is made and duty and taxes are paid at the destination country

 

Financial Guarantee 

If using NCTS more than 3 times annually a Customs Guarantee will be necessary to cover the movement.  The guarantee is discharged when the customs entry is evidenced from the country of destination.

[1] New Computerised Transit System

[2] Common Transit is an EU customs procedure that allows goods to move between the EU and common transit countries or between the common transit countries themselves with duty being paid in the country of final destination.  Each member state and common transit country has designated customs offices

[1] New Computerised Transit System
[2] Common Transit is an EU customs procedure that allows goods to move between the EU and common transit countries or between the common transit countries themselves with duty being paid in the country of final destination.  Each member state and common transit country has designated customs offices

 

Movements of goods across the EU to the UK

Example:  Free circulation goods being exported by road from Germany through Calais to Dover would not need to use transit to move the goods across member states.

Instead, a French export customs declaration would be required to export the goods from France, and a UK import declaration would be needed to import the goods into the UK.

 

Goods moving across the EU to NI

Free circulation goods being exported by road from Germany via Calais/Dover  for delivery into NI would need Transit as goods will be moving via the GB land-bridge.

Transit would be necessary to avoid import formalities and payment of duties/VAT on arrival in the UK, and the same again into NI.  Transit would allow for one import to be made on arrival into NI.

We run a one-day introduction to the New Computerised Transit System (NCTS) and the processes involved in moving goods under the Common transit Convention (CTC). This course is designed to provide an insight into how NCTS works and why it might be needed after Brexit.

All Training Courses | Strong and Herd

By on December 15th, 2020
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