UK: 
USA:
You may have seen a few weeks’ back our article ‘5 Brexit tax rules you need to know before 1st January’ on our news feed – if you haven’t, make sure you check it out.
***Please be advised that this is date specific and subject to change (posted 30th November 2020)***
Following the post, we’ve received a lot of interest in one item in particular: UK duty deferment. Quite understandably this seems to have caused confusion from many businesses about the specific implications the new rules will have to their processes.
As such, we’ve spoken with Kevin Roger from VAT & customs consultants, 4 Eyes Ltd, who has kindly provided some much-needed clarity. He explains:
We have also received a number of queries about post-Brexit duty deferments. I suspect non-UK companies might not have digested the implications of this rule change, which is unsurprising given that the guidance from HMRCHis Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes. is ongoing and this change is not prominently flagged.
Getting into the detail
Here’s what Kevin has found:
Finding #1
If you search online for ‘duty deferment for UK’, the top result tends to show this page:
However, this link does not seem to contain a mention of ‘establishment’ anywhere throughout.
Finding #2
However, additional guidance around the application process does indicate that a business must be established in the UK:
What is an establishment?
The following excerpt is from the Gov.uk ‘Check if you’re established in the UK or EU for customs’ guidance, which defines what is meant by ‘establishment’ (yes, it mentions the EU but this is not true after 31st December 2020 – did we mention that the HMRC guidance isn’t quite there yet?!):
The official guidance:
A person or business needs to be established in the UK or EU to meet a number of customs rules. This includes being able to get a wide range of customs authorisations and simplifications for example:
- a special procedures authorisation
- making simplified customs declarations
- Authorised Economic Operator (AEO) authorisation
- a comprehensive customs guarantee
What established means
Individual
You are established in the UK or EU when you have a residence in the UK or EU which you live in for at least 183 days a year.
Partnerships and corporations
If you are a partnership or corporation established in the UK or EU you must have one of the following in the UK or EU:
- registered office
- central headquarters
- permanent business establishment
Multi-national or large companies
Multi-national or large companies usually consist of a parent company and subsidiaries or branches which can be established in one or several parts of the UK or EU.
Whether the branch or subsidiary has the status of a separate legal person depends on national company law.
Evidence of establishment
You may be asked to provide evidence of establishment in the UK or EU.
The evidence you will need to provide includes:
- a certificate of registration issued by the Registrar of Companies
- details of where staff are employed and the work that they carry out
- physical premises owned or leased by the business
- details of contracts, orders or invoices held or issued by the business
- proof that the business has its own accounts
Permanent business establishment
A permanent business establishment is a place of business where staff are permanently employed and where the technical resources of the business are always present. Customs operations must be wholly or partly carried out there.”
If you’d like some further guidance on this subject, visit 4eyesltd.co.uk or alternatively, you can get in touch with our team here.
Related: 5 Brexit tax rules you need to know before 1st January
