Reforming Customs Treatment of Low Value Imports
What is this?
Currently importers of products with a value of less than £135 can take advantage of preferential customs treatment, known as Low Value Imports (LVI). This allows for a more simplified customs declaration and doesn’t require importers to pay customs duty.
There has been a huge growth in LVI in recent years, primarily through parcel deliveries direct to UK consumers. It is estimated by HMRC to be worth £6bn pa and growing very rapidly.
The BRC and members have been pushing the Government to act on LVI as it has distorted competition with UK based retailers, who pay tariffs and full customs costs for importing goods through their supply chains. We were really pleased the Government accepted our case and announced in the budget it would reform the LVI system; retaining the benefits of simplified trade in LVI but ensuring customs duty and VAT are paid.
What is proposed?
You can read our analysis of the Government’s consultation here , the key points are below.
Firstly, all LVI products with the exception of personal non-commercial imports will pay customs duty. To reduce administrative costs, the Government proposes a simplified duty system bracketing groups of products in tariff rates than the thousands of commodity codes for traditional trade.
Secondly, all sellers and OMPs will be responsible for collecting duty and VAT. The charges will be collected at the point of sale, with VAT added to the cost of the product plus relevant customs duty. Where an importer does not have a physical presence in the UK they will be required to establish a fiscal representative here, which will be liable for payment.
Thirdly, there is a requirement for additional data which will be needed for customs declarations to ensure compliance with border checks.
Finally, the Government is proposing an additional administrative fee to cover the cost of border checks.
What is BRC doing about this?
The consultation is complicated and primarily aimed at current users of the LVI system to assess the impact of the proposals on their businesses. So, we are unlikely to respond to all questions in the consultation. However, we will respond to the more generic parts of it, for example how the simplified tariff system is developed and how enforcement of the new system should work.
In addition to technical input to HMRC we will continue to push for more rapid implementation than the Government’s suggestion of 2029 at the latest. Whilst we accept, changes to customs systems take time to agree and implement, we believe another 3 to 4 years without change to the current system could do significant, long term damage to UK retail.
Next Steps
The Government consultation ends at the beginning of March. It will use responses to refine its proposals, although it has implied it may need further consultation on detailed issues such as the simplified tariff system. We will continue to update you through our Trade Community
