Does the government’s plans for UK borders have some serious failings to resolve?

The government’s Border Operational Model (BOM) and its three-stage plan has serious failings, say tax and advisory firm Blick Rothenberg.

Simon Sutcliffe, a partner at the firm said: “The BOM plan launched by HMRC yesterday is not what it seems and is contradictory and thousands of companies who thought they could use it will not be able to without undergoing arduous checks as to their suitability. Many will now have to submit to standard customs controls in January instead of being able to delay submitting customs entries and paying duty as promised.

“HMRC state that as of 1st January 2021 businesses can import goods and simply record the details of importation in their own books and records and then 6 months later submit a full customs declaration and pay any duty due but today they have contradicted this by saying that to begin entering the movements in businesses records they will require pre-authorisation by HMRC but that is then contradicted in their subsequent guidance. This suggests a business will still need to be authorised by HMRC at some point to benefit from the 6-month deferment.”

He said: !This whole first stage of the BOM plan is a total muddle business urgently need clarity. On the one hand they are dealing with the pandemic on the other they are required to deal with this and the Government and HMRC are doing nothing to make this any easier by issuing confusing guidance.

“Whilst the BOM paper is a reasonable overview of the plans for the frontier for both exporters and importers, the system HMRC propose already exists within the world of customs procedures and requires demanding levels of checks to prevent fraud and the loss of swathes of revenue.”

Alan Pearce, VAT Partner at the firm added: “The proposals for calculating Import VAT are equally confusing. Businesses will have to take the import value from the commercial invoice, estimate what they think the duty might be then notionally add VAT at 20% to the invoice value and estimated duty. This will then be included in the VAT return under the new Import VAT Postponed Accounting guidance. Months later a business may be faced with making adjustments in the VAT returns for every importation where they approximated the level of duty. All of this having no impact on the amount of VAT collected by HMRC but causing businesses more time and money to adjust the returns.

“Unless HMRC are willing to risk vast amounts of revenue by not assessing and not restricting access to the simplified process to those who it feels will abuse it they will have to authorise and oversee even more importers than they do now or put in jeopardy millions of pounds worth of duty revenue.

“Further, for the majority of businesses they will likely be faced with submitting full customs formalities from 1st January 2021 as the processes and procedures become too confusing and complex to realistically operate.”