Businesses in the food and drink sector need to take steps now, to prevent disruption to imports or exports from 1 January 2021 – after the Brexit transition period ends. These changes will happen regardless of whether a trade deal is agreed with the EU, and will be of particular significance to the food and drink sector, given the need to minimise the time that perishable goods spend in transit.

In addition to the steps all importers and exporters need to take before the end of the transition period, food and drink businesses should also consider whether certain import licences and controlled goods processes will apply to them, and take the necessary actions now.

Customs - Border controls

The UK Government recently published the Border Operating Model (BOM), explaining how the border with the EU will operate post-transition. Rather than impose full customs procedures on imports from 1 January 2021 as originally intended, these procedures will be staggered to allow businesses time to adjust, with less onerous requirements in the first six months (though businesses can choose to apply full customs processes if they want). It is crucial that businesses understand what measures the BOM will require them to implement in advance of the end of transition.

The Scottish Government has published a helpful update for the food and drink sector, which summarises the most relevant import and export issues.

Essential pre-December 2020 actions for all importers and exporters

It is crucial for businesses to consider and action certain key measures as soon as possible. In the BOM, the UK Government urges businesses to take the actions below regardless of the outcome of negotiations, as it "is not seeking anything in negotiations with the EU that will change the necessity of the following requirements". These include:

    • Apply for a Duty Deferment Account (DDA) to defer and combine customs duty, excise duty and import VAT payments for up to a month, rather than paying for each consignment individually (more information on DDAs is available on the Government website). Bear in mind this can take time, given that guarantees may need to be provided (although the BOM allows DDAs to be used without a guarantee in some circumstances);
    • Prepare to pay or account for VAT on imported goods (see the below section on VAT for more information); and
    • Establish whether you can use a Simplified Customs Declarations Process (SCDP) on imports: For non-controlled goods imported from the EU up to 30 June 2021, traders may automatically be entitled to use simplified customs procedures, by recording imports in their own commercial records at the point of entry of goods (Entry in Declarant's Records (EIDR)), and following up with a supplementary declaration within six months. However, to submit the supplementary declaration, and to continue using SCDP after 1 July 2021, it is necessary to be authorised and to have a DDA. Authorisation should therefore be applied for in good time. Visit this UK Government guidance for more information and to apply to use simplified declarations.

    Similarly, the EU Commission is publishing 'readiness notices' for stakeholders in over 100 sectors, including on customs procedures. The central advice to stakeholders is:

    • Consider whether an EU EORI number, in addition to a UK number, will be needed and will have to be obtained from an EU Member State (read our 2019 blog post on EORI numbers for more information on the requirements); and
    • Consult with the appropriate customs authority (i.e. HMRC) to ensure all steps have been taken before the transition period ends.

    The EU will not be reciprocating a gradual introduction of border controls, meaning businesses trading with the EU need to be prepared to complete relevant customs declarations and pay appropriate duty and taxes on all goods from 11pm on 31 December 2020.

    Essential pre-December 2020 actions for food and drink importers and exporters

    • Importing excise goods (including alcohol and tobacco): from 1 January 2021, businesses importing excise goods from the EU will need to submit a full customs declaration and pay customs duty in the UK. Importers can use simplified procedures provided they follow the controlled goods procedure.

    New customs tariffs and the UK global tariff

    The UK is negotiating trade deals not just with the EU but also with other countries, mostly those with whom the EU already has a trade agreement (here is a list of countries with which trade agreements have been reached). Any trade agreement between the UK and another country will eliminate most tariffs on imports and exports between the UK and that country, and set out any remaining tariffs and/or quotas.

    For any country with which the UK does not have a trade deal from January 2021, World Trade Organization (WTO) rules apply.

    From 1 January 2021, most imports from countries with which the UK does not have a trade deal (which may include the EU) will be subject to the new UK Global Tariff (UKGT). The UKGT replaces the EU's Common Customs Tariff and generally either liberalises (reduces to zero) or simplifies (rounds down to the nearest even percentile) all tariffs. The UKGT tool helps importers estimate their likely import duty liability from January 2021.

    For exports from the UK, tariffs will depend on the destination country's own tariffs.

    Businesses must understand the potential implications of the new tariff position on their supply chain, not only when it comes to trade with the EU but also trade with the 70 or so non-EU countries that have free trade agreements with the EU. If you are unfamiliar with the WTO and how it works, read our 2019 briefing on the WTO.


    The UK Government has confirmed that, despite VAT being an EU tax, the UK will continue to have a VAT system. From 11pm on 31 December, VAT will continue to be payable, however UK VAT may start to diverge from EU VAT, and there will also be many practical changes from the outset because the UK will no longer be a member of the EU.

    Postponed VAT accounting

    A much-anticipated measure in place from 1 January 2021 will be the introduction of postponed VAT accounting for import VAT. VAT registered businesses that hold a UK EORI number and import goods for use in their business will be able to account for import VAT on their VAT returns, rather than at the border. This measure is automatic for those eligible. Businesses delaying supplementary declarations must use postponed accounting.

    Non-VAT registered businesses will need to report and pay full import VAT on each consignment. Payments may be deferred if a DDA is set up.

    EU VAT refunds

    Businesses will have until 11pm on 31 March 2021 to submit any claims through the EU VAT refund electronic system for expenses incurred before 1 January. Following this date, refunds must be claimed through each individual EU member state's existing process. For businesses dealing in multiple EU countries, this may involve additional administration to understand individual processes – it may be useful to read EU Commission guidance.

    Northern Ireland

    The rules that will apply to goods moving between Northern Ireland and Great Britain, and between Northern Ireland and the EU, are still being finalised. The final position will depend on the terms of any trade deal that is reached. In the meantime the UK Government has published guidance on moving goods into, through or out of Northern Ireland.

    Next steps

    Preparing for the end of the transition period will be essential for UK, EU and potentially non-EU traders. Implementing the appropriate measures in advance will help businesses mitigate the impact of the inevitable congestion at UK and EU ports from 1 January 2021.

    If your trade processes are going to change from 1 January 2021 and you are unsure where to begin, get in touch with Isobel d'Inverno for VAT and customs, Charles Livingstone on other trade issues or Grant Strachan on food-specific regulation issues.


    Isobel d'Inverno

    Director of Corporate Tax