The Customs Tariff (Preferential Trade Arrangements) (EU Exit) Regulations 2020

Made: at 12.39 p.m. on 16th December 2020

Laid before the House of Commons: at 4.00 p.m. on 16th December 2020

Coming into force in accordance with regulation 1

These Regulations are made by the Treasury, in exercise of the powers conferred by sections 9(1), 11(1), (3) and (4), 17(6) and (7), 19(1) and (4), 31(6) and (7) and 32(7) and (8) of the Taxation (Cross-border Trade) Act 2018 (“the Act”) and by the Secretary of State, in exercise of the powers conferred by sections 11(3), (4) and (6) and 32(8) of that Act.

Further to section 28 of the Act, the Treasury in exercising the function of making the following Regulations has had regard to international arrangements to which Her Majesty's Government in the United Kingdom is a party that are relevant to the exercise of that function.

The Treasury and the Secretary of State both consider it appropriate in consequence of, or otherwise in connection with, the withdrawal of the United Kingdom from the European Union, that the following Regulations come into force on such day as the Treasury may by regulations under section 52 of the Act appoint.

Further to sections 9(3) and 17(8) of the Act, the Secretary of State recommends that these Regulations be made.

In accordance with section 11(7) of the Act, in considering what provision to include in regulations made under section 11(1) of the Act, the Treasury has had regard to recommendations made to them by the Secretary of State.

Citation, commencement, extent and application

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• (1) These Regulations may be cited as the Customs Tariff (Preferential Trade Arrangements) (EU Exit) Regulations 2020 and come into force on the appointed day.

• (2) These Regulations extend to the United Kingdom.

• (3) These Regulations apply to all goods—

• (a) that are imported into the United Kingdom in respect of which a liability to a charge to import duty is incurred under the Act; and

• (b) in respect of which a claim is made by the importer or the importer's representative for a preferential rate of import duty to be applied to the goods under the terms of an Agreement.

• (4) Schedule 1 has effect for the purposes of specifying the Agreements and associated reference documents in respect of which the provisions of these Regulations apply.

Interpretation

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• (1) In these Regulations—

• “the Act” means the Taxation (Cross-border Trade) Act 2018;

• “the Tariff Quota Regulations” means the Customs (Tariff Quotas) (EU Exit) Regulations 2020 ;

• “Agreement” means an arrangement— that is listed in column 1 of the table in Schedule 1; andthe effect of which is to apply import duty rates to goods, or any description of goods, originating from the country or territory that are lower than the applicable standard rate of import duty for those goods.

• “adjusted quota period” has the meaning given in regulation 8(2);

• “the appointed day” means the day appointed by the Treasury by regulations under section 52(2) of the Act for the coming into force of these Regulations;

• “authorised use goods” has the meaning given in regulation 5(1);

• “customs value” means the value of goods for Customs purposes established by the methodology set out in Part 12 of the Customs (Import Duty) (EU Exit) Regulations 2018 ;

• “import licence” has the meaning given in regulation 2(1) of the Tariff Quotas Regulations;

• “originating goods” has the meaning given in regulation 6;

• “origin quota” has the meaning given in regulation 7(1) and “origin quota goods” is to be construed accordingly;

• “the Parties” means the parties to an Agreement;

• “preferential duty rate” means the duty rate applicable under regulation 3(2) where—the terms of an Agreement provide for a rate of import duty to be applied to any goods that is lower than the applicable standard rate of import duty for those goods; orin the case of any goods, the rate of import duty to be applied under the terms of an Agreement may be higher than the applicable standard rate of import duty for those goods;

• “Preferential Duty Tariff Table”, in relation to an Agreement, means the table at Annex 1 to the Preferential Tariff or, where Annex 1 to the Preferential Tariff contains more than one table, the table relating to the relevant party to that Agreement ;

• “preferential quota goods” means goods that are classified under a commodity code listed in the Preferential Quota Table;

• “Preferential Quota Table”, in relation to an Agreement, means the table at Annex 2 to the document described in column 2 of the table in Schedule 1 or, where Annex 2 to that document contains more than one table, the table relating to the party to the Agreement relevant to the originating goods ;

• “Preferential Tariff” is the document described in column 2 of the table in Schedule 1;

• “proof of origin”, in relation to any goods, means a document or declaration which meets the requirements or conditions set out in the relevant origin reference document to an Agreement for the purpose of proving that those goods qualify as originating goods;

• “quota close date” has the meaning given in regulation 8(1);

• “quota duty rate” has the meaning given in regulation 4(1);

• “quota number” means a unique reference number by reference to which each quota is identified as specified in column 1 of the Preferential Quota Table;

• “quota open date” has the meaning given in regulation 8(1);

• “quota period” has the meaning given in regulation 8(1);

• “quota volume” has the meaning given in regulation 9;

• “re-imported goods” has the meaning given in regulation 20(1);

• “relevant origin reference document”, in relation to a particular Agreement, means the origin reference document described in column 3 of the table in Schedule 1, which sets out (with modifications) the rules of origin applicable between the government of the United Kingdom and the government of any other country or territory which is a party to that Agreement and includes any annexes or appendices to that document;

• “working day” means any day except—a Saturday or Sunday; ora bank holiday within the meaning of section 1 of the Banking and Financial Dealings Act 1971 , including those bank holidays occurring only in part of the United Kingdom.

• (2) Other words and expressions have the meaning given in the Customs Tariff (Establishment) (EU Exit) Regulations 2020 .

Preferential duty rates

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• (1) Subject to meeting the conditions specified in paragraph (3), where, in relation to originating goods, the importer or the importer's representative—

• (a) makes a Customs declaration under section 3(1) of the Act (obligation to declare goods for a customs procedure on import) for free circulation or authorised use claiming a preferential duty rate under an Agreement; and

• (b) that declaration is accepted by HMRC under section 4(1) of the Act (when liability to import duty incurred),

the duty rate applicable to those goods on importation into the United Kingdom is the preferential duty rate determined in accordance with paragraph (2).

• (2) The preferential duty rate is—

• (a) where the rate for originating goods is expressed in column 2 of the Preferential Duty Tariff Table against the commodity code in column 1 of the same row of that table only as a percentage, that percentage of the customs value of the originating goods; or

• (b) where the rate for originating goods is determined by applying a formula set out in column 2 of the Preferential Duty Tariff Table against the commodity code in column 1 of the same row of that table, the result of applying that formula in accordance with the method of calculation set out in the notes in Part 2 of the Preferential Tariff.

• (3) For the purposes of paragraph (1), the conditions specified in this paragraph are that, unless regulation 18 applies, the importer or the importer's representative must, on receipt of a request from HMRC—

• (a) provide—

• (i) a valid proof of origin under regulation 14; or

• (ii) such other information or documents as are requested by HMRC under regulation 19; or

• (b) present to HMRC the documents required under regulation 17.

• (4) In paragraph (1)—

• (a) in sub-paragraph (a), the reference to “a Customs declaration under section 3(1) of the Act” is to be read as including a reference to any such declaration made to HMRC under equivalent provisions of direct EU legislation that have effect in Northern Ireland in respect of goods that are imported into the United Kingdom by their entry into Northern Ireland; and

• (b) in sub-paragraph (b), the reference to “that declaration is accepted by HMRC under section 4(1) of the Act” is to be read as including the acceptance by HMRC of any such declaration under equivalent provisions of direct EU legislation that have effect in Northern Ireland in respect of goods that are imported into the United Kingdom by their entry into Northern Ireland.

• (5) The preferential duty rate described in paragraph (2) is without prejudice to the application of a lower duty rate which may exist in respect of the same classification of goods (classified under the same commodity code) by virtue of regulations made under sections 8, 11, 12 or 19 of the Act.

Preferential quota

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• (1) Subject to paragraph (2) and to meeting the conditions specified in paragraph (4), where, in relation to preferential quota goods for which no import licence is required, the importer or the importer's representative—

• (a) makes a Customs declaration under section 3(1) of the Act (obligation to declare goods for a customs procedure on import) for free circulation or authorised use claiming a preferential duty rate under an Agreement; and

• (b) that declaration is accepted by HMRC under section 4(1) of the Act (when liability to import duty incurred),

the duty rate applicable to those goods on importation into the United Kingdom is the quota duty rate determined in accordance with paragraph (3).

• (2) Subject to meeting the conditions specified in paragraph (5), where, in relation to preferential quota goods for which an import licence is required, the importer or the importer's representative—

• (a) makes a Customs declaration under section 3(1) of the Act (obligation to declare goods for a customs procedure on import) for free circulation or authorised use claiming a preferential duty rate under an Agreement; and

• (b) that declaration is accepted by HMRC under section 4(1) of the Act (when liability to import duty incurred),

the duty rate applicable to those goods on importation into the United Kingdom is the quota duty rate determined in accordance with paragraph (3).

• (3) The quota duty rate is—

• (a) where the rate for originating goods is expressed in column 4 of the Preferential Quota Table against the commodity code in column 3 of the same row of that table only as a percentage, that percentage of the customs value of the originating goods; or

• (b) where the rate for originating goods is determined by applying a formula set out in column 4 of the Preferential Quota Table against the commodity code in column 3 of the same row of that table, the result of applying that formula in accordance with the method of calculation set out in the notes in Part 2 of the Preferential Tariff.

• (4) For the purposes of paragraph (1), the conditions specified in this paragraph are that—

• (a) the goods qualify as originating goods in accordance with regulation 6;

• (b) unless regulation 18 applies, the importer or the importer's representative must, on receipt of a request from HMRC—

• (i) provide—

• (aa) a valid proof of origin in accordance with regulation 14; or

• (bb) such other information or documents as are requested by HMRC under regulation 19, and

• (ii) present to HMRC any documents required under regulation 17;

• (c) the goods are of a description which is classified under a commodity code in the Preferential Quota Table;

• (d) the quantity of the imported goods for which the quota duty rate is claimed is within the limits of the quota volume as described in regulation 9;

• (e) the quota period has not expired; and

• (f) a request to benefit from the quota and a Customs declaration for free circulation or authorised use for the goods have been accepted by HMRC.

• (5) For the purposes of paragraph (2), the conditions specified in this paragraph are that—

• (a) the goods qualify as originating goods in accordance with regulation 6;

• (b) unless regulation 18 applies, the importer or the importer's representative must, on receipt of a request from HMRC—

• (i) provide—

• (aa) a valid proof of origin in accordance with regulation 14, or

• (bb) such other information or documents as are requested by HMRC under regulation 19; and

• (ii) present to HMRC any documents required under regulation 17;

• (c) the goods—

• (i) are of a description which is classified under a commodity code in column 3 of the Preferential Quota Table; and

• (ii) meet any conditions relating to the nature or identity of the goods that are specified in column 12 of the Preferential Quota Table; and

• (d) the import licence in respect of the goods is valid in accordance with regulation 35 of the Tariff Quota Regulations.

• (6) A quota may include one or more types of goods classified under different commodity codes, provided the unit of measure which establishes the quota volume is the same for each type of goods.

• (7) The quota duty rate described in paragraphs (1) and (2) is without prejudice to the application of a lower duty rate which may exist in respect of the same classification of goods (classified under the same commodity code) by virtue of regulations made under sections 8, 11, 12 or 19 of the Act.

• (8) In paragraph (1)—

• (a) in sub-paragraph (a), the reference to “a Customs declaration under section 3(1) of the Act” is to be read as including a reference any such declaration made to HMRC under equivalent provisions of direct EU legislation that have effect in Northern Ireland in respect of goods that are imported into the United Kingdom by their entry into Northern Ireland; and

• (b) in sub-paragraph (b), the reference to “that declaration is accepted by HMRC under section 4(1) of the Act” is to be read as including the acceptance by HMRC of any such declaration under equivalent provisions of direct EU legislation that have effect in Northern Ireland in respect of goods that are imported into the United Kingdom by their entry into Northern Ireland.

• (9) This regulation has effect subject to the arrangements for a licensing system in respect of preferential quota goods under Part 3 of the Tariff Quota Regulations.

Authorised use

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• (1) If in—

• (a) column 1 of the Preferential Duty Tariff Table; or

• (b) column 3 of the Preferential Quota Table,

the commodity code applies to goods, the description of which in the Goods Classification Table refers to the use to which the goods are put, then the goods so classified under the commodity code in that row are “authorised use goods”.

• (2) Authorised use goods are subject to the preferential duty rate or quota duty rate described in paragraph (3) if—

• (a) they are granted authorisation under the Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018 ; and

• (b) they comply with the conditions set out in regulation 3 or 4.

• (3) Without prejudice to regulation 3(4) or 4(7), the preferential duty rate or quota duty rate for authorised use goods is either the percentage of the customs value of those goods or, where the rate is determined by applying—

• (a) the formula in column 2 of the Preferential Duty Tariff Table in respect of goods listed in that Table, the result of applying that formula in accordance with the method of calculation set out in the notes in Part 2 of the Preferential Tariff; or

• (b) the formula in column 4 of the Preferential Quota Table in respect of goods listed in that Table, the result of applying that formula in accordance with the method of calculation set out in the notes in Part 2 of the Preferential Tariff.

Preferential origin goods

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Goods qualify as originating goods if they meet the conditions to qualify as originating goods as set out in the relevant origin reference document to an Agreement for the purposes of that Agreement.

Origin quota

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• (1) Where, in column 2 of the Preferential Quota Table, it states “Yes”, goods classified against the commodity code in that row are origin quota goods and are subject to goods-specific rules of origin within the limits of a quota (the “origin quota”) as set out in the relevant origin reference document to an Agreement for the purpose of that Agreement.

• (2) Each origin quota is to be identified by a quota number.

• (3) On application to HMRC by the importer or the importer's representative, goods that qualify as origin quota goods are subject to the preferential quota duty rate determined in accordance with regulation 4(3).

• (4) An application under paragraph (3) must be made in the Customs declaration for release to free circulation or authorised use relating to the relevant goods.

Quota periods

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• (1) Subject to paragraph (2), each period during which a quota applies (“the quota period”) commences at the beginning of the day which falls on a date specified in column 6 of the Preferential Quota Table (“the quota open date”) and finishes at the end of the day which falls on the corresponding date specified in column 7 of that Table (“the quota close date”) in respect of each quota.

• (2) Where an Agreement takes effect on a date which, in respect of a particular quota number, falls between the relevant quota open date and the relevant quota close date—