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Europe & Trade Global Business

Trade reliefs and restrictions (UK)

24 Apr 2020

trade

The consequences of the Coronavirus are manifold across businesses of all sizes and sectors. This explainer intends to provide guidance on trade restrictions and reliefs for the UK. 

Restrictions

It is important for manufacturers and logistics providers and those across the materials supply chain to be aware of UK government restrictions on exports in conjunction with {battling] coronavirus. While, the IoD has been urging government to cooperate and coordinate with other countries to minimise such restrictions, it is nonetheless crucial to stay up to date with what these apply to. Regulators and enforcement authorities can and will retrospectively pursue infringement cases against firms found not to be compliant. If you or your organisation have any questions or require further detail, please email allie.renison@iod.com. 

Pharmaceuticals/drugs

The Department of Health and Social Care (DHSC) and the main UK medical regulator the MHRA maintain a list of drugs that cannot be parallel exported from the UK. At least 80 new medicines have been added to list since the start of the coronavirus outbreak – a full list which is regularly updated can be found below. 

https://www.gov.uk/government/publications/medicines-that-cannot-be-parallel-exported-from-the-uk 

PPE (Personal Protective Equipment)

The UK has implemented the EU’s coronavirus response legislation, which includes provisions for requiring authorisation of PPE supplies to be cleared through individual country export control processes. For a temporary period – likely to be extended, although the scope of equipment may be narrowed - all manufacturers, distributors, or other economic operators involved in producing PPE for export to countries outside the EU and EFTA countries (Switzerland, Iceland, Norway and Lietchenstein) must obtain a license before doing so. Some smaller territories/dependencies are also excluded from the new requirement.

For covering materials such as visors, face shields, gloves and aprons, a form to authorise export must be submitted to the government. While information about the new requirements and restrictions is located on the DHSC’s website, it is important for applicants to note forms must be sent to the Department for International Trade. We are working with government to ensure better streamlined content for trade purposes on its pages. 

Full information can be found here - https://www.gov.uk/government/publications/personal-protective-equipment-ppe-export-control-process/personal-protective-equipment-ppe-export-control-process. Please check back for updates on these regulations as they develop. 

**It is essential that economic operators ensure they have the correct license, communicated to customers in other countries, and importers in the UK should be particularly careful to speak to suppliers (or their logistics provider) to ensure they have any necessary licenses and all due diligence has been followed, to smooth the transportation process. There have been several high profile cases already of delays to shipments and air cargo pickups/deliveries, owing to the lack of necessary new-compliance paperwork required in-country, for imports of PPE into the UK. 

Reliefs

There are a number of reliefs and deferments the government has brought in, largely though not exclusively for import purposes, where they exercise much greater policy control than exports to other countries. 

Duty-free relief for certain products

The EU, as part of its coronavirus policy response, has made emergency provision for relief from tariff and import VAT payments on certain items – largely PPE and wider medical supplies. This decision is retrospective to January 30th, allowing relief to be claimed from that point onwards. The nature of the reliefs can vary from country to country. Please note that this applies to imports from non-EU countries. There are still currently no changes to trade with EU countries for as long as the UK remains in a transition period, which remain free of formal barriers for this period. 

The UK’s transposition of these regulations has narrowed the eligibility criteria, with the government stipulating that this relief is tied to PPE and supplies which is being imported for sale through to the NHS. HMRC has since issued guidance with further stipulations about which state bodies this can be linked to, and also the full commodity code list to which that relief can be applied. It is regularly updated and can be found below. 

Importers require a duty deferment account with HMRC backed by a guarantee and those importing goods covered would need to increase the level of their guarantee to cover any additional duty due.  

If you or your organisation produce and sell such items in the UK, then the relief does not apply, and VAT must be charged as normal. 

https://www.gov.uk/guidance/pay-no-import-duty-and-vat-on-medical-supplies-equipment-and-protective-garments-covid-19

VAT/Duty deferment 

For payments which were due to take place in April (April 15th), HMRC made provisions for traders to defer import duty payments due to coronavirus disruption or hardship if in financial difficulty. This is still linked to duty deferment accounts, with account holders able to contact HMRC for approval to enter into an extended period to make full or partial payment, without having their guarantee called upon or their deferment account suspended. 

If those importing feel this will again be a relevant issue for the next two months (the initial window for duty easements runs from March to June), the duty deferment account holder should contact the Duty Deferment Office on 03000 594243 or by email at cdoenquiries@hmrc.gov.uk, or the COVID-19 helpline on 0800 024 1222. Account holders will be asked to provide an explanation of how COVID-19 has impacted their business finances and cash flow. Full information can be found below.

https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

Relief for Exporters/Trade Finance/Credit Insurance

The Department for International Trade has announced that UK Export Finance has expanded its export insurance policy scope to cover countries such as the USA, EU, Australia, Japan and Switzerland among others. This will help to extend cover for exporters uncertain about receiving payment for transactions overseas from clients overseas. For more information visit https://www.gov.uk/government/news/ukef-expands-protection-against-non-payment-for-uk-exporters

Finding Intermediaries for Import/Export

With changes to UK-EU trade and economic arrangements still on the horizon for the beginning of 2021 as far as we know, now is a good time for businesses trading internationally or looking to do so to take advantage of logistics providers who can help smooth the transport process of your goods and related services. The link below provides a sample list of customs agents, freight forwarders and other intermediaries who SMEs should contact for commercial assistance.

https://www.gov.uk/guidance/list-of-customs-agents-and-fast-parcel-operators

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