The Taxation (Cross-border Trade) Bill and explanatory notes were introduced to the House of Commons on 20 November 2017. The Bill aims to give the government the ability to establish a standalone customs regime, and ensure that VAT and excise legislation operates effectively, following the UK’s withdrawal from the European Union (EU) in 2019.
As the rules governing customs are mostly in EU law that is directly applicable in the UK, and existing UK legislation is insufficient to establish a standalone customs regime, leaving the EU will mean that the UK will require new domestic legislation.
The Taxation (Cross-border Trade) Bill contains 56 clauses and 9 schedules (with 70 pages of Explanatory Notes and 174 pages of notes on the delegated powers). It does not presuppose any particular outcome from the negotiations. In assessing the options for the UK’s future customs relationship with the EU (and therefore, how the government uses the powers in the Bill), the government will be guided by what delivers the greatest economic advantage to the UK, and by three strategic objectives:
The government previously set out its plans to legislate for the UK’s future customs, VAT and excise regimes in its Customs Bill White Paper.
The Bill is a Bill required to be brought in by Ways and Means resolutions, and all of the provisions in the Bill are required to be covered by these resolutions.
There are two Ways and Means resolutions:
Whatever the outcome of negotiations with the EU, the UK will need to legislate for a new Customs regime to be in place by March 2019. The new regime must provide for the tariff-related aspects of the UK’s future trading framework. It will need to allow sufficient flexibility to give effect to a range of potential outcomes from negotiations with the UK’s European partners, including an implementation period, and implementation of a new Customs regime in the event there is no negotiated agreement.
In relation to VAT and excise, it is necessary to amend existing legislation as a consequence of the UK’s withdrawal from the EU with or without an agreement in order to ensure that these regimes work appropriately on withdrawal.
The government’s approach is to ensure that legislation is in place to establish a standalone UK customs regime, which will include the facility to vary the amount of import duty, including provision as to how it may be varied in prescribed circumstances. The legislation will also provide for changes to the VAT and excise regimes so that they can operate as required upon exit from the EU.
The Bill makes legislative changes and provides sufficient powers to address a contingency scenario if the UK leaves the EU without a negotiated agreement, and contains powers (or amends existing ones) that will allow the government to give effect to a range of negotiated outcomes. This will give the government the ability to ensure that the UK withdraws from the EU in as smooth and orderly way as possible.
To these ends, the Bill creates a new legislative framework for customs, and amends primary legislation for VAT and excise. It also contains powers to provide for the detail of the new customs regime, for changes to the domestic excise regime for goods, and for dealing with particular aspects of the VAT regime. Moreover, it contains a power to make appropriate provision in consequence of or otherwise in connection with withdrawal for all three regimes.
In particular, for customs, the Bill provides for (where appropriate):
The Bill will also: