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Customs Bill announced in the Queen’s Speech

21st June 2017

At the opening of Parliament on 21 June 2017 the Queen announced 8 bills relating to Brexit. One of these proposed bills is a Customs Bill. The associated background briefing indicates that, besides dealing with customs duties, the Bill will ensure that changes can be made to the UK's VAT and excise regimes to ensure that the UK has standalone regimes on EU-exit.

Customs Duties
Currently customs duties are covered by European Regulations. These regulations are directly applicable, which means that member states are not permitted to pass their own laws in the field of customs duties. The same rules apply regardless of where goods enter the EU, and goods that have gone through the relevant entry formalities are then regarded as in free circulation, which means they can move between member states without additional customs duty formalities. The UK will have to replace this regime with its own customs duties regime.

VAT is governed by European Directive. Member states have to implement directives via their own legislation, which means that - unlike with customs duties - the UK already has extensive legislation of its own in the field of VAT. Within the EU the system is integrated, however, which means that where, for example, a business supplies services to a business in another member state it is normally the customer, not the supplier, that accounts for VAT under its local system. Some arrangement will have to be agreed to deal with this type of issue. The interpretation of the VAT system is ultimately a matter for the European Court of Justice ("ECJ") - to help make sure that all member states interpret and apply the VAT system in the same way. It would seem to be open to UK courts, after Brexit, to take a different line from the ECJ in interpreting UK VAT legislation even if the UK legislation is designed to dovetail with the EU system.

Excise duties
As regards excise duties, European law lays down minimum rates of duty that member states must charge on alcohol and tobacco. There are also rules covering the taxation of energy products and electricity. In addition there are certain common provisions which apply to all products. These rules cover, for example:

  • The categories of products that Member States must subject to excise duties;
  • Which country receives the duties; and
  • Rules on the production, storage and movement of excise products.
Again, new arrangements will presumably be required in these areas.


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