Onward Supply VAT Relief and the UCC
Monday 18th January 2016
The attached CIP will be published on the GOV.UK website in the coming days.
Onward Supply VAT Relief (OSR) allows an importer to deliver goods to a (non-UK) EU VAT registered customer without having to pay Import VAT when the goods are removed from warehouse (customs duty has to be paid, and the supply would be VAT zero rated).
Currently, you can do this using Local Clearance Procedure (LCP) - an "entry" in your commercial records is the trigger point which is then followed up by a supplementary declaration , normally the next working day.
As of the 1st May 2016, LCP (or EIDR as it will be know) will not be available for OSR shipments.
To continue to benefit from OSR post 1/5/16, an importer/Customs Warehouse operator using CFSP will have to do the following:
- Apply for SDP by 1/2/2016 (if not already authorised)
- (When authorised) Submit a Simplified Frontier Declaration (albeit with all the data required in a supplementary declaration) before the goods are delivered from the warehouse
- Deliver the goods from the warehouse only when clearance is received from CHIEF (no subsequent SDW will be required);
Submit a full declaration to CHIEF
As you will appreciate, this will require OSR shipments to be processed in real time, with other warehouse removals being processed (as they are now) the next working day.
This is a big change in both process and procedure - What cannot be underestimated is the potential change to importers own IT processes as this will require them to report real time, and hold any physical movement until a positive response is received from CHIEF