The Percy Pig Problem and the Warehousing Solution
You may have seen in the news that Percy Pig became an unexpected, early casualty of Brexit as import duty became chargeable on supplies made into the Republic of Ireland (“ROI”) from the UK. The reason for this is that Percy Pigs are manufactured in Germany and then imported into the UK before being moved back into the EU.
Dated: 27 January 2021 Author: Terri Bruce, Director of VAT & Customs
Under the terms of the “Free Trade Agreement”, no duty is applicable on the importation of EU origin goods into the UK or vice versa. However, if the product is re-exported into the EU in an unchanged state, duty becomes payable on importation as the origin of the product remains EU and there is no preferential status applying to goods traded between the UK and the EU unless the goods have UK origin.
This creates an illogical position and may explain a lot of the issues experienced by businesses trading with ROI during the first weeks of January.
Who does this affect?
This impacts any UK business importing from the EU for re-export to the EU.
So what are the rules?
Under the trade agreement:
- Goods imported into the UK from the EU of EU origin are duty free
- Goods imported into the EU from the UK of UK Origin are duty free
- Goods imported into the UK from the EU of UK origin could have duty charged on import
- Goods imported into the EU from the UK of EU origin could have duty charged on Import
The origin of the goods can change if they are subject to processing but the origin rules are highly complex and a substantial transformation must be achieved. The rules can vary depending on the commodity.
- In order to avoid the imposition of duty on goods re-exported from the UK back into the EU (and vice versa) a customs warehouse should be used.
- In the alternative you could consider making changes to your supply chain and using solutions such as transit procedures.
- In goods are being processed in the UK, Inward Processing should be considered in order to substantiate a change in origin.
Warehousing should also be considered by any business importing into the UK from the rest of the world.
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