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EU transit guarantees after Brexit slow trade

21 January 2021

Brexit

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Some UK businesses are experiencing difficulty persuading road haulier firms to move their goods between the UK and the EU.

The reason is two-fold; either haulier firms are wary of the increased volume of documents required to move goods after Brexit, and the associated risk of their lorries and drivers delayed overseas awaiting completion of the correct forms by their client or they do not have a sufficient Customs guarantee.

These guarantees, often referred to as T1 guarantees, are required by the haulier for road transport that passes through more than one EU member state.   The UK haulier obtains the comprehensive guarantee from HMRC and enables them to use the New Community Transit System (NCTS).  NCTS is used for intra EU road transport entirely within the EU but also to transport to and from some non-EU countries including the UK, Norway, Switzerland, Turkey, Iceland and Serbia. 

Without NCTS, customs entries would be needed at every border in the journey. When goods move by road from the UK to say Italy by road, the full import entry is made in Italy, not France.  Therefore during the journey through France the goods are “suspended “ , free of VAT and duty. To remove the risk of diversion of the goods to the domestic market in France in this example, the haulier(not the owner of the goods) must hold a NCTS customs guarantee to cover the potential duty and VAT.

HMRC has been inundated with requests from UK hauliers for new or increased NCTS guarantees and has a backlog.  Many hauliers have increased their guarantees but still find that they are not sufficient to cover all the potential duty and VAT and are turning away transport requests from customers.