8th November 2010

1. Correlation table for 2011 CN Codes available: 2. Implementation of ICS postponed:  3. 2011 Intrastat thresholds: 4. Regulation (EU) No. 961/2010 on increased restrictive measures against Iran:  5. Onward Supply Relief (OSR) CPC: 6. Computer software + VAT: 7. Suggested notification to HMRC when extending IPR throughput period: 8. US-UK Defence Trade Cooperation Treaty:  9. S&H new website with members’ areas

 
1. Correlation table for 2011 CN Codes available: As you are aware the EU review the endings to commodity codes (digits 7 + 8 = the Combined Nomenclature or CN) every year. The correlation table showing 2010 codes affected by the changes due on the 1st January 2011 is now available. You can either access this from www.uktradeinfo.com or email back and we will forward you the excel spreadsheet. When reviewing the correlation table data be aware that the information contained therein must not be used for Classification decisions and where “ex” appears in the table it means that the 2010 code is used in another area of the table. To see where look at the 2010 to 2011 correlation. For further clarification it is advisable to refer to the codes accompanied by their textual descriptions to identify how the changes have been affected. 
 
2. Implementation of ICS postponed: The Import Control System (ICS) project is part of the wider Customs Service Transformation Programme (CSTP) set up to deliver EU Multi-annual Strategic Plan (MASP) legislative change, bringing the pre-arrival messaging procedure under the safety and security areas of the Modernised Customs Code. HMRC announced that: “Despite significant effort to achieve the previously advised 5 November implementation date it is with regret we must now confirm that the roll-out of this service has been postponed until 1 December 2010. We have encountered some technical difficulties which meant that we could not ensure the roll-out of a sufficiently robust system for trade use.” The rollout of ICS has, therefore, been postponed from 5 November to 1 December 2010.    HMRC also confirmed that an agreement with the Commission has been reached following representations from the trade and Member States that a period of leniency from 1 January 2011 (anticipated 2 months) will be given to enable businesses to fully test their systems using live data without fear of financial penalties if they do not submit Entry Summary Declarations. 
 
3. 2011 Intrastat thresholds: The Intrastat thresholds will remain unchanged in 2011 from those set on 1 January 2010. These remain:
Exemption thresholds
  • The exemption threshold remains at £250,000 for Dispatches
  • The exemptions threshold remains at £600,000 for Arrivals
Delivery terms threshold
  • The delivery terms threshold remains at £16,000,000.
 
4. Regulation (EU) No. 961/2010 on increased restrictive measures against Iran:
A new Regulation on restrictive measures against Iran, prohibiting the export of dual use and Common Military list goods, together with a prohibition on the supply of key equipment to key sectors of the Iranian oil and gas industry came in on 26th October 2010. These restrictive measures comprise: additional restrictions on trade in dual-use goods and technology, equipment which might be used for internal repression; restrictions on trade in key equipment and technology for the Iranian oil and gas industry; restrictions on transfers of funds to and from Iran; restrictions concerning the Iranian banking sector; freezing of assets or funds against designated entities and restrictions on providing certain services to Iranian ships and cargo aircraft.   Please email back if you wish to receive the full document.
Or, for questions regarding export controls for strategic goods, sanctions & embargoes contact:
Vivian O’horo
Counter Proliferation and Sanctions Enforcement Policy
Room LG69, 100 Parliament Street,
London,SW1A 2BQ
Tel. 0207 147 0476
vivian.ohoro'@hmrc.gsi.gov.uk
 
5. Onward Supply Relief (OSR) CPC: OSR may be used to claim VAT relief on the customs import declaration (C88) for goods intended for onward supply to another EC Member State. Under the tax legislation, there is a need to provide, at the time of import, the VAT identification numbers of both the taxable person importing the goods into the Member State of import and of the customer in the Member State for which the goods are bound. 
From 1st July 2011 anyone involved in using Onward Supply Relief Customs Procedure Codes (CPC)  - 42 00 000, 42 51 000, 42 53 000, 42 71 000, 42 71 004, 42 78 000, 42 91 000, 42 92 000, 63 23 F01 – will have to meet a new EU requirement to prefix certain box 44 OSR related information with ‘document codes’. These numbers should be entered in box 44 of the SAD using specific type codes if these VAT identification numbers are not indicated as part of the Economic Operator Registration and Identification (EORI) numbers in boxes 8 or 14. This will cover all uses of OSR - goods going straight into Onward Supply Relief (OSR) or to OSR via customs warehousing, Inward Processing, etc. If you want a copy of the document codes we will be pleased to email it back to you.
 
6. Computer software + VAT: There are currently special rules for determining the value, for import VAT purposes, of computer software imported on carrier media. These are set out in Section 7 of Public Notice 702. In particular, the value and tax treatment depends on whether the software is: 
·              Normalised i.e. standard packages available off the shelf which are taxed as goods; or
·              Specific i.e. custom built (bespoke), which are taxed as a supply of services.
The Customs Code Committee (Customs Valuation Section) has recently completed its discussions on the customs valuation treatment of computer software on carrier media, and the conclusions reached have an impact on the determination of the value of such goods for import VAT. Article 167 of Commission Regulation No 2454/93 (the Implementing Regulation) provided special rules for determining the customs value of imported software on carrier media, under which, subject to certain conditions, the customs value could be based on the value of the carrier medium only. Following the repeal of Article 167 of the Implementing Regulation in 2002 (by Commission Regulation No 444/2002), the customs value of imported software has to be determined according to the normal valuation rules. As a result, where the customs value is declared on the basis of the transaction value, under Article 29 of Council Regulation No 2913/92, the value should be based on the price actually paid or payable for both the carrier medium and the data and instructions (i.e. the software) on it. For customs valuation purposes, no distinction is made between normalised or specific software.
            Value for import VAT: Under Section 21 (1) of the VAT Act 1994, the value of imported goods shall be determined according to the rules applicable in the case of Community customs duties i.e. on the customs value. This means that the value for import VAT of normalised software, which is taxed as goods, should be based on the customs value i.e. the value or the price actually paid or payable for both the software and the carrier medium. Where appropriate, additions should be made in accordance with Section 21 (2) of the VAT Act 1994 (to include duty and other import charges and incidental expenses). In the case of specific software, the total amount (based on the customs value including the value of the software and carrier medium) is taxed as a supply of services within the Member State concerned. No import VAT is payable on the physical importation of the carrier medium in order to avoid double taxation.
 
7. Suggested notification to HMRC when extending IPR throughput period: We have had a number of instances when HMRC IPR control offices have required more data that previously requested to approve an extension to the through-put period for IPR suspension goods. We have therefore set up the following template for such requests which you may find useful:
 
APPLICATION FOR EXTENSION OF THROUGHPUT PERIOD
We should be grateful if you would kindly consider extending the throughput period for the under mentioned IPR suspension goods.
 

EORI Number
 
IPR Authorisation Number
IP/****/***/**
Original Import Entry
 
Description of Goods
 
Commodity Code
 
Value in GBP
 
Economic code
eg 01/ 30(3)/ 30(4) (enter the applicable code)
Processing work already carried out
 
Processing work outstanding
 
Reason for delay in processing
 
Expected re-export date
 
Length of extension required
 

  
8. US-UK Defence Trade Cooperation Treaty: You may have heard reported in the press that the US Congress has now ratified the US-UK Defence Trade Cooperation Treaty. This is excellent news which reflects the close relationship between both the US and UK.   To clear up any misunderstanding, the ratification of the Treaty by Congress has no immediate impact on controls of exports from the UK to the US. If you needed an export licence before, you still need one now.  The UK will however, now proceed to implement the Treaty over the course of the coming year. During this process, we plan to consult with businesses about the practicalities, before its formal adoption. The UK-US Defence Trade Cooperation Treaty was negotiated to facilitate cooperation between the UK and US Governments by removing the need for US ITAR export licences for less sensitive categories of technology which are destined for UK or US government end-use (i.e. it is not to be used for exports to third parties). The Treaty was signed by Prime Minister Blair and President Bush in June 2007 and cleared by the UK Parliament in 2007. The associated Implementing Arrangement was then agreed in 2008. The Treaty is a significant change to how exports are managed and will allow the movement and transfer of equipment and information between pre-approved US and UK government agencies and contractors (the ‘approved community’) without ITAR export licenses. By doing so, it will improve interoperability between UK and US forces and support to operations and facilitate cooperation between our industries. The quid pro quo for the removal of the need for export licences is that, while Treaty material is in the UK, it will be protected under the Official Secrets Act.   US agreement required the approval of the Senate Foreign Relations Committee (SFRC), the Senate itself and the House of Representatives. Congress has now agreed the Treaty, enabling implementation to begin.  The Treaty represents a significant change in how the transfer of defence goods is managed between the UK and US, and Congress understandably gave it thorough consideration, hence the delay in the Treaty being agreed. 
 
9. S&H new website with members’ areas: Strong & Herd are pleased to announce that our new website is now up and running with a special area for onecall/ business support clients. You should have received your password and Member’s ID by now and be able to access the extra information available to S&H members only. If you haven’t let us know and we’ll send you the details. Please look at our new website and if you want anything special in your members’ area let us know.
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Strong & Herd LLP, Manchester International Office Centre
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