July 2020 / United Kingdom

The European Commission released a Guidance Note on 14 July 2020 aiming to provide economic operators with information on changes in customs procedures relating to movements of goods between the European Union and the United Kingdom following 31 December 2020. On 31 December 2020, the transitional period of the Brexit Withdrawal Agreement will end, following which the United Kingdom will be considered a third country also from a customs perspective. This essentially means that all customs formalities will be applicable to movements of goods between the European Union and the United Kingdom; furthermore, all licences, authorizations, registrations, etc. (including binding tariff information decisions and binding origin information decisions) previously obtained by UK economic operators will cease to be valid. The Commission especially emphasizes that UK economic operators will need to reobtain an EORI (EU customs identification) number if they have a permanent business establishment in the European Union, or are planning to lodge a customs declaration/apply for a customs decision. Goods originating from the United Kingdom will also qualify as "non-originating" according to EU preferential trade agreements. This means, among other things, that these good will not benefit from a preferential customs duty rate when imported into the European Union. The Guidance Note also briefly describes the customs procedures that will be applicable to products moving between the European Union and the United Kingdom, as well as the special provisions applicable to Northern Ireland.

On 15 July 2020, HM Revenue and Customs (HMRC) and HM Treasury published the consultation outcome on the Fifth Money Laundering Directive and Trust Registration Service outlining how the government intends to implement the changes to the Trust Registration Services on the transposition of the Directive (EU) 2018/843 (the Fifth Money Laundering Directive). The idea behind the consultation was to increase the transparency of trust ownership to ensure that the United Kingdom's anti-money laundering and counter terrorist financing regime is up to date, effective and proportionate. The Fifth Money Laundering Directive explicitly requires certain trusts to be registered. A significant majority of the responses agreed with the list of trusts to be outside the scope of registration and most respondents gave examples of other trusts they felt should be outside the scope.

Trusts to be exempted from registration

The government response exempts the following trusts:

• trusts imposed by statute where these do not result from the clear intention of the settlor;
• UK registered pension trusts;
• charitable trusts regulated in the United Kingdom;
• pure protection life insurance policies and those paying out on critical illness or disablement, including group policies;
• trusts used by the government and other UK public authorities;
• trusts for vulnerable beneficiaries or bereaved minors;
• personal injury trusts;
• save as your earn schemes and share incentive plans;
• maintenance fund trusts;
• certain trusts incidental to commercial transactions;
• certain trusts used as part of financial markets infrastructure
• authorized unit trusts;
• co-ownership trusts where the trustees and beneficiaries are the same person;
• will trusts created on death that only receive assets from the estate and trusts that only receive death benefits from a life insurance policy and are wound up within 2 years of death; and
• existing trusts holding assets valued at less than GBP 100 unless or unit further assets are added.

Deadlines and penalties for non- or late registration

A number of respondents were concerned with the 30-day requirement to register a new trust or update information within a trust as it may not be realistic. The government agreed that requiring trusts created by will to be registered within 30 days of death was inappropriate and will not be required accordingly. The government also outlined that they intended to proceed with the proposed penalty regime as outlined in the consultation document.

Legitimate interest and third-country entity requests

The government committed to ensuring clear guidance and examples are provided to help stakeholders understand the legitimate interest and third-country entity request processes, committing to ensure each request is considered on its own merits.

The UK government has confirmed the postponement of reporting deadlines under Council Directive 2018/822 (DAC6) following the adoption of Council Directive (EU) 2020/876 amending the Directive on Administrative Cooperation (DAC). This measure comprises part of the government's COVID-19 pandemic package. The new reporting deadlines are as follows:

Time framework for reporting	Reporting deadline
mainstream reporting (30-day period to report new cross-border arrangements)	The period commences on 1 January 2021
lookback reporting (reportable arrangements from 25 June 2018 to 30 June 2020)	28 February 2021
periodic reporting on marketable arrangements	30 April 2021

  Reporting as from 1 January 2021 must be done as normal. In addition, HM Revenue and Customs (HMRC) confirmed that the IT systems for reporting will be available ahead of the revised reporting deadlines (for the HMRC statement, see here). The International Tax Enforcement (Disclosable Arrangements) (Coronavirus) (Amendment) Regulations 2020 (S.I. 2020/713) were made on 9 July 2020. The Regulations will come into force on 30 July 2020.

On 13 July 2020, Order 2020 (S.I. 2020/728) was made announcing the reduced Value Added Tax (VAT) rate in the field of hospitality and tourism in light of the ongoing Covid-19 pandemic.

More specifically, the Order provides for a temporary reduced VAT rate for certain supplies in the course of catering, holiday accommodation and admission to shows and other attractions.

This measure comprises part of the government's COVID-19 pandemic package. The relief and consequential changes to the flat-rate scheme both have effect for the period from 15 July 2020 to 12 January 2021.

The Order entered into force on 15 July 2020.

On 8 July 2020, HMRC announced that reduced rates of Stamp Duty Land Tax (SDLT) will apply for residential properties purchased from 8 July 2020 until 31 March 2021 inclusive. On 1 April 2021, the reduced rates shown below will revert to the rates of SDLT that were in place prior to 8 July 2020.

This temporary measure comprises part of the government's COVID-19 pandemic package.

HMRC released a policy paper on 10 July 2020.

First home

The following rates apply for a first home purchased during the aforementioned period:

Property or lease premium or transfer value (GBP)	SDLT rate (%)
up to 500,000	0
portion from 500,001 to 925,000	5
portion from 925,001 to 1.5 million	10
portion above 1.5 million	12

Additional dwelling

The 3% higher rate for purchases of additional dwellings applies on top of the above-mentioned revised standard rates. Hence, the following rates apply for an additional dwelling purchased during the above-mentioned period:

Property or lease premium or transfer value (GBP)	SDLT rate (%)
up to 500,000	3
portion from 500,001 to 925,000	8
portion from 925,001 to 1.5 million	13
portion above 1.5 million	15

New leasehold sales and transfers

The following rates apply:

Net present value of any rent (GBP)	SDLT rate (%)
up to 500,000	0
over 500,000	1

The HMRC policy paper, released on 10 July 2020, can be accessed here.

The European Commission has adopted a communication to help national authorities, businesses and citizens prepare for the changes that will arise in the relationship between the European Union and the United Kingdom at the end of 2020. The communication, dated on 9 July 2020, sets out an overview of the main areas of change (including customs and taxation rules) that will take place in any event as of the end of the transition period (i.e. 31 December 2020), and whether there is an agreement on a future partnership between the European Union and the United Kingdom or not.