Common Transit Convention Explained
9th November 2020
Common Transit is an EU customs procedure that allows goods to move between the EU and common transit countries or between the common transit countries themselves with duty being paid in the country of final destination. The UK is set to remain part of the Common Transit Convention beyond the end of 2020.
Why is the Common Transit Convention important post Brexit'
This procedure facilitates the movement of goods by temporarily suspending duties and other charges on imported goods until they reach their final destination. Common Transit may therefore be useful for road freight that transits from Ireland through the UK to mainland EU or from the UK through the EU to Italy for example. It’s also used to move goods away from an entry border and carry out customs processes elsewhere.
Common transit countries
The current common transit countries are Switzerland, Norway, Iceland and Lichtenstein (the EFTA countries), Turkey, Macedonia and Serbia. Each member state and common transit country has designated customs offices. Import charges on goods that move under the common transit convention are suspended and collected at the customs office of destination in the member state and not at the external frontier. This means multiple customs charges do not arise.
Why is the Common Transit Convention needed for the UK'
When we leave the EU, the UK will become a “third country”. In the absence of a free trade deal, UK exports will be subject to EU VAT and possibly duty depending on the commodity code(s). This VAT and duty are payable as soon as the trailer enters the EU, say at Calais. To be able to pay the VAT and duty at this French entry point, Spanish, German or Italian importers for example would need to have fiscal representation in France to make the VAT and duty payments. This is not an easy, quick or cheap undertaking. Hence why Transit is a popular customs procedure when VAT and duty need to be suspended during transit.
In a Day 1 No Deal (D1ND) scenario, T1 transit forms will need to be raised for UK export shipments that have to transit a European country en-route to a different EU delivery country.
What types of shipment does it affect'
In a Day 1 No Deal (D1ND) scenario, Transit will only really apply to UK export shipments. It will affect export full load, dedicated express and some part load shipments.
Is the Common Transit Convention needed for all EU countries'
No. A T1 document is not needed for UK exports to France, Belgium, Holland or Ireland as long as the trailer ships directly into the country of delivery. This is because these countries are countries of EU entry. For example, if a vehicle loaded with goods for France ships directly into France, a T1 is not needed. If the driver ships into Belgium with a final delivery point in France, a T1 is needed. This is because the driver must TRANSIT one EU country to get to a different EU country for delivery.
How does the Common Transit Convention work'
If your shipment requires a T1 document to be raised this needs to be done on the New Computerised Transit System (NCTS). In general, it is only Authorised Consignors and customs agents that have access to this system.
We will use a full load export from Derby to Rome to explain how this works with the assumption that the exporter is not Authorised to use NCTS.
Common Transit EXAMPLE:
Full load export from Derby to Rome
Consignment value €200,000 - 20% VAT and 3% duty are payable in Italy = €66,000
1 - Driver loads in Derby
Before leaving GB Customs Documents/CT declarations must be made electronically, using the New Computerised Transit System (NCTS)
- Export declaration made into CHIEF
- A Movement Reference Number ( MRN ) is produced
- From MRN, goods are entered into Transit on NCTS
- Office of Departure entered (This is where T1 document is collected and stamped)
If the shipment is worth €200,000 and 20% VAT and 3% duty are payable in Italy, the T1 issuer vouches for the customs and tax payments for the goods with their security deposit. I.E. The payment of €66,000 to the Italian Government if the VAT and duty are not paid.
- Office of Destination entered (Either Italian Customs or an Authorised Consignee Address in Italy).
This is where the driver presents the T1 document and the T1 form is to be discharged. I.E. The goods are customs cleared with VAT and duty paid, the import customs entry completed and the driver can leave to make the final delivery.
The haulage company must ensure their driver has all the necessary customs information and documents and other paperwork.
The driver must carry the information and documentation provided by the haulage company in the vehicle for the duration of the journey. This also includes information and documentation necessary to meet EU member state requirements. This is because each movement of goods from the UK to the EU is both an export movement for UK authorities and import movement for EU authorities.
2 - Driver arrives at Office of Departure to collect T1 (unless issued by an authorised consignor or consignee)
Any person acting as the principal of a transit movement (T1 issuer) must provide a guarantee to ensure payment of the customs duties and other charges if the CT requirements are not fulfilled.
The CT guarantee must be valid for the UK, all EU member states, and any other countries (common transit countries, San Marino or Andorra) involved in the movement.
A guarantee is usually an acceptance by an independent party (usually a bank, insurance company or similar organisation) for liability, jointly and severally with the principal. Traders who meet special requirements may qualify for a guarantee waiver, avoiding the need for a guarantor.
If the T1 is issued by an authorised consignor or consignee, they can:
- declare goods without presenting them at the customs office
- print the transit accompanying document and, where applicable, the list of items at the consignor’s premises
- remove goods under customs control directly from their authorised location
3 - Driver arrives at Customs of Transit Countries
Although the NCTS is a largely paperless system, a covering document known as the TAD (Transit Accompanying Document) must accompany the goods during transit and be presented, together with the goods, at any office of transit en route and at the office of destination.
The TAD includes a unique Movement Reference Number (MRN) generated by the NCTS upon acceptance of the declaration. The MRN appears on the TAD in both a numerical format and as a barcode. The barcode allows automatic processing using barcode readers, at busy CT offices, most notably on borders between the UK, or the EU and common transit countries, for example France or Switzerland.
4 - Driver arrives at Office of Destination
The full CT movement ends when the goods and the accompanying TAD are correctly presented at an approved office of destination within opening hours and within the time limit set by the office of departure.
This releases the CT principal and their guarantor from their obligations, therefore it’s vital that these documents are submitted to customs as soon as the goods arrive at the office of destination. A carrier or recipient of the goods who accepts them knowing that they’re moving under the community or common transit procedure is also responsible for the production of the TAD and the goods intact at the customs office of destination. Failure to observe this condition is an offence under Article 96 of Council Regulation (EEC) 2913/92.
Any unloading or other action taken without customs permission may also incur a customs debt (that’s, Customs Duty and any other applicable charges) through the unlawful removal of the goods from customs supervision - Article 203 of Council Regulation (EEC) 2913/92 refers.
Any person who delivers a TAD or NCTS fallback SAD to an office of destination or an authorised consignee may obtain a receipt, on form TC11 (UK Form C1129), certified by customs or the authorised consignee. The receipt acknowledges presentation of the CT document; it does not constitute a discharge of the principal’s or guarantor’s liability.
Any person who delivers a TAD or NCTS fallback SAD to an office of destination or an authorised consignee may obtain a receipt, on form TC11 (UK Form No C1129), certified by customs or the authorised consignee. The receipt acknowledges presentation of the CT document; it does not constitute a discharge of the principal’s or guarantor’s liability.
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Information published here is correct, to the best of our knowledge and belief, at the time of publishing but we take no responsibility in the event of incorrect or misleading information. This service is provided free of charge and without liability or obligation.