Importing wine from the EU: the lowdown
After news that the UK government has temporarily suspended, but not abolished, the VI-1 form requirement, db takes a look at what could happen to the process of importing EU wine from 1 July 2021.
This week, the UK government said the requirement for additional import documentation, most notably the requirement for an accompanying VI-1 form, for wine shipped from the EU to the UK would be delayed.
These forms will not be needed from 1 January 2021 to 30 June 2021. While this provides welcome breathing space, the UK Wine and Spirit Trade Association (WSTA) wants the complete removal of such requirements.
It argues that the additional documentation will prove costly and lead to job losses, an increase in the price of wine, and businesses moving away from the UK.
It’s estimated that in a year, the introduction of VI-1s would generate over 600,000 customs forms and cost the wine industry £70 million. Smaller importers may find the process too expensive, leading to a reduction in choice for the UK’s 33 million wine drinkers.
What will change?
Chris Porter, business development manager at Kukla Beverage Logistics, has been calling customers to explain the changes. He said the temporary suspension was “very good news”, but that he hopes “further negotiation post 1 Jan will lead to a more permanent arrangement whereby imported wines from the EU are exempt from VI-1s.”
He told the drinks business that, as it stands, post 1 July 2021 there are four main elements that will be required. As before, to import wine from the EU, a commercial invoice is needed. The three other elements, however, are different.
The VI-1 form requires wine producers to submit samples for laboratory testing. This is required before a certificate can be issued.
The eAD (electronic administrative document) will also change. An eAD will still be issued, but rather than covering the whole journey to the UK, it will only apply to the transport from the production site to the European port of exit.
The wine will also require an EX-1 (or standard export document), which confirms the goods are for export from the EU. Both these documents are closed upon arrival at the EU port of exit, in other words, they do not cover the transport to the UK.
For the journey to the UK, in order to clear wines on arrival, an import clearance document, known as a C88 must be raised. The goods will then be sent either fully bonded to a tax warehouse, or duty paid against a deferment approval number.
If the UK tax warehouse does not hold ‘full bond’ status, and is approved for suspended excise-only, two customs declarations are required. A C88 duty paid form must be issued to cover the UK global tariff (the replacement to the EU’s common external tariff) along with a UK eAD with a movement guarantee to cover the excise tax.
What does it mean?
Firstly, Porter said this could mean a delay in the process. The time it takes to obtain a VI-1 form will vary, depending on how close producers are to an official laboratory and the length of the wait time.
Porter said he was currently advising customers that being prepared “should circumvent delays”. He warned that there could be some “teething problems” in early July, but he expected things to settle “quickly” as businesses became more familiar with the new regulations.
Companies should be mindful that there are additional costs involved in submitting wines to external laboratories, obtaining a certificate and gaining an import clearance.
Kukla has set up an official customs division in Folkestone in order to handle the increased administrative burden associated with UK import clearances.
“That will be the centrepiece of our Brexit management and where we’re ready to manage our customers’ fiscal responsibilities,” Porter said. As part of the service, Kukla will manage the documents required for each client, creating a ‘customs envelope’, and the company is looking at ways to mitigate costs.
Among the key sectors affected by the change in regulations will be small wine importers and the fine wine trade.
“Many of the larger companies have their own in-house laboratories for analysis,” Porter said. “We’ve spoken to a few who say it’s fine because they do it all the time in order to export around the world. It’s the smaller companies that rely on external services that could suffer. It’s important for such companies to at least be prepared for the need for an accompanying VI-1 in a worse-case scenario post 1 July.”
Currently, VI-1 forms are standard practice when importing non-EU wines to the EU. Some countries, including Australia and the US, have simplified versions.
As previously reported by db, the fine wine trade could suffer too. While it’s more straightforward to send a sample of wine that is being bottled for analysis, this is not the case for bottles from older vintages. The WSTA has warned that if the requirements are not abolished, it could cause permanent damage to the UK as an international wine trading hub.