Get Ready for Brexit
What steps do you need to take to be ready for Brexit?
The UK is in a transition period until the end of 2020, the UK and EU are in negotiations on trade arrangements that are hope to be in place for the end of the Transition Period, but may not be. The current rules on trade, travel, and business for the UK and EU will continue to apply during the transition period. However, new rules will take effect on 1 January 2021. You should prepare now to ensure that your business is able to accommodate the new requirements for trade under Brexit from 1 January 2021.
The first step is to consider how Brexit will impact your business and your movement of goods.
If yes to any of these, a UK Customs Declaration is essential and required by law. All goods will also require a Security Declaration. Export declarations are required from 1 January, Import declarations will also be required and for most goods you will have up to 6 months to complete the process. However, delaying the completion of your declarations will expose you to building up a backlog, increasing your administration costs and a growing liability for any taxes and duties due on the goods. We believe it is best practice to be able to complete your declarations as you import the goods and do so as early as possible in 2021.
Descartes e-custom software provides a straightforward way of submitting Customs Declarations through your customs registration. It also allows you to record the import in your records pending submission of a supplementary declaration for those first 6 months should you require this.
Who is responsible for the Customs Declarations in your business?
You will need to determine whether it’s you or your supplier that is responsible for making the required Customs Declarations from 1 January 2021, when moving goods either into or out of the UK. There are a set of rules that define the essential terms of trade for the sale of goods known as ‘Incoterms’, published by the International Chamber of Commerce (ICC). They will enable you to determine if you or the Supplier is considered to be the Importer or Exporter and therefore responsible for the Customs Declarations under Brexit.
If you are responsible for (or will be named on) the Customs Declaration you will need a UK EORI (Economic Operators Registration and Identification).
- An EORI is a registration number required to undertake Imports or Exports
- You will need a UK EORI for Imports or Exports into or out of the UK
- You will need an EU EORI for Imports or Exports into or out of the EU
If you are not established in the customs territory do you need to appoint a tax representative?
If you import or export plant or animal products, high-risk food or feed, medicines, textiles, chemicals or firearms you should determine if you need to register with the relevant authority as an importer or exporter and if you need to obtain certificates for importing into the EU.
Check whether your goods must only enter the UK via dedicated inspection points.
Decide if you wish to operate any simplified procedures, such as making a simplified customs declaration at the frontier followed by a supplementary declaration post import (known as CFSP in the UK), or Entry in the Declarants records which replaces the need for the Simplified Declaration.
If you choose to use a third party agent to submit your declarations on your behalf, it is highly likely you will remain liable for the information declared. This is what agents will refer to as acting as a ‘direct representative’. Descartes recommend that you obtain at least some basic Customs training – see here for a list of companies who offer Customs Training.
Do you need an account with customs to enable the payment of duties and other taxes?
VAT registered businesses should be able to benefit from postponed accounting under current UK Treasury plans or in countries already offering similar schemes.
Descartes can relieve the burden of managing your regulatory compliance and Customs Declarations with our e-customs software. Find out how you can be Brexit ready with Descartes.
All businesses that trade with the EU will need to ensure they are prepared for the changes and new requirements for trading with the EU. Download our Brexit Checklist to ensure you are ready for Brexit with Descartes.
How to submit Customs Declarations
Customs Declarations need to be submitted electronically to HMRC. To submit declarations to Customs you will need to be registered with HMRC and obtain an EORI number. You will also need software with the ability to:
- Prepare the declarations
- Submit them to Customs via an HMRC approved communications channel know as a Community System Provider (CSP).
Obtaining a customs “Badge”
For submitting Customs Declarations via the HMRC’s CHIEF service you will need to obtain an ID known as a “Badge”.
If your imports from the EU are going to arrive via RoRo ferry then you can obtain a Badge from any CSP and use it to have your declarations communicated to HMRC’s system. Descartes can provide you a Badge for any RoRo into the UK and handle your communications to HMRC using our Pentant CSP. (contact us to …..)
For Inventory Managed Imports you will need to have a Badge from the CSP managing the Inventory System for the port your goods are entering through, e.g. Dover, Felixstowe, Southampton, etc
What information is required?
Most information is commercially related data and easily identified – name of consignor, consignee, weights, goods description, values, nature of transaction, details of transport etc. There are some Customs areas that need to be known such as the Tariff Code for the product, but these should in most cases be an extension of the current Intrastat codes if you are already dealing with Intra-EU movements.
There are some specific codes used to determine which procedure the goods are to be put through, any authorisations held or documents accompanying the goods, for example, but for most businesses these can be repetitive once established.
Customs/Excise Duties and other charges
You will need a CPC (Customs Procedure Code) that will denote how much (if any) Customs/Excise duties are payable together with VAT. You can find further details on UK CPC’s at the HMRC CPC web page. The Customs Declaration may require costs to be confirmed. This can include transport, packing, insurance and documentation. There are other charges which may also be required to complete the valuation of the goods. Further details can be found on the HMRC Valuation web page.
Certain products may be subject to prohibitions, restrictions, or licencing and these will be detailed in the Customs Tariff data together with details regarding which type of documents will be required.
A Customs Declaration is a legal declaration. If you decide not to submit your own Customs Declarations most brokers will act on a direct representative basis and you will remain liable for the information declared. Descartes recommend that you obtain at least basic Customs training to mitigate any risks. – see here for a list of companies who offer Customs Training.
The majority of goods will be processed and cleared automatically by Customs but consignments requiring physical or documentary checks will be handled in the UK by BF (Border force) for inspections or the NCH (National Clearance Hub, Salford). Details can be found on the HMRC clearance hub web page.
How to Minimise delays through UK ports
Whilst import and export declarations can be submitted prior to arrival they are currently not legally accepted until the goods arrive at the Customs approved location, traditionally the port of arrival or departure. Considering the short time frames it may not be possible to prepare for the import declaration for all the goods being transported before they arrive.
Temporary Storage and Exports
Using Temporary Storage Facilities (ETSF), away from the immediate place of arrival, provides additional time to prepare for the customs declarations, minimising potential delays at ports and also allows goods to be stored at your own premises.
Some goods, such as those subject to health controls, will still need to be managed at the place of import whilst for other goods use of temporary storage can streamline the logistics process at the point of arrival.
ETSF could also be combined with transit procedures and authorised consignee status to further simplify the movement through the port, especially for RoRo traffic. The Transit Procedure can be used to move the goods inland to a Customs Warehouse if long term storage is envisaged.
On exports it should also be possible to gain approval for company premises to be authorised to treat the export declaration as arrived (in the UK known as Customs Supervised Exports or CSE) and when used Customs can select goods for physical examination in the same way that such checks are made at a customs frontier location. This means the goods can travel to the port of export in the knowledge the goods have already been given permission to export and again could be used with Authorised Consignor status to start the Transit movement away from the port.
Some port systems particularly those in Belgium and Netherlands allow for information to be provided in advance of arrival of the goods to facilitate quick handling via those ports.
How to reduce your tax liability
Many companies will be looking just to pay customs duty and release the goods into free circulation for use or sale at the time of import. However, if there is no free trade agreement or the scope of the agreement does not extend to your products and there are no other tariff reliefs then you may need to look to other processes to reduce the impact of customs duty.
This could be achieved by operating a customs warehouse, where goods are stored without payment of duty, or processing arrangements where goods are imported under duty suspension, processed into a new product and either re-exported or put to free circulation at the duty rate of the finished product.
If the imported product is manufactured from components originally exported, then it may be possible to pay duty on the value excluding these exported parts or materials. This is known as Outward Processing Relief.
Management of such schemes usually requires the use of a duty management system to manage both the stock and the customs data, as well as submitting and related declarations or returns.