It has been some time since the UK and EU agreed to an extension of Article 50 and the possibility of a no-deal Brexit hangs over UK and EU businesses once again. The new UK Prime Minister and his cabinet are seemingly intent on leaving the EU on the 31st October regardless. The UK Parliament has various factions planning ways to a try and stop a no deal exit from the EU and the EU seem equally unwilling to budge on the integrity of the single market even if that means a no-deal Brexit.

The Brexit uncertainty continues

Although the UK Government has tried to inject some certainty, conflicting statements such as the chances of a no-deal Brexit are ‘a million to one’ when also “turbo charging” no-deal preparations does little to help companies decide when to commit to no-deal solutions. 

Whilst it is still possible a deal could be reached, with both sides maintaining their red lines then business need to start preparing again before it is too late.

What preparations have been made 

We have seen increased preparations by all parties with the UK Government in particular looking at a range of methods to avoid disruption to critical supply chains including apparently planning on flying trucks into the UK on chartered freighters (which for those of us who have dealt with airfreight for many years brings a whole new meaning to the term “flying” trucks). Unfortunately, a large number of companies who only trade with the EU are still apparently without an EORI (Economic Operators Registration and Identification) number a pre-request to be able to import or export either directly or via an agent and a planned advertising campaign by HMRC is expected soon to address this

Regardless of what happens on the UK border it will always have two sides. Within the EU the main preparations have been around streamlining the port process and increasing customs resources. French Customs announced changes to their processes to make it mandatory to submit an import declaration to French Customs or advise that the goods were moving under Transit before the goods could be loaded onto the ferry or channel tunnel in order to allow them to perform their risk analysis prior to the goods arrival. The infrastructure at French ports is also being enhanced for additional parking or ANPR express lanes out of the port area for cleared cargo.

Similarly, in addition to increases in customs personnel and trader awareness initiatives, Dutch and Belgian ports have made changes to their port systems to receive pre-notification of goods cleared for import or Export for RoRo and Ferry traffic. Both also recommending submitting import declarations prior to arrival, as with France not only will this potentially allow customs to perform risk analysis prior to arrival and reduce clearance times in the port it also potentially removes the need for a separate safety and security declaration.

However, it is the UK, which in the case of a no-deal would be free from the constraint of EU Union Customs Code (UCC) legislation and common external tariff, that can make the most significant albeit potentially temporary changes to avoid disruptions at the frontier.

Imports into the UK

If you are a UK IMPORTER you will no doubt welcome the planned temporary UK tariff that would see 87% of all tariff lines becoming duty free and the introduction of Postponed accounting for VAT. This in itself though does not allow for a frictionless border as even duty free goods still require a customs declaration. Therefore, further procedural measures were announced in preparations for the original No-Deal Day One Brexit back on March 29th.

Whilst the UK would normally require a safety and security declaration for all goods arriving in the UK, it was proposed that for goods arriving directly from the EU would be exempt for 6 months.

The main thrust of these simplifications were that whilst an EU export declaration will still be required to export from the EU, a pre-arrival import declaration would only be required for

  • certain controlled goods (including Excise goods such as alcohol, tobacco products and hydrocarbon oils, goods subject to licensing controls such as controlled drugs and firearms, fish and fish products) or
  • where you wish to use existing simplified authorisations or special procedures (such as customs warehousing, temporary import or processing). Where a pre-arrival import declaration is made then that declaration will need to be amended to an arrived status within 24 hours from actual arrival.

All other goods would be able to move through the port under a combination of entry in the traders records (commonly called EIDR) and Transitional Simplified Procedures (TSP) which is in effect the same the current “CFSP” simplified procedures but opened up to a wider range of traders through a much simplified application process. To be authorised for TSP a company simply must adhere to the following:

  • Have a UK EORI number.
  • Be established in the UK (true for almost any Customs declaration where the declaration has to be established in the same customs territory).
  • Be an importer (freight forwarders or Customs brokers CANNOT apply but can submit declarations on behalf of a TSP approved trader).
  • Have a customs deferment account so that any taxes payable can be paid via direct debit.

If authorised for TSP and moving through the port under EIDR (or if already authorised for EIDR) then there should be no need to stop at the port with UK Border Force expected to operate the same level of controls as today for Intra EU traffic to combat smuggling and protect society. At port locations managed by port community systems, often called inventory linked locations, a simplified release using the port system or a simplified declaration will be required to facilitate physical removal from the port. For certain controlled goods such as those subject to plant health controls preparations have been made to perform checks away from the border or at the trader’s premises. 

Once the goods have moved from the port then traders using TSP like CFSP will have to submit a supplementary declaration by the 4th working day following the month of import, although it is not clear if HMRC will allow a similar 6 months to submit the first supplementary declaration (albeit with a need for additional statistical and VAT returns in the meantime).

For excise goods if it is planned to store the goods in an excise warehouse then it is also necessary to start an EMCS (Excise Movement and Control System) movement for those goods at the port of arrival.

TSP as per its name is a temporary disruption avoidance measure and HMRC will review this within 6 months of its introduction, however they did previously announce the system would run for at least 12 months.

One final note of caution is for anyone importing eCommerce goods into the UK. In the case of a no-deal Brexit any parcel regardless of value will be subject to VAT. For parcels up to a value of £135 it will be the responsibility of the sender to account for the VAT either through a new UK Government online service or via the parcel operator. This will include parcels worth £15 or less as the existing Low Value Consignment Relief (LVCR) will no longer apply.

Exports from the UK

If you are a UK EXPORTER then things may not look as positive.

Whilst the weakening pound has made goods cheaper to prospective customers, imported raw materials are more expensive and in case of a no-deal you will be faced with the introduction of EU duties.

You will still need to make an export declaration for all goods prior to them being exported from the UK. For certain controlled goods there will be an additional requirement to subsequently report their export.

For excise goods if the goods are removed from an excise warehouse then you will need to still start an EMCS movement to the port of export. In addition, on arrival into the EU either of the following: 

  • Excise duties are accounted for on arrival, if the country of arrival is where the goods will be consumed.
  • A new EMCS movement for those goods at the port of arrival to the country of consumption or a tax warehouse.
  • Raise a NCTS transit movement to cover the movement of goods to their destination.

As has already been mentioned, there is also the need for someone to make an import declaration on the EU side and in the case of France this needs to be done prior to loading onto the ferry or channel tunnel. As an alternative to an import declaration prior to arrival, especially for RoRo traffic and if the preferred place of clearance is away from the frontier, is to use the common transit procedures.

The UK will remain part of the Common Transit Convention meaning that traders can use NCTS to move goods across territories with the need to make a customs declaration or pay duties. By becoming authorised as Authorised Consignor and/or Consignee means a trader can seek to start or stop these movements at their own customs approved premises, authorised for temporary storage if necessary (temporary storage allows companies to store goods for up to 90 days before placing the goods under a customs procedure).

If exporting via the EU or UK to a country outside the EU, then NCTS (New Computerised Transit System) is also vital to avoid raising a movement after crossing the border where this is possible or where using the UK as a landbridge between UK and Ireland. For goods crossing the UK between Ireland and the EU transit only allows for uninterrupted travel, if the goods re going to be consolidated or handled in some way then you should be looking at temporary storage, customs warehousing or another procedure depending on the handling to be undertaken.

Regarding the Irish Land Border, whilst the traffic East to West should be as we have described above (e.g. Holyhead to Dublin), for goods moving between Northern Ireland and the Republic of Ireland, UK Customs have so far said there is no requirement for any UK import or UK export declarations and that no tariffs will apply to goods crossing from Republic of Ireland into Northern Ireland (quite how that squares with charging duties on the same goods from Germany, Belgium or Netherlands with WTO rules is  a question that will be discussed elsewhere should it materialise). The Irish Government has been quiet on their detailed plans for the EU side of the land border (other than vague hopes for an all Irish agricultural / standards zone which would go against the UK and DUP red lines as it would mean part of the UK treated different to the rest and continuing to follow EU standards) and so far the EU has been dismissive of any suggested technical solutions and only willing to consider them after a withdrawal agreement has been passed.

What should companies do now?

  • Obtain an EORI number if necessary
  • Obtain a deferment account
  • Apply for TSP if applicable
  • Consider other applications depending on your supply chain needs
  • Decide on whether you want to employ a broker or submit your own customs declarations. Grants for customs training are available and Descartes works with a number of companies qualified to provide this.
  • Once decided signup early as both brokers and software companies are likely to come under increasing pressure as companies face the prospect of a no-deal Brexit. It is better to be prepared than be without any options on October 31st other than not to ship or receive your goods.

How can Descartes help?

Descartes is a global leader in providing on-demand Software as a Service solutions that drive end-to-end supply chain operational efficiency and ensure regulatory compliance. With regard to Brexit Descartes can help UK companies and companies outside of the UK meet the challenges of Brexit.

In the UK

E-Customs SaaS web-based application which is easy to access from anywhere with a low set up cost and no hardware maintenance. Features and functionality include:

  • Inventory linked imports (Air, Sea & Road including Dover, CCS UK airports and CNS Courier) - pre and post arrival
  • Non-Inventory linked imports - pre and post arrival
  • Import supplementary declarations
  • Exports
  • NCTS
  • EMCS
  • Customs Warehousing
  • Excise Warehousing
  • CCS UK Temporary Storage (ETSF)

Descartes e-Customs will ensure you are Brexit ready for HMRC CHIEF changes and CDS ready with e-Customs already in use for managed migration import supplementary declarations.  It also provides functionality to act as the EIDR notation and submit the subsequent TSP declaration.

e-Customs will save you time by reducing data entry with full or partial back office integration, excel worksheet integration, templates and intelligent master data. It is easy to use and suitable for freight forwarders, brokers, importers and exporters alike.

Descartes Pentant inventory system in operation at Dover and other locations in the UK both as a port community system and a temporary storage solution.

Safety & Security ENS filings.

In the EU

Descartes Customs Declaration and duty management software in a range of European countries especially in the Benelux and Scandinavian regions reducing data entry with full or partial back office integration, templates and intelligent master data. It is easy to use and suitable for freight forwarders, brokers, importers and exporters alike.

Safety & Security ENS filings

Globally

Connectivity Services - Connectivity via the Global Logistics Network to trade partners to send or receive customs related data and information.

Trade Data Content, CustomsInfo and Denied Party Screening- Descartes helps maximise the value of trade data by helping organisations work smarter. Our suite of solutions helps businesses achieve higher trade compliance rates, increase insight and leverage market research, reduce the risk of transacting with denied parties, and minimise duty spend.

 

Read more Brexit blogs here

Written by Martin Meacock

Director, Product Management