HMRC in the UK recently issued guidance just in case the powers that be fail to reach agreement and the UK crashes out of the EU on 29th March 2019 – a so-called hard Brexit. This may be useful for Irish importers and exporters.
Customs procedures with a “no deal” Brexit
Essentially the two-way free movement of goods between the UK and the EU will cease and the raft of changes that firms trading with the EU will need to accommodate are significant.
Whilst the political process is deadlocked, or so it would seem, the information shared below is very much the worst possible outcome for importers and exporters to the EU from a red-tape perspective. If the government is successful in negotiating a softer version for the UK exit from the EU, then some, or perhaps all, of the following changes may not have to be made.
Contingency planning should now include at least an appreciation of the import/export changes that will need to be faced if the UK leaves the EU with no deal.
The specific customs changes would include:
- Businesses would have to apply the same customs and excise rules to goods moving between the UK and the EU as currently apply in cases where goods move between the UK and a country outside of the EU (customs duty may also become due on imports from the EU. This means customs declarations would be needed when goods enter the UK (an import declaration), or when they leave the UK (an export declaration).
- Separate safety and security declarations would also need to be made by the carrier of the goods (this is usually the haulier, airline or shipping line, depending on the mode of transport used to import or export goods).
- The EU will be obliged to apply customs and excise rules to goods it receives from the UK, in the same way it does for goods it receives from outside of the EU. This means that the EU would require customs declarations on goods coming from, or going to, the UK, as well as requiring safety and security declarations.
- The Excise Movement Control System (EMCS) would no longer be used to control suspended movements between the EU and the UK. However, EMCS would continue to be used to control the movement of duty suspended excise goods within the UK, including movements to and from UK ports, airports and the Channel tunnel. This will mean that immediately on importation to the UK, businesses moving excise goods within the EU, including in duty suspension, will have to place those goods into UK excise duty suspension, otherwise duty will become payable.
Before importing goods from the EU after 29 March 2019
UK businesses will need to:
- Register for an UK Economic Operator Registration and Identification (EORI) number. Businesses are advised by HMRC that they do not need to do anything now. For those businesses that sign up for the EU email updates, they will be contacted when this service becomes available.
- Ensure their contracts and International Terms and Conditions of Service (INCOTERMS) reflect that they are now an importer.
- Consider how they will submit import declarations, including whether to engage a customs broker, freight forwarder or logistics provider (businesses that want to do this themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC).
- Decide the correct classification and value of their goods and enter this on the customs declaration.
When importing goods from the EU after 29 March 2019, a business will need to:
- Have a valid EORI number.
- Make sure that their carrier has submitted an Entry Summary Declaration at the appropriate time.
- Submit an import declaration to HMRC using their software, or get a customs broker, freight forwarder or logistics provider to do this for them.
- Pay VAT and import duties including excise duty on excise goods unless the goods are entered into duty suspension (for example a customs or excise warehouse – a financial security will be required to cover the duty liability of the goods whilst they are being moved to the warehouse). Import VAT may also be due although HMRC have indicated that this process may be dealt with on the VAT return thus delaying any cost impact at the time of import.
- Once excise goods leave a customs suspensive arrangement, they may be immediately entered into an excise duty suspension regime. A business will need to declare the goods on EMCS for onward movement via a Registered Consignor.
Businesses may also need to apply for an import licence or provide supporting documentation to import specific types of goods into the UK, or to meet the conditions of the relevant customs import procedure.
Before exporting goods to the EU, a business will need to:
- Register for an UK Economic Operator Registration and Identification (EORI) number. You do not need to act now, but you will want to familiarise yourself with this process.
- Ensure that contracts and International Terms and Conditions of Service (INCOTERMS) reflect that you are now an exporter.
- Consider how you will submit export declarations, including whether to engage a customs broker, freight forwarder or logistics provider (businesses that want to do this themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC). Engaging a customs broker or acquiring the appropriate software and authorisations from HMRC will come at a cost.
When exporting goods to the EU, a business will need to:
- Have a valid EORI number.
- Submit an export declaration to HMRC using their software or on-line, or get their customs broker, freight forwarder, or logistics provider to do this for them. The export declaration may need to be lodged in advance so that permission to export is granted before the goods leave the UK (the export declaration also counts as an Exit Summary Declaration).
- Businesses may also need to apply for an export licence or provide supporting documentation to export specific types of goods from the UK, or to meet the conditions of the relevant customs export procedure.
When exporting duty suspended excise goods to the EU, a business will need to continue to use EMCS to record the duty suspended movement from a UK warehouse or premises to the port of export.
Many thanks to Bob Edwards, a UK associate, for permission to publish this article.