The UK ceased to be a member of the European Union (EU27) on 31 January 2020. In the early part of February 2020, the UK Government began to set out the trading landscape post 31 December 2020.
There will be no frictionless trade with the EU after the end of the transition period. Customs declarations and checks that currently only apply to trade with non-EU countries will become the norm for goods moving between the EU27 and the UK.
In recent speeches and interviews, senior UK Government ministers have confirmed that “The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow”. What does that mean?
- Full import controls will apply to goods arriving in the UK post 31 December 2020
- Transitional Simplified Procedures (TSP) will be withdrawn. Anyone authorised to use TSP will need to hold the appropriate authorisations.
- The proposed special arrangements for exports/imports at roll on roll off (RoRo) ferry locations will not apply. Therefore, import declarations or transit movements must be presented on arrival to a Customs Office or via a Port Inventory System. For exports, goods will need to be presented on exit of the UK as happens for exports to non-EU countries.
- EMCS (Excise Movement and Control System) movements will start at the port of import and not within 24 hours as was proposed.
- The proposed VAT Postponed Accounting has also been shelved. VAT will be due on imports at the point of importation (cash on the table) subject to the use of deferment accounts and financial guarantees being in place.
- The ‘Brexit Tariff’ with 88% of goods being imported free from customs duties, has been withdrawn. Instead the Department for International Trade is consulting on the future tariff and potential removing nuisance tariffs (those under 2.5%) and rationalising others but at the same time protecting indigenous industries, promoting inward manufacturing while not undermining any negotiated free trade agreements.
How does a UK business mitigate these changes?
You will need to:
- review terms of trade with EU27 customers/suppliers
- consider how declarations will be made and who will make these declarations. There will be a rush to secure valuable customs agent’s resource in autumn 2020.
- review which HMRC regimes could mitigate exposure to the above, such as AEO, warehousing, IP, OP and CFSP.
- consider Transit authorised consignor and consignee status to start and finish transit movements at your own premises.
- consider Temporary Storage authorisations to receive goods inland
It is worth noting that the EU27 never promised any simplified procedures to importers or exporters so the UK is mirroring this, but businesses in the UK now have less time to get prepared! UK businesses need to move quickly to ensure they can continue to operate their supply chains as smoothly as possible.
The great unknown is what will happen on freight movements between mainland UK and Northern Ireland to ensure goods can move freely between Northern & Southern Ireland, and how the Irish Protocol will be managed and policed. There does seem to be divergence between the UK and EU27 over what the words mean with the UK insisting that there will be no border between Great Britain and Northern Ireland. That is not my reading of the protocol!