By Adam Johnson, Director, Leeds-based Tudor International Freight
We are advising our customers trading with the EU to take six practical steps now to prepare for a possible no-deal Brexit.
This so-called cliff-edge departure from the bloc, which some commentators regard as more likely, following confirmation of Prime Minister Theresa May’s resignation and the appointment of Boris Johnson, is the legal default option. A no-deal Brexit will therefore take effect at the end of October, if a withdrawal agreement has not been approved by the EU and UK and no further extension of the Article 50 deadline has been agreed by then. In these circumstances, UK companies’ relationships with EU businesses will become subject to arrangements much like those applying to their dealings with firms in other countries now.
In our view, it is therefore imperative that British enterprises trading with the EU familiarise themselves with three programmes being or set to be administered by HM Revenue & Customs (HMRC), if they have not already done so.
Affected businesses should also ensure their documentation is appropriate for a no-deal departure, consider enlisting specialist support for relevant tasks and ensure companies in their supply chains are preparing adequately too.
If a business is currently trading with countries outside the EU, as well as those inside the bloc, it is likely to have an Economic Operator Registration and Identification (EORI) number already. But if not, it should apply for one now, as this is mandatory for each company outside the EU buying from or selling to it. Applications can be filed on the gov.uk website and registrants will need to quote their VAT numbers, taxpayer references, company start dates and Standard Industrial Classification codes.
Another key task for British businesses trading with the EU is familiarising themselves with the changes being made to the UK’s Customs Handling of Import and Export Freight (CHIEF) system. This allows import and export declarations to be processed and calculates duties and taxes payable on goods entering the country. The system is currently transitioning to a successor, the Customs Declaration Service (CDS), which will include existing and additional features. This will require all UK importers and exporters to have a Government Gateway account, so now is the time for EU traders to apply for one of these, if they have not done so already.
HMRC is also set to administer the Simplified Import and Export Procedures (SIEP), intended to keep goods flowing if we leave the EU without a deal. These will enable companies to move items through customs without filing import declarations or paying any duty due. They will instead be able to declare goods imported monthly, with duty payments being made a month later.
It is important to note, however, the SIEP procedures will be different for so-called controlled and standard goods. For example, controlled items – such as hazardous products and dangerous cargo – will require a Simplified Frontier Declaration and, if they are being exported, commodity and customs procedure codes. More information about relevant matters, such as transactions, duties and VAT, is on the gov.uk website.
Regarding documentation, it is important paperwork such as commercial invoices follows the same standard rules as those used for shipments going outside the EU. The UK company VAT number should be shown, commodity codes provided for each line item and the value of goods clearly marked.
Affected enterprises should be checking that companies in their supply chains are preparing, in ways such as these, for a no-deal outcome too.
We are also advising the UK’s EU traders to start considering whether they will require specialist support from outside organisations for tasks such as submitting customs declarations or assisting with documentation checks.
They should remember the few hundred freight forwarders in the UK who are Authorised Economic Operators can offer them advantages unavailable elsewhere, including a faster customs clearance process and a reduced level of financial guarantees.
For more information: www.tudorfreight.co.uk