Brexit

Days
Hours
Minutes
Seconds

As it currently stands, the effects of Brexit on international trade and customs duty are unknown. Many commentators have made various predictions, but in truth, no one knows what will await us post the "Article 50" negotiations.

Although the Government's wish for a "frictionless" border with the EU is laudable, in the short term at least, this may not be achievable systemically. It will be up to individual businesses to arrange their operations to minimise risk and damage - and maximise potential opportunity.

The Institute of Directors, in its comprehensive "Navigating Brexit" policy report, has touched on the need to prepare, saying;

"business people must not wait for the outcome of negotiations before undertaking their own planning and consultation in an attempt to minimise the potential for disruption to existing commercial relationships"
"For those businesses engaged in the EU goods trade, it is essential to begin exploring what extra paperwork dealing with the EU as a third country would entail. Planning for a worst case scenario is necessary"
"Inward and outward processing relief, .... warehousing are procedures which will become important for those firms selling or importing from the EU. Businesses already trading with non-EU markets will have an advantage in knowing how to use these kinds of procedures to mitigate any increase in costs or delays"
"There is a strong incentive for UK-based goods traders who have not yet done so to apply now for AEO authorisation under HMRC's ongoing roll-out of the EU's new UCC".

As the UK's leading provider of duty management/reporting software and services, we are uniquely placed to help you navigate through the uncertainty and to implement the processes and procedures necessary to allow for as smooth a transition possible on day one of the UK standing independent of the EU. Indeed, our position has meant that we are involved in the information gathering/planning phase with both HMRC Treasury and HMRC following the publication of the Future customs arrangements; A FUTURE PARTNERSHIP PAPER published by HM Government in late August 2017.

In that paper, broad options have been put forward in respect of our relationship with the EU going forward and the need for a transitionary period to allow business to properly implement whatever the new arrangement will be. The face to face discussions have also addressed the issue of contingency planning should we end up with both no deal and no transition agreement at the end of the Article 50 2 year period.

What is interesting to note from both the paper and discussions (and one would assume, will also be detailed in the coming Customs White paper) is the reliance on;

  • "negotiating mutual recognition of Authorised Economic Operators (AEOs), enabling faster clearance of AEOs' goods at the border"
  • "simplifications for business, such as self-assessment to allow traders to calculate their own customs duties and aggregate their customs declarations"
  • "making existing domestic simplified procedures easier for traders to access, in a way that is compatible with the UK's international obligations, in order to reduce the requirements traders need to comply with for their goods to be cleared at the border"

All of which continue the IOD's theme of implementing mitigation procedures now in advance of our exit and future relationship...whatever form that may take.
Over the coming days, weeks and months, we will be developing tools to assist in assessing the impact of Brexit and will release them - We will also continue to update information as and when we have it - here on our website. If you would like to contact us in the meantime about Brexit planning or other Customs issues please email us at info@customs.net

Article 50

And so it begins.... On the historic day that the UK invoked Article 50 of the European Union Treaty, the EU Commission published a very useful Q&A on Article 50 and the process to come. Article 50 Q&A

Key Extracts from the Article 50 Letter

The Prime Minister's letter to Donald Tusk not only triggers the process of leaving the EU, it also sets forward some general principals in terms of the UK's negotiating position - some key points are:

"As I have said before, that decision was no rejection of the values we share as fellow Europeans. Nor was it an attempt to do harm to the European Union or any of the remaining member states. On the contrary, the United Kingdom wants the European Union to succeed and prosper. Instead, the referendum was a vote to restore, as we see it, our national self-determination. We are leaving the European Union, but we are not leaving Europe - and we want to remain committed partners and allies to our friends across the continent"

"This letter sets out the approach of Her Majesty's Government to the discussions we will have about the United Kingdom's departure from the European Union and about the deep and special partnership we hope to enjoy - as your closest friend and neighbour - with the European Union once we leave. We believe that these objectives are in the interests not only of the United Kingdom but of the European Union and the wider world too"

"From the start and throughout the discussions, we will negotiate as one United Kingdom, taking due account of the specific interests of every nation and region of the UK as we do so"

"The United Kingdom wants to agree with the European Union a deep and special partnership that takes in both economic and security cooperation. To achieve this, we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU

If, however, we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organisation terms. In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened. In this kind of scenario, both the United Kingdom and the European Union would of course cope with the change, but it is not the outcome that either side should seek. We must therefore work hard to avoid that outcome"

"iv. We should work together to minimise disruption and give as much certainty as possible. Investors, businesses and citizens in both the UK and across the remaining 27 member states - and those from third countries around the world - want to be able to plan. In order to avoid any cliff-edge as we move from our current relationship to our future partnership, people and businesses in both the UK and the EU would benefit from implementation periods to adjust in a smooth and orderly way to new arrangements. It would help both sides to minimise unnecessary disruption if we agree this principle early in the process"

"v. In particular, we must pay attention to the UK's unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland. The Republic of Ireland is the only EU member state with a land border with the United Kingdom. We want to avoid a return to a hard border between our two countries, to be able to maintain the Common Travel Area between us, and to make sure that the UK's withdrawal from the EU does not harm the Republic of Ireland. We also have an important responsibility to make sure that nothing is done to jeopardise the peace process in Northern Ireland, and to continue to uphold the Belfast Agreement"

"As I have said, the Government of the United Kingdom wants to agree a deep and special partnership between the UK and the EU, taking in both economic and security cooperation. At a time when the growth of global trade is slowing and there are signs that protectionist instincts are on the rise in many parts of the world, Europe has a responsibility to stand up for free trade in the interest of all our citizens. Likewise, Europe's security is more fragile today than at any time since the end of the Cold War. Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake. The United Kingdom's objectives for our future partnership remain those set out in my Lancaster House speech of 17 January and the subsequent White Paper published on 2 February"

"The task before us is momentous but it should not be beyond us. After all, the institutions and the leaders of the European Union have succeeded in bringing together a continent blighted by war into a union of peaceful nations, and supported the transition of dictatorships to democracy. Together, I know we are capable of reaching an agreement about the UK's rights and obligations as a departing member state, while establishing a deep and special partnership that contributes towards the prosperity, security and global power of our continent"

The UK Government's Plan For Britain

In addition to the Article 50 letter, the UK Government's Plan For Britain site provides further insight - Plan for Britain

In Customs terms, the following section is important;

What is the single market and why are we leaving it?
The single market works by treating EU member states as a single economic area. It means businesses can trade goods across the EU without paying tariffs. The single market for services seeks to remove barriers to businesses wanting to trade across borders, or to establish a company in another country.

We have ruled out being a member of the single market, as the PM said in the Lancaster House speech. EU leaders have made clear their view that members of the single market must sign up to the 'four freedoms' that underpin it — including the free movement of people - and be subject to the jurisdiction of the European Court of Justice. We respect that position.

Instead, we want a bold and ambitious Free Trade Agreement with the EU. This will enable free-flowing trade in both goods and services, and ensure the freedom for UK companies to trade with and operate within European markets.

We also intend to leave the Common Commercial Policy and for the UK not to be bound by the EU's Common External Tariff so that we can pursue our own independent trade policy, securing trade deals with new partners.

The Prime Minister created the Department for International Trade for this purpose. We will agree a new customs arrangement with the EU to ensure that trade with the EU is as seamless and frictionless as possible, including between Northern Ireland and the Republic of Ireland.

The UK's Exit from and New Partnership with the EU

The Department For Exiting The EU has published a White Paper detailing some of the issues surrounding the UK's new relationship with the remaining 27 EU Member States post Brexit. White paper

Treasury Select Committee Warning

The Commons Treasury Select Committee has published correspondence between it's Chairman and Jim Harra - Director General of HMRC. The correspondence surrounds the seeming "collapse in confidence in the successful implementation of the Customs Declaration Service" - (CDS) the replacement to CHIEF. In addition, the Chairman, RT Hon Andrew Tyrie MP, has written to the Chief Executive of the Infrastructure and Projects Authority to request a Delivery Confidence Assessment of CDS to be delivered by 12th April 2017.

Comment can be found on our News Page

Details of the correspondence can be found via this link Treasury Select Committee

The Council of the EU issues Brexit negotiating Guidelines

One of the key points (skirting over the "Gibraltar Veto") is that the house has to be sold and split before we can talk about how we bring the children up! Link to Guidelines

To discuss any of these issues please contact us

UK Government Publishes its Vision for Future Customs Arrangements with the EU

- 16/08/2017 - News Page

2 New White Papers Published - 9 October 2017

The UK Government published two Brexit related white papers - one entitled "Customs Bill: legislating for the UK's future customs, VAT and excise regimes" and another called "Preparing for our future UK trade policy".

The Customs Bill document re-states and, in some areas, builds on the ideas put forward in the "Future customs arrangements - A FUTURE CUSTOMS PARTNERSHIP" paper to describe the legislation needed to support whatever model we adopt post leaving the EU.
Some of the key messages (and most of them are not new) are:

  • The UK wants to keep UK Customs (and Excise and VAT) law as consistent bas possible with the EU
  • Although a negotiated settlement is preferred, the UK must be prepared for a "Hard Brexit"
  • Legislation will enter Parliament in the autumn providing for most negotiated outcomes and a contingency scenario (the no-deal position)
  • We will leave the EU Customs Union
  • Current authorisations or statuses will continue under post Brexit UK Customs law
  • Delegated powers will be allowed for that provide the Government the ability to deliver certain aspects of the negotiated outcome outside of the need to operate within parliamentary timescales
  • A time-limited interim implementation period (in terms of a negotiated settlement) will be sought to allow for a smooth and orderly transition - with businesses and people only having to adjust to a new customs relationship once.

There are 3 broad options:
1. The "highly streamlined customs arrangement" option will seek to agree:

  • continued waiver of entry and exit summary declarations at the UK/EU border
  • The UK remains a member of the Common Transit Convention
  • Mutual recognition of AEO
  • Bilateral implementation of technology based solutions for Ro-Ro ports
  • To reduce the time and cost of customs compliance through the use of simplifications like Self-Assessment
  • Speedier authorisation processes
  • Easier access to existing simplified procedures

2. The "new customs partnership" option is accepted as being "innovative and untested and would take time to develop, implement and negotiate with the EU" and as such the Customs Bill cannot be drafted to provide for this model.

Northern Irish/|Irish trade may introduce some exemptions from control for micro/small and medium sized businesses making up circa 80% of north to south trade - for large companies a "trusted trader" (AEO?) process with access to simplified procedures and periodic reporting may be explored.

3. The "Contingency Scenario" will require;

  • A standalone customs regime from day one, including a tariff, classification process and duty
  • Current EU exclusive traders will need to be registered and be provided with an EORI
  • Ro-Ro movements will be required to be pre-notified so that declaration hold ups at the ports themselves can be minimised
  • Current processes for customs declarations within the air/maritime and rail modes will continue as now
  • The collection of tax on small parcels to change - the £15 VAT free limit would not be applied and new processes will be developed to collect taxes on parcels valued below £135.

Additionally, the White paper and specific engagement with HMRC and HM Treasury is making clear the vital importance that current processes such as AEO, simplified procedures and deferment processes such as customs warehousing or inward processing will have in a post Brexit landscape, either as they stand now or further refined.

The uncertainty of the negotiating process makes at least one thing clear; whichever of the 3 options comes to fruition, implementing robust procedures now will not be a waste of time or resource, and might even be a vital first step in advance of whatever tidal wave of applications HMRC will have to deal with.

This site uses cookies to help make your experience the best we can. You can find out more about the cookies we use by reading our cookie policy. Dismiss