The impact on business is tied to the type of customs arrangement which is negotiated and ratified with the EU 27 and any subsequent application to join the World Trade Organisation (WTO).
The recently amended Facilitated Customs Arrangement (FCA), announced by the UK Government following the Prime Minister’s plans for a ‘Customs Partnership’ which were effectively vetoed by Brussels and some of her ministers, puts more sharply into focus some suggestions of what firms may want to consider ahead of any bold long-term strategic decisions to relocate their business activities or increase their presence in other jurisdictions:
- Make sure any goods that the firm supplies to or sources from the EU or other RoW countries continue to meet the EU customs legislation and standards. Ensure you can prove the origin of the goods being exported; a Binding Origin Information certificate will set this beyond doubt in the EU. This could be coupled with a fresh review of supply chains, their integrity, security and suitability. Additionally, obtaining a Binding Tariff Information classification ruling to prove the correct and accurate classification of goods being exported to the EU may prove useful with other fiscal authorities around the world. Getting the customs valuation of your goods correct is also important to prove goods are correctly valued, in case customs duty must be levied upon the value, and to ensure you are not paying more than necessary in duties. All these binding rulings will, in the short to medium term, demonstrate that both the UK and EU have accepted the origin, tariff classification and customs valuation methods used for particular goods.
- Ensure your shipping and freight agent, as well as your internal logistical staff, are ready and experienced in preparing and submitting import and export documentation. Build a line of communication with HMRC and make sure your IT systems and record keeping are suitably robust to deal with the potential extra documentary requirements and statutory customs expectations of HMRC. A number of reputable in-house training companies will give HMRC recognised accreditation in various aspects of customs legislation and procedures.
- Consider seeking authorisation and the use of the existing relevant UK/EU and WTO customs regimes to their full potential, including customs warehousing, Inward Processing, Outward Processing, Duty Deferment Accounts and Authorised Economic Operator (AEO) status. These may prove useful in building and demonstrating customs compliance with UK and EU fiscal authorities and possibly assist in quicker movements depending on any ‘local’ customs agreements. The AEO status of an entity, such as a freight forwarder, cannot be conferred onto another entity, so achieving AEO status individually is important.
- Revisit contracts and ascertain if these can be renegotiated. For example, to give more favourable shipping terms (INCOTERMS) thus determining which entity, the supplier or purchaser, bears the larger risk during the movement of the goods internationally.
- Consider increasing the company’s monetary ability to pay customs duty and import VAT at the time of entry to avoid unnecessary delays. A company may also decide to hold a larger amount of non-perishable stock to compensate for any delays at customs controls, so orders can be fulfilled on time and in line with contractual obligations.
As negotiations continue and the date of exit looms closer, the UK may unilaterally be able to suspend the needs for customs checks on importations.
This is not something which would not be available to EU member states. Nevertheless, this suspension of customs controls would only realistically be likely if the UK importer was already authorised under a customs regime, such as AEO, or have existing EU approved rulings in place demonstrating binding origin, tariff or customs valuation rulings. All of these may result in HMRC viewing those specific movements from that importer or exporter as of low risk.
More importantly, many of these rulings are cost-effective to obtain and would be useful items to have in any trader’s customs armoury.
For more information please contact Simon Sutcliffe.