Preparing for Brexit
As the Brexit Negotiations restarted on Thursday 9th November, there is increasing pressure to have agreement on a transition period concluded.
This is necessary for many reasons, in particular:
- Business will need a year to make preparations and introduce new Customs procedures.
- The Authorities need a significant increase in the number of customs officials in the UK, Ireland and the EU. These are unlikely to be recruited and trained in time for March 2019.
- The IT systems need significant investment to cope with the potential ten-fold increase in the number of declarations required.
- The fact that there is still no concrete solution to the Northern Irish Border and how this will be managed.
This leaves companies unclear as to whether to prepare for a worst case scenario of a Hard Brexit in March 2019 or whether to adapt a 'wait and see' approach. The downside to the latter, however, is that as the months go by, it leaves less and less time for the necessary work to be completed.
Also, the facts are that when we deconstruct the meaning of Hard versus Soft Brexit what this really boils down to is whether there will be customs duties applied. The customs compliance requirements remain mostly the same however in both scenarios.
While there are uncertainties around this whole procedure there is in fact a lot more known than unknown. It is certainly still unclear whether a Trade Agreement leading to reduced/zero tariffs will be agreed. It is to be hoped an agreement will be reached, but a start on this will only be made this December at the earliest.
Less unclear however is that there will be requirements for Import and Export Declarations to be lodged with the Customs Authorities once the UK is a Third Country for Customs Purposes. This is the case with all imports and exports from non-EU countries and there is very little reason to believe that any different situation will apply to the UK. Indeed Pascal Lamy, the former EU Trade Commissioner and former head of the WTO re-iterated this last week when he said that ‘There is no ‘no-border’ solution.’
If we look at what is being suggested by the UK, the most recent thinking is outlined in the Governments White paper on Customs published in October 2017.
In summary the White Paper confirms that:
- It is necessary, in the interests of being prudent, to provide for the implementation of a Customs, VAT and Excise regime for goods moving between the UK and EU.
- Traders who trade only with the EU will now be subject to customs declarations and checks for the first time.
- EU Movements by sea and air will be dealt with broadly in the same way as they are dealt with currently for non-EU movements.
- For roll-on-roll-off traffic, pre-notifications to customs may be introduced with customs posts set back from the ports.
- Trusted Trader status will be critical to enable simplifications in managing customs, cost-savings in lodging declarations and avoiding delays - in particular at the Northern Ireland Border.
Trusted Traders may obtain simplified options in terms of lodging customs declarations, i.e the monthly reporting as we have discussed. In addition, for cross border trade the Trusted Trader arrangement would allow for aggregated returns and periodic duty payments. This outline is therefore quite clear in stating that trade with the EU will be subject to customs requirements.
Preparing for a Hard Brexit
What should a company do therefore at this point to prepare for a Hard Brexit while still hoping for a soft Brexit?
We are strongly advising the following steps are undertaken:
- Review your supply chain and map out imports and exports to and from the UK.
- Assess the impact of tariffs on a worst case and best case scenario.
- Identify the level of customs awareness within the Company.
- Assess the potential increase in the costs of customs compliance.
- Look at applying for Trusted Trader Status.
Indeed both the UK and Irish Authorities have identified the Trusted Trader Status as a means for reducing burdens for companies and a prudent company would be well advised to start preparations for this authorisation as soon as possible.
The time-line between starting an application process and receiving an authorisation is on average one year, which means that, even allowing for a start date of January 2018, it would be unlikely that authorisation would be achieved before January 2019. If Brexit occurs in March 2019 this leaves limited time for slippage.
At present, as the UK is part of the EU, there is no need for Irish companies to have an ATA Carnet to accompany goods for temporary export into the UK. Once the UK becomes a third country then this requirement will change. If your company brings professional equipment, commercial samples or goods for international trade fairs or exhibitions to the UK on a temporary basis then you will need to apply for an ATA Carnet. Dublin Chamber is the national guaranteeing association for ATA Carnets in Ireland and will be able to assist with any ATA Carnet requirements you may have.
For more information, please contact: