Whilst the UK left the EU in January 2020, the deal has finally been agreed and came into place this year. The deal is the largest Trade deal ever signed by the EU – and hopefully we can all move forward together as trading partners and friends.

Of course, Brexit will have an impact on how we operate as importers (and exporters) and we wanted to look at things from the perspective of our clients who import goods into the UK from the EU. It all seems a bit complicated, doesn’t it? Hopefully this blog from WeDo Trade Finance MD, Vince, will help to alleviate some of the stresses.

Tariffs

In future there will be no tariffs or quotas for goods that qualify under the “Rules of Origin”.

The Rules of Origin need to be carefully examined and understood as this could see you benefit from preferential or zero tariffs – otherwise you will find yourself operating under the standard tariff system.

You may need to carry out a Supply Chain check to ensure the goods you are purchasing meet the criteria regarding % threshold of content according to the Trade & Cooperation Agreement (TCA) – which can be found online. As an example, 50% of parts and accessories for anything relating to toys, games and sports must be from within the EU.

The TCA sets out a full list of products and HS Codes so you can identify the goods correctly and then understand what the rules of origin criteria are that apply in your case. You will then have to prove to Customs that this is the case and therefore will need to ensure any relevant paperwork is available to prove this.

With regards to product and regulatory compliance, the UK has largely retained EU standards and have made a commitment to align as best we can with any changes to be brought in over a phased period.

The UK and EU have separate regimes regarding human, plant and animal health (i.e. phytosanitary standards) and these type of goods will likely be subject to stricter border controls – which may, in turn, potentially add some costs (along with any costs involved in obtaining the relevant Health Certificates to prove the goods meet the required standards).

Customs Declarations

As we move forward, there will be a need for Customs declarations between the UK and EU although we have agreed simplified forms that will help to minimise both costs and time incurred.

There will be a staged introduction for EU Imports over a 6 month period up until the end of June.

One other acronym to be aware of is EIDR (Entry In Declarants Records) which is part of this declaration procedure. The value of the goods will be deemed to be open market value rather than the value of the import.

As part of this process, you will need to check your customs procedure code, have a unique consignment reference (this could be your invoice number or job number), record of date and time of entry into UK – creating the initial tax point, a written description of the goods along with the appropriate commodity code, the customs value and also the exact quantity of goods.

Also, if the goods are going to be Warehoused, you may also need the warehouse approval number and the details of any licensing requirement and supporting documents confirming serial numbers or suchlike.

So, unless you have a VAT deferment in place there will undoubtedly be additional admin and paperwork involved and customs declarations are now a requirement for both import and export business transacted with the EU despite the fact we have agreed a trade deal.

EORI Numbers

You will also need to have an Economic Operators Registration and Identification number (EORI) number to do this. EORI is an identification and registration number for businesses importing and exporting goods between the UK and EU – it is issued by HMRC and starts with the prefix GB.

Who has / needs EORI registrations?

• If an importer is already dealing across world outside of the EU they will already have and be familiar with their EORI
• In addition HMRC have issued EORI numbers to all VAT registered businesses
• So, this will likely only be an issue for non VAT registered businesses not already operating outside of EU

Although companies can complete most of the requirements themselves it can be complex and depending on the nature of the trade they are involved with, especially with regards to imports, they may wish to use an Agent to take care of this – as many SME businesses decide to do.

The option to postpone VAT upon arrival of goods into the UK and account for this within the usual VAT returns process may be an attractive option to SME importers and help to ease the burden when clearing goods into the UK form the EU. It is well worth the importers discussing this with their accountant, Shipping Agent and / or HMRC. The potential to implement this applies to imports from anywhere – not just from the EU.

In addition, it is worth an importer exploring the Duty Deferment & Guarantee Waiver Scheme. A Waiver from Customs / HMRC can be automatically approved at £10K per month for a Duty Deferment account – and can also potentially be obtained for a higher limit upon direct application to HMRC.

Checklist

A few things an Importer should ask themselves: –

• What is my EORI number? Make sure you have an EORI number and engage with customs if you need one issuing.
• How do I set up postponed VAT accounting?
• Have I applied for a Duty Deferment and Guarantee Waiver?
• What are the Commodity Codes for the goods we are buying?
• What Rules of Origin will I need to comply with and can I demonstrate this to Customs?
• What is the Customs valuation for the goods being imported?
• How many Customs Declarations will I be making a year and do I need assistance from an Agent?
• What are my responsibilities and what records do I need to keep?
• On what terms do we trade with our Suppliers and do these need to be reviewed?

In summary, there is a lot of guidance available and numerous links on the Government and HMRC websites.

Within this information is the Border Operating Model Document which effectively states the rules on import and export and contains links to lots of process maps that also covers a number of niche areas.
If in doubt, contact Gov.UK or HMRC where there should be plenty of guidance available and, above all, make sure that if you are importing or exporting goods that you keep good records that will stand up to scrutiny.

Vince Tovey

Vince Tovey is the Managing Director of WeDo Trade Finance. He has over 30 years experience in Trade Finance and helping SME businesses to navigate their way through some challenging financial times and help them to develop and grow.