Getting ready for Brexit.
If you are importing to, exporting from, or even just transiting across the UK you need to take steps to prepare. No matter what the outcome of the last-minute talks you will need to have new customs documentation. That is certain. Your goods simply will not be allowed to move if all the documentation is not in order. In the past bringing in goods from China, US etc we had plenty of time to resolve any queries as they could take weeks to arrive. Now with the UK and established short supply chains, especially in food, there will not be the same time to fix things if the paperwork is incorrect.
Even at this late stage it is not too late to do something about Brexit. If you are not prepared you can still act to get ready before the 31 December. Here are some things to think about and help you get ready.
- Get your EORI Number. That is the first step. You cannot continue to trade internationally without it.
- Do you know the commodity code for your product(s)? This is a 10-digit code for exports. 8 for imports. First 6 digits are always the same in every country worldwide. This is the code that describes your product on the revenue system an determines the duty you should pay. Almost half of non-compliant customs declarations are due to this. You can find details at https://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en
- If there is any confusion or doubt you can apply for a BTI. A BTI is the Binding Tariff Information and you need to apply to Revenue for this. Once you have this it lasts 3 years. The more information you can give them in the application the better so they can correctly classify your product.
- Review your supply chain. Where you are exposed?
- If you are bringing in components, raw materials, packaging etc from the UK see can you source products from somewhere else in the EU rather than the UK?
- Review your contracts with customers and suppliers in the UK? Are they fit for purpose? Do you even have them? Contracts provide clarity and clarity is something that is seriously lacking at the moment. But if the contracts were designed before Brexit there may be elements in them that will now hurt your business.
- Do you know how your hauliers get to the continent? Do they use the land-bridge across the UK? If they do have you checked that they all their paperwork in order and their drivers are trained?
- If you are using groupage (i.e., instead of a full truck you only have a few pallet spaces on the trailer and there are other customers of the haulier using the same trailer to move their stock) have you checked what steps has your haulier put in place to make sure all other customers on the same truck have their paperwork in place. All it takes is one to delay the whole shipment.
- There are talks of fast lanes for trucks travelling to and from Ireland across the UK land-bridge. This can work. For example, Switzerland has a transit agreement with the EU to allow products pass through their territory. The UK may or may not go for this option. Even if they do go for this the UK goods etc cannot avail of it. So, will their truckers be happy to allow Irish trucks pass freely along the road while they are sitting in a 20- or 30-mile tailback? They will not. You cannot rely on this in the first few weeks after Brexit so allow extra time in your transit plans.
- Related to that are your products secure for a longer journey. Will they survive a trip taking 2-3 days when in the past it took less than one? If they are high value items will they be safe sitting on a motorway queue overnight. If you are using trucks with branded trailers to show off what is in the truck do you need to change the siding on the trailer until things settle down?
- Assess the potential cost of duties. What impact on your business? If you are in a tight margin business, then the duties could wipe out your profit if you do not factor them in correctly when setting a price. If you are in a competitive market, then the extra cost of tariffs and charges could price you out of the market. That is after all the intention of tariffs and duty. They are there to protect indigenous businesses so if you are an outsider that means they are designed to help your indigenous competitors.
- Do you know how to calculate duty? It is not just on the value of the items. Transport costs and insurance are also factored in. You need to calculate the commercial value of the goods. AND you need to include the transport cost to getting them to the EU. AND you must include the cost of insurance. This is the CIF value and VAT, Duty etc is calculated against the CIF value. The cost of getting product to the UK can be complicated to calculate as it can even depend on when the flight crosses into EU airspace. Ask your courier/haulier should give you a breakdown of this. Make sure your contract with the haulier requires them to give you this.
- Even if there is a trade deal a customs declaration will still be required. For every shipment to, from or through the UK a customs declaration will be required. Do you know how to meet customs clearance requirements? There are over 50 boxes to be completed on a customs declaration. Someone on your team needs to understand customs documents and procedures. Ideally you must have an SOP Standard Operating Procedure for both importing and exporting that others can pick up and be trained in it also.
- The bad news is there are over 50 boxes to be completed on a customs declaration. The good news is often once you fill in the form 90%+ of the information remains the same with only the quantity and value changing. The best advice here is do one together as a team and be happy the 90% is complete and accurate. Then it is only the 10% you have to change every time.
- And even if you think you know how to do a customs declaration because you did it on the old AEP system in the past just to complicate life a little further a new system came into operation at the end of November. The Automated Import System AIS. Do you know how to use THAT system? https://www.revenue.ie/en/customs-traders-and-agents/customs-electronic-systems/ais/what-is-ais/index.aspx
- If you are not clear on what is required why not start off with a customs agent and then once you know what is required, you can see if it is worth spending the money getting set up to do it yourself. But remember you must understand it reasonably well even if you do use a customs agent. You must give them some information. The customs agent can only act on information you provide. If you are using a customs agent, make sure they are fully integrated with your business. Do they know who to contact? Do your staff know who to contact with them. And what happens if an issue arises out of normal working hours.
- So, who will manage your customs procedures in house? Are they identified and in place? Are they fully trained? There are lots of online customs training available now. Many are funded by the government. Free up your staff to do these courses.
- If you trade in agricultural products of animal origin, then additional veterinary checks and certs will be required and the time to clear customs will likely be longer.
- Do you have all your country-of-origin requirements clarified and certified? Where you are trading with a country that has a Free Trade Agreement and using the UK as a land bridge then you need the country of origin to prove it otherwise you will pay the full rate of duty. For example, if you buy a product from a UK supplier but they originally sourced it from Germany you need to the certificate of origin correct as being Germany. Otherwise you will in effect pay duty on the double as the duty from Germany to the UK will be built into the cost the UK supplier charges you and then you pay duty again on top of that.
- There are some duty savings procedures mainly for those involved in manufacturing. Are you taking advantage of these?
- Have you applied for all available grants and supports? For example, Enterprise Ireland has a €9000 Ready for customs grant. LEO and Intertrade Ireland also have schemes that can help. You are not alone in this. It just feels that way.
- Have you looked at the option of applying for Authorised Economic Operator status? This is mainly for larger companies. It is really a qualification like ISO etc, and it costs a lot of money to get it, so it needs to be worth the cost for your business.
- If you get selected for an audit, they could ask for this year plus the past 6 years of records for Customs, VAT etc. So, you need to keep 7 years of records. Do you have a system in place to keep these records?
- It is not just export and import. If your business is subject to compliance requirements, then there may be additional potential compliance costs. How much will it cost you to be compliant post-Brexit? How much will it cost you if you suddenly find out you are no longer compliant.