By Halo Financial Team
It looks like Brexit confusion is continuing right up until the 29th
March deadline – and maybe beyond, if recent discussions are anything to go by. As a result, businesses who trade with Europe are seeking advice and help with key business decisions, including importing and exporting, particularly in the event of a no-deal Brexit, which is likely to create fresh uncertainty.
Halo Financial has brought together 10 top tips from the UK government on exporting goods to and from the European Union in the event of a no-deal Brexit. We have also produced a similar guide covering importing tips.
David Johnson, Founding Director of Halo Financial, commented, “There is considerable mis-information flying around about what may or may not happen in the event of a no deal Brexit. Most is guesswork dressed as expert opinion and, such is the lack of clarity that the only option is to deal with the known knowns.”
“UK exporters need to rise above the panic and take sensible steps to protect their business’s profitability and longevity through suitable risk management strategies.”
Alison Horner, Indirect Tax Partner at Halo’s business advisory and accountancy partners, MHA MacIntyre Hudson
, has been working hard to bust the many myths surrounding this situation. In her recent opinion piece in City AM
, Alison pointed out:
“Getting the technical details of international trade right is going to be essential for many companies to make the best of the situation. Confidence is low, in part because there are a number of myths circulating around the barriers to trade a no-deal Brexit will create. Some of these can fortunately be quickly dispelled.”
“Careful preparation and a thorough understanding of the technicalities of international trade will make a major difference to the ability of businesses to cope with the shock of a no-deal Brexit.”
Top tips for UK business exporting goods to the European Union in the event of a no-deal Brexit
- Apply for a UK Economic Operator Registration and Identification number
Businesses who want to trade with the European Union must apply for a UK Economic Operator Registration and Identification (EORI) number. Some may also need to obtain a European EORI number. The EORI number is an identifier in all customs procedures and is mandatory for exporters and importers. It must be quoted in an Entry Summary Declaration or Exit Summary Declaration. It also should be used when contacting Her Majesty’s Revenue and Customs (HMRC) about issues over customs. The application form
differs, depending on your business circumstances, including whether you are registered for VAT.
The form should take around 10 minutes to complete and the EORI number usually arrives within three working days by email. However, if you are a trader in Northern Ireland and only export or import goods with the Republic of Ireland across the Northern Ireland–Ireland land border, you do not need an EORI number.
- Do you need an Export licence?
You may require a licence to export restricted goods outside the UK. Alternatively, you may have to follow special rules. This will be determined by the nature of the goods, their destination, their end use and the licensing rules of trade activities. Goods that are restricted include agricultural and military goods. Here are details about military and dual-use goods
. This is a comprehensive list of prohibited and restricted goods
- Know the origin of your goods
You will need to know the origin of your goods to discover if they are exempt from customs duty under international tariff preference agreements
. There are two major categories - those goods obtained or produced in one country and those made in more than one country. The second category is more complex. Here is the full guidance on the origin of imported and exported goods
- Do your research
It is important to conduct some background research on the destination(s) you wish to export to. This information, combined with the commodity code of the goods, will help you to determine if the goods will occur import duty in the destination country. Commodity codes are standard classification codes for products and services that show where money is spent within a company. They identify goods and services for export and import in international commerce. Businesses are legally responsible for the correct tariff classification of goods. All exports and imports (including goods sent to the UK from abroad) must be declared to Her Majesty’s Revenue and Customs (HMRC) using a commodity code. The codes are used in declarations to check you are paying the correct duty and to discover whether you need an import/export licence.
Click this link for product classification guides
. Commodity codes can be found in Trade Tariff
lists, along with duty and VAT rates. Here is more guidance on some goods that can be difficult to classify
. You can also email HMRC for advice at firstname.lastname@example.org
Customs procedure codes
Customs procedure codes (CPCs) identify the reason for importation and exportation of goods using a seven-digit code. The CPC is based on a 2-digit community code which identifies a customs procedure, such as removal from warehouse, entry to free zone, and export under Outward Processing Relief. Here is more information
about customs procedure codes, with examples.
5. Get to grips with the National Export System
The National Export System (NES) is a computer system which allows exporters to electronically declare to customs their intention to export goods to third countries. It is operated through the Customs Handling of Import and Export Freight (CHIEF) computer system, which controls the movement of international cargo. There are three direct routes, known as WEX channels: these are via web, email and XML. To use the HMRC WEX system, fill in the application form, PA7
to apply for a CHIEF badge so you can use either of the routes. Find out more about the NES procedures
. You can also get the help of a third party. There are more details about this under the Professional Help heading later on.
6. Commercial invoices
The agent/courier/freight forward will ask you to complete a commercial invoice. This will contain the value of your goods – the price you are selling them for. The price of any freight costs or export insurance (which you may or may not have included in the selling price) will also need to be listed separately. It is important that the information provided on the commercial invoice is accurate, as this invoice will be used by your freight forwarder/agent to make an official customs declaration. You can see a full list
of what is required in an export invoice. You can also find out what data is required when making Full and Simplified Export Declarations in Section 19 of Notice 275
For commercial items you must attach the commercial invoice (and licence, if you need one) to your consignment. The relevant documents must accompany the goods to the port of exit. For more details, see Notice 275: Customs Export Procedures
7. ‘Present’ the goods to customs
Notification of the arrival of goods at the required location for customs control is called ‘presentation of the goods to customs’. CHIEF will examine the ‘arrival message’ and determine whether the goods have permission-to-progress (P2P) or need to go a different route. When the goods should be presented to customs depends on their method of transport. Information on minimum time limits can be found in section 4.4
. An authorised CHIEF ‘loader’ will need to send a notification of arrival on CHIEF. This lets HMRC know that the goods are at a required location for customs control (normally a port). For detailed information on this process, see chapter 4 of Notice 275
8. Finalise the export entry on CHIEF
Once the means of transport upon which the goods were loaded has left the UK, a departure message must be submitted to CHIEF. This can also only be carried out by the CHIEF ‘loader’. If after P2P is given, the goods are not exported, the declarant (usually via the loader) must advise customs of the change in circumstances. For more information on how to finalise an export, see Notice 275
9. Keep records
You are required to keep records for all traded goods you declare to HMRC for up to six years. This is for duty and tax purposes and for government statistics. Here are some tips about archiving your paperwork
10. Investigate Professional help
It is possible to make your own customs declarations, but the process is complicated and only suitable for more experienced exporters. Most businesses use a customs broker or agent to do this for them.
You will need to arrange transport yourself. Third parties that can help with the customs process and the movement of the goods include Freight Forwarders, Express Couriers and Customs Agent.
Freight forwarders move goods around the world on behalf of important and exporters and handle customs clearance. More details can be obtained from the British International Freight Association
. Express couriers or Fast Parcel Operators
(FPA) may also do the same. Customs agents and brokers can also ensure goods can be cleared through customs on route to delivery in the UK. A customs agent/broker can either act as a direct representative or indirect representative
. If you use a third party, you must outline whether the third party is empowered to act as a direct or indirect representative in writing. Please note that export declarations are pre-lodged to HMRC. The Export Accompanying Document (EAD) issued by HMRC declarations system needs to accompany the goods to the port where the goods are being presented to customs.
These tips are based on existing guidance that already applies to trade by UK businesses outside the EU. For more details about exporting outside the European Union, see Starting to export outside of the EU
If you’re exporting and concerned about Brexit, talk to us
and see how we can help.