By Halo Financial Team
With just about a month to go until Britain leaves the European Union, businesses are crying out for practical tips on how to navigate a no-deal Brexit.
With little clear information available and time rapidly running out, companies need clarification and advice on vital issues, including imports and exports, if no deal is agreed with the EU by Friday 29th
Halo Financial has brought together 10 top tips from the UK government on importing goods to and from the European Union in the event of a no-deal Brexit. We’ve also compiled a similar guide for exporters
If Britain leaves the European Union without a deal, UK businesses will need to apply customs, excise and VAT procedures to goods traded with the EU, in the same way as to goods traded outside Europe. Trading partners in the EU will also have to apply customs, excise and VAT procedures to goods received from the UK.
Here are the top tips on importing goods to and from the EU in a no-deal Brexit:
1. Get 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 importers and exporters. It must be quoted in an Entry Summary Declaration or Exit Summary Declaration. It also should be used when contacting HMRC about 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 import or export goods with the Republic of Ireland across the Northern Ireland–Ireland land border, you do not need an EORI number.
2. Understand commodity codes
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 import and export in international commerce. Businesses are legally responsible for the correct tariff classification of goods. All imports or exports (including goods sent to the UK from abroad) must be declared to HM Revenue & Customs (HMRC) using a commodity code. The codes are used in declarations, in checking you are paying the correct duty and knowing 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 email@example.com
3. Know the value of your goods
The value of the goods is necessary to determine the level of customs duty applicable. You can calculate the value of the goods by using one of six methods. Businesses are advised to start at Method 1 – based on transaction value – and to move on to the Method 2 if it does not apply and so on. Transaction value is the price paid or payable by the buyer to the seller for the goods when sold for export to the UK in accordance with specific rules. Find a full list and explanation of the valuation methods here
4. Are your goods prohibited or restricted?
Some goods are restricted and businesses need a special licence to bring them into the UK. For instance, licences are needed for the import and export of military and para-military goods, dual-use and technology, artworks, plants and animals, medicines and chemicals. Here is a list of banned and restricted goods
. For more guidance on import and export licences, click here
5. Know and state 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
6. Investigate special customs procedures and duty relief
There are several special customs procedures available to qualifying businesses, which can carry duty relief. These include:
To use special procedures you must get prior authorisation from HMRC. There is more information about special procedures in Notice 3001
7. Get to grips with 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.
8. Declare imports to customs
Businesses can make their own customs declarations by using a Single Administrative Document (SAD), form C88
for the importation and exportation of goods. This can be done electronically. Here is some guidance
on what to do. You can also employ a broker or agent to make the declarations on your behalf. You could use a freight forwarder, who 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.
9. Pay import duty and VAT
You may need to pay import duty and VAT depending on the classification of the goods and where they come from. These are set out in the UK’s no deal customs tariff schedule. At time of writing, this is yet to be published. The government says it will follow “as soon as possible”. Some goods benefit from a duty suspensions
. Goods may also be liable to additional duties, including anti-dumping duties.
Goods aren’t normally released by HMRC until all the charges due are paid. Exceptions to this include if the importer of the goods takes advantage of duty deferment. The application process for duty deferment is currently being updated. Here are more details about import duty
An announcement setting out when to apply is due “shortly”, says the government. There will be changes to how VAT-registered businesses account for import VAT. In a VAT for businesses technical note, the government has announced that in a ‘no deal’ scenario it will introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. This will apply both to imports from the EU and non-EU countries.
10. 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
There are also a few other things for importers. to consider. The first is excise duty. This is chargeable on some goods on to of customs duty. Here is a list of goods
liable for excise duty.
Becoming an Authorised Economic Operator
Authorised Economic Operator (AEO) status is an internationally-recognised quality mark indicating your role in the international supply chain is secure and your customs controls and procedures are efficient and compliant. However, only businesses that are heavily involved in importing and exporting are likely to benefit.
Most businesses will find that the straightforward registration for Transitional Simplified Procedures
is their best option for preparing for no deal. Businesses can apply for AEO status for customs simplification (AEOC), AEO status for security and safety (AEOS) or both. If you hold AEO status you can obtain certain benefits. These include:
- a lower risk score which will be incorporated into customs’ risk management systems and be used to determine the frequency of customs physical and documentary checks
- consignments may be fast tracked through customs controls. Holding an AEO security and safety authorisation does not mean that your consignments will not be subject to examination for prohibited or restricted goods or on behalf of other government agencies. However if it is selected for examination it will receive priority over non AEOs
- recognised status across the EU
- an industry ‘kite mark’ and useful marketing tool
- potential for reciprocal arrangements and mutual recognition with countries outside the EU, for example, USA or trading partners that have adopted the WCO Safe framework.
For more information on the application process, benefits, and more, see Notice 117
You won’t be able to achieve Authorised Economic Operator status before 29th
March 2019, so you may wish to consider this at a later point.
Read Halo Financial’s guide to the UK government’s export tips