The looming uncertainty of a possible ‘No Deal’ Brexit agreement has left UK businesses in a challenging position in formulating a robust contingency plan.
Trying to plan and pre-empt the future of UK and EU relations is proving extremely difficult. However, there are signs that both parties have expressed a desire to keep the impact of Brexit to a minimum, in order to support continued business and trade.
With this in mind, foundations are being built to put in place agreements on tariff and non-tariff barriers. After all, it is not just trade between the UK and EU that will be affected but also local customs procedures on both sides of the channel
A robust and workable contingency plan must include special consideration for the following 3 factors.
- AEO Certification
- Customs processes, procedures and legislation
- Impact and implication to supply chain and distribution network
Here is NNR guide to all 3:
One of the options highlighted by the UK government to help reduce the risk of delays at the post-Brexit border is the Authorised Economic Operator (AEO) certification, an ‘internationally recognised quality mark indicating that your role in the international supply chain is secure, and that your customs controls and procedures are efficient and compliant.’
The scheme is available to any company involved in the international supply chain which carries out customs related activities in the EU including manufacturers, exporters and importers. The benefits include simplified customs procedures and the possibility of fast-tracking shipments in some cases.
Trade is a two-way street and a streamlined customs administration implies that customs barriers on both sides of the borders need to be aligned. The UK as a member of the EU customs union adopted the principles of the AEO programme in 2008 but many traders failed to see the benefits in applying and so the UK saw less traders apply than reported by the other EU member states, while the AEO certification still remains a “voluntary” programme the UCC (Union Customs Code) now links all simplifications and facilitations to certification, a trader should strongly consider becoming AEO certified if they are looking to or wish to partake in any simplification or facilitation to allow their goods to move across borders efficiently.
Customs processes, procedures and legislation
Since the early nineties, when current customs regime came into force and the free movement of goods across the EU was put in place, many traders both in the EU and UK never needed customs knowledge within their operations. they are now faced with a situation where their movement of goods between the UK and EU will become subject to customs control. Traders do have the option to appoint a customs representative to assist them with Customs compliance but it is the trader who is ultimately responsible for compliance with customs law and legislation. Noncompliance with customs law and legislation can have serious financial consequences for the traders who do not take customs and trade compliance seriously.
Traders will need to be able to understand on the rules surrounding the customs tariff, the rules are in place to ensure correct classification of goods, origin status and Customs valuation allowing duty and VAT calculation. If the trader can put in place processes to ensure compliance and also have a good understanding of the customs procedures for the movement of goods under customs control both in and out of ports and airports of the UK it will lead to more consistent transit times and avoid any unnecessary delays at the border points.
Impact and implication to supply chain and distribution network
The fiscal effects on the goods not only include the VAT element – but also needing to be considered are the rates of duty and any preferential rates of duty that could be applied based on the country of origin of the goods or the potential economic need for the goods and or any manufacturing process and potential re-export. All of these need to be considered alongside rules administered by other government departments and should be understood and followed. With all shipments under Customs control, there is always the element that any Customs activity at the border the goods could result in delays in the movement of the goods.
The NNR team are constantly working with their customers to make sure they are up to date with the potential changes, whilst offering support and advice on the potential impact. The NNR UK team have various solutions that may help when Brexit becomes reality in March 2019; the solutions may change as things become clearer but until then we continue to plan for the unknown.