Another Step Further Forward

It is highly probable that customs declarations will be required for goods moving between the UK and EU from 1st January 2021

The 9th January saw the UK House of Commons give its final approval to the EU Withdrawal Agreement Bill.

The bill now goes to the UK House of Lords for further review before being given Royal Assent and entering UK law around the 23rd January 2020.

The European Parliament is also expected to approve the Withdrawal Agreement on the 29th January in time for the UK to formally leave the EU at 11pm GMT / Midnight CET on the 31st January.

Although this means that from that time the UK can no longer take part in the EU decision making process, appoint members to any EU institutions or represent the EU internationally for most people and traders little will change as the UK and EU will be in an implementation or transitional period to 31st December 2020.

This implementation period is intended to give the UK and EU time to negotiate the future trading arrangement as well as prepare both for the end of the transitional period.

The Withdrawal Agreement includes provisions for what should happen at the end of the implementation period should there be no replacement provisions which supersede them, including goods in movement at the end of the implementation period and with respect to Northern Ireland.

Whilst the Withdrawal Agreement does allow for an extension if required, the UK Government has ruled this out. Therefore the trade negotiations, which are due to start in March, are likely to focus on the key priorities for the UK and EU.

Unfortunately, some uncertainty will continue until details about the customs arrangements and Norther Ireland are clarified during 2020.

However, regardless of an any potential agreement on tariffs or if the UK unilaterally decides to introduce a largely free trade tariff or even if there are any unilateral stop-gap measures that can be taken to allow for negotiations to continue after 2020, it is highly probable that customs declarations will be required for goods moving between the UK and the EU from 1st January 2021.

It is also possible that there may need to be some form of declaration or reporting between the UK and Northern Ireland.

Businesses therefore need to start planning now for how they will manage these new customs processes and engaging with their chosen providers.

  • January 9th -21st EU Withdrawal Agreement Bill debated in House of Lords before returning to the UK House of Commons
  • January 21st - 23rd EU Withdrawal Agreement Bill receives Royal Assent
  • January 29th EU Parliament Expected to ratify Withdrawal Agreement
  • January 31st UK Officially Leaves the European Union 11pm GMT
  • February 1st Implementation period Starts
  • February 25th The 27 EU Member States hope to sign off on its negotiating Mandate
  • March – June Initial Round of Negotiations
  • June 30th Last date by which the Implementation period can be extended
  • November 26th Date by which Trade Agreement must be in place in time to be ratified by the EU before 31st December.
  • December 31st End of Implementation Period 11pm GMT
  • January 1st 2021 New Trading Arrangement between the UK and the EU – FTA or WTO ?

Impact on UK Customs Systems

As well being able to cope with the huge volume of additional declarations likely to be generated as a result of the UK leaving the EU, if under the Withdrawal Agreement Northern Ireland has to abide by the EU Union Customs Code then it is also likely that the UK Customs System in whole or at least in part with respect to Northern Ireland will also need to remain aligned.

Currently the UK is moving from the legacy HMRC system called CHIEF to the new Customs Declarations Service (CDS) platform. Part of the need to implement CDS was so that it would be UCC Compliant.

Descartes is one of a few companies operational with CDS and whilst the scope of CDS is limited at present to a few targeted pilot declarants performing import supplementary declarations, it is expected that the number will increase significantly during the middle of 2020 as HMRC look to phase out CHIEF* and should Transitional Simplified Procedures remain an option post 1st January 2021 then CDS would provide the basis for such a scheme especially for new traders making customs declarations for the first time.

Whether companies are already experienced in completing declarations or are thinking of taking the process inhouse post Brexit, now is the time to start investigating CDS and what it means for your company.

For more information on CDS see, www.descartes.com/solutions/customs-and-regulatory-compliance/customs-declarations or email info@descartes.com.

 

Written by Martin Meacock

Director, Product Management