Brexit countdown
We have seen the hopes of a Brexit deal rise and fall over the weekend of 12 – 13th October. With the latest proposals Ireland remains within the customs territory of the UK, but also apply EU Customs rules and the suggestion of a proposal to track goods entering Northern Ireland to determine whether they ended up in the Republic. Not too dissimilar to the original plan presented by Theresa May, but then applying to imports into the UK.
The difficulty with the tracking of goods idea is not only the burden it would place on business in maintaining an audit trail beyond the moving of goods, but the risk in those with an entrepreneurial spirit abusing it. For example, a company importing Chinese televisions into the UK post Brexit will be able to import them duty free (see Temporary Tariff Arrangements here and here). Great news potentially for UK consumers. Now, if that company moves their goods to stores in Northern Ireland, at that point they do not know where they will be ultimately sold to the final consumer, but to be safe they make sure they apply UK and EU standards, but what about any EU Customs duty? What if they sell the goods to a consumer or business in the Republic of Ireland, previously distance selling rules would normally apply to cover the VAT, but now the EU would be looking at a difference of 14% duty and an additional 3% VAT. OK an audit check could be made to police any voluntary system, but what about a consumer walking into the store and buying one or more televisions, will all goods have to be sold based on proof of residence? Now it is true that the difference in VAT and Excise already promotes some cross border consumer practices, but this can only be a heightened risk in the case of customs duties which could negatively impact the Republic of Ireland retail industry (note that this is the same impact that stopped e-Commerce in low value parcels from the Channel Islands a few years ago and is driving the proposed changes under Brexit for the UK and in many other countries now and across the EU by 2021.
What further concessions will both sides be prepared to make? It is difficult, short of Northern Ireland remaining (at least in some way) in the EU Customs (and maybe also the VAT) territory, as to what can be done to avoid a hard border on the island of Ireland will need to be seen.
Considering the complexities involved there is no surprise that there is some doubt about an agreement by the end of this week to present to Parliament or even by the end of this month.
It is no surprise therefore that we still see a great deal of information coming from HMRC regarding no Deal arrangements.
Northern Ireland - UK Land Bridge:
The use of Great Britain as a land bridge between EU and Ireland will likely lead to an increase in the use of Transit and the need to present the goods at an Office of Transit which is used to declare that goods have moved into a new customs territory (i.e. on entry into the UK or EU).
Should traders want to use NCTS to move goods into Northern Ireland from Ireland by sea, you will be able to complete an Office of Transit check when you enter Northern Ireland at Belfast Port. However, there are no UK Offices of Transit at the Irish land border (ILB) and goods moving under Transit across the ILB should be able to continue to their final UK destination or next EU office of Transit without stopping.
Customs have also clarified that for controlled goods it is possible to use Transitional Simplified Procedures when entering the UK and that controlled goods includes all controlled goods not just Excise (see full list here). It will also be possible to declare goods into transit or special procedures if a user wishes.
New Additional Information Statements have been announced in respect of controlled goods requiring UK Customs declarations.
NI AI statements
As mentioned in our last blog, some new AI statements have now been released:
| NIROI | NIROI AI statement | For use on both imports/exports to identify an Import/Export from/to Ireland via Northern Ireland |
| NISTA | AI statement to record a starting address (up to 70 characters) |
For use on both imports/exports to record a starting address for ‘NIROI’ declarations, mandatory for ILB |
| NIDES | AI Statement to record a destination address (up to 70 characters) |
For use on both imports/exports to record a destination address for ‘NIROI’ declarations, mandatory for ILB |
| NIVRN | AI Statement to record a Vehicle Registration Number / Trailer Registration Number (up to 70 characters) |
For use on exports to record a VRN/TRN for ‘NIROI’ declarations, mandatory for ILB |
Transitional Simplified Procedures
New customs procedure codes have been announced for controlled goods requiring a Simplified Customs Declaration.
- CPC 05 20 040 –TSP controlled goods other than excise goods or controlled drugs (as specified within guidance available on GOV.UK) imported to free circulation
- CPC 05 30 040 – TSP controlled drugs imported to free circulation
- CPC 05 40 040 – TSP excise goods imported to free circulation, on payment of excise duty (via the supplementary declaration)
- CPC 05 42 071– TSP excise goods imported to free circulation and excise duty suspension in excise warehousing
It should be noted that the codes will be available to use in CHIEF Live until after 11pm on the 31st October 2019 and so cannot be used for pre-lodging Simplified Frontier Declarations until after that time.
HMRC have also clarified that for goods moving under Transit the same principle applies as for goods arriving by RoRo in that for controlled goods you do not have to submit the simplified frontier declaration before the goods enter the UK, but that you must submit it before the goods leave the office of destination or authorised consignee.
For assitance with customs and regulation software visit our Descartes Brexit Page.
Merchandise in Baggage (MIB)
Post Brexit an exporter declaring MIB will use the CHIEF export ‘full’ declaration and will need to include an Additional Information (AI) statement ‘MIB01’ identifying a MIB export.
When MIB01 is detected the trader MUST declare the full declaration as ‘arrived’ indicating the goods are on hand (Box 1 must be declared as ‘EXA’ rather than ‘EXD’ as at present). On amendment CHIEF will prohibit the removal of “MIB01”.
Safety & Security Declarations
HMRC have confirmed that Entry Summary Declarations do not need to be submitted for goods being imported from the EU into the UK until 1 November 2020.
HMRC have already a planned system upgrade resulting in the service being unavailable from 5pm to 11pm on Thursday 31 October.
However, for goods going into the EU the indications are currently that an Entry Summary Declarations will be required. Whilst this can be negated by use of NCTS or a pre-lodged import declaration this is not always the case, indeed EU guidance states for NCTS that a ICS Entry Summary Notification is required unless NCTS transit declaration includes the Safety & Security and:
- The NCTS in those countries accepts a declaration lodged by economic operators, which contains transit data and ENS data;
- TSAD and TSLoI are printed as equivalent to TAD and LoI;
- The NCTS in those countries is able to receive and forward ENS data together with transit data to the EU countries and other Contracting Parties and also to receive ENS data transmitted from the EU countries and other Contracting Parties to those countries (acting as transit and destination country);
- The EU countries recognise and accept such common transit declaration data for the purpose of both the common transit procedure and ENS data, without any legal amendment or extension of the scope of the Convention, based on the relevant provisions of the UCC;
- Other Contracting Parties recognise transit and ENS data as well as TSAD and TSLoI, when presented to one of their customs offices, as equivalent to a TAD and LoI provided it contains all necessary transit data.
As a precaution Descartes recommend you plan submitting ENS declarations for goods moving into Europe. To do so will require an EU EORI number.
For assitance with customs and regulation software visit our Descartes Brexit Page.
Excise Goods
HMRC have clarified that for Haulage companies who import excise goods the driver will need in addition to either a master reference number to show that the importer has made a full or simplified frontier customs declaration or the UK EORI number of the importer if the importer made an entry in their own records, a copy of the eAD or commercial documentation that clearly states the ARC if available.
This seems to contradict the advice to traders that the submission of an EMCS movement could be delayed until the end of the next working day. For excise goods it is strongly recommended to pre-lodg the import declaration and EMCS movement request.
HMRC have also stated that for imports that If the goods are dispatched before Brexit, but received after Brexit then no import declaration is required (although some process to remove the goods from the port may be required). As you cannot use EMCS to create reports of receipt the movement will remain open in the system and you’ll need to provide an alternative proof of receipt to HMRC.
Excise traders should also be aware that from 24 October 2019, if you raise a movement on EMCS to an EU member state with a dispatch date later than 31 October 2019 the movement will be rejected by EMCS and HMRC. We will have to wait to see how this will change if no final decision has been made by the 24th.
Transition
In the case of a no deal Brexit there are no transitional arrangements meaning that at 11pm UK time or Midnight CET, goods arriving from the UK will be treated as third country goods and required to undertake import formalities. Whilst this will not change the export process (as at the time of export the goods were destined for an EU Member State) it could result in increased uncertainty in the lead up to 31st October and potential double taxation for goods imported into the UK and then into the EU post Brexit (this is different to guidance on market standards where there is the concept of placing on the market).
Quote from the EU guidance documents:
“Where an ENS was lodged at the customs office of first entry in the UK before the withdrawal date, it will not remain valid for subsequent ports or airports in the EU27 where the goods are arriving as of that date. The economic operator shall lodge a new ENS covering all goods arriving in the EU27. Where in those cases the operator could not comply with the respective time-limits, the ENS lodgement should be accepted. “
Although special provisions are made for EU-27 goods in transit at the time of Brexit
“As a general rule, for Union goods which are moving as intra-Union movement from the UK around the withdrawal date, their treatment will depend on when they enter the customs territory of the Union: where they enter the EU27 before the withdrawal date, they will keep their customs status of Union goods; where they arrive at the EU27 external border as of the withdrawal date, they will be treated as any other third country goods.”
Also, any goods in the EU under cover of a UK Authorisation are at risk of incurring a customs debt unless they are transferred to an EU authorisation or otherwise discharged.
For assitance with customs and regulation software visit our Descartes Brexit Page.
Director, Product Management