Chris Barlow of MHA McIntyre Hudson offers some advice on preparing for customs changes post Brexit.

With the Brexit transition period forecast to end on 31 December 2020, the prospect of major changes to trade arise, with the implementation of customs declarations, customs checks and duty rates needing to be negotiated with EU and non-EU countries. If there are no specific trade agreements, then the WTO’s tariffs will apply.

There is a long list of factors to consider before the U.K. leaves the customs union, and we recommend businesses use the transitional period to consider how you will be affected and try to ensure your business is Brexit-ready.

There is no "one size fits all", approach, but early preparation will mean the difference between a business stuck in queues and desperately playing catch up, and one which is ready and raring to go when the transitional period ends.

Examine Your Supply Chain

You should start by reviewing your supply chain. Map out the source of all raw materials or goods, reviewing processes and the movements of goods which are currently involved in bringing your product or services to the market.

You should then consider whether you need to make changes to your supply chain. Can you renegotiate contracts or use existing break clauses if you wish to purchase elsewhere? Planning is particularly vital when entering into contracts that will be running in 2021.

From a logistics point of view, is your business likely to suffer delays along the supply chain because there may be bottlenecks at ports? Do you need to have contingency plans in place, including holding more stock, using alternative suppliers or alternative supply routes, or does your business need more warehouse space?

First Time Customs Declaration

You must also consider whether you are one of the estimated 130,000 businesses which will be making customs declarations for the first time. If so, you will need to register for the National Export System; this will allow you to submit electronic export declarations or use a freight forwarder to make the declaration on your behalf.

You should also be aware that the Customs Declaration Service ("CDS") is due to replace the existing electronic system for handling import and export declarations in a phased launch from August 2018, and businesses will need to be ready to use the system.

VAT

Following the end of the transitional period, all goods imported into the U.K. are expected to be liable to import VAT, usually 20 percent, depending on the goods.

Along with import VAT, businesses will potentially have to pay customs duties, which may make predicting the increase in costs in different industry sectors more challenging. Some businesses may have to wait until there is more information about trade agreements before final duty rates are known. However, you can get advice now about whether a duty relief scheme might mean you pay less or no tax or duty on imports.

Authorized Economic Operator Status

Authorized Economic Operator ("AEO") status is an internationally recognized hallmark of quality which, according to HMRC, indicates that "your role in the international supply chain is secure, and that your customs controls and procedures are efficient and compliant." The application process takes around six months, but AEO status does bring both financial and supply chain benefits to your business, including reductions in the level of financial guarantees required for deferment accounts; faster application processes for customs reliefs and simplifications; and fast tracking of consignments through customs borders.

As mentioned above there are many factors to consider. For more information or to discuss how we can help you prepare, please contact Chris Barlow on 0121 236 0465 or chris.barlow@mhllp.co.uk