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BREXIT CHECKLIST
YOUR BREXIT CHECKLIST
How to prepare for the end of the transition period
BREXIT CHECKLIST
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INTRODUCTION
From 1 January 2021 businesses that deal with Europe will have to follow new rules on exports, imports, tariffs, data and hiring. The UK left the EU on 31 January 2020, and a transition period commenced allowing both parties time to negotiate a new trade agreement. During this transition period, the UK has remained part of the Customs Union and Single Market. The transition period ends on 31 December 2020 and if a trade deal has not been agreed by then, the UK and EU could be trading on WTO terms from 1 January 2021. While there is still uncertainty, we want to you plan ahead. This simple checklist outlines some of the actions you can be taking now to help get your business ready. Our experienced Customs Brokerage team are here to support your cross-border shipping requirements, whatever the outcome of the negotiations.
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HOW TO PREPARE
On 1st January 2021 the transition period for the UK leaving the European Union will end and supply chains must plan for uncertainty as Brexit negotiations are still ongoing. There are currently two likely scenarios:
Free Trade Agreement (FTA)
The UK and EU are negotiating on an FTA that would take effect by the end of the transition period. An FTA would mean, that tariffs and quotas would not be applied on the majority of goods traded between the UK and EU with some exemptions. Customs checks and other formalities will still be required.
WTO terms
If no agreement on an FTA is reached by the end of the transition period, the UKwill trade onWorld Trade Organisation (WTO) terms. Shipments will therefore be subject to customs clearance, inspections and tariffs may be imposed on goods moving between the UK and the EU countries.
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1. LEARN WHAT WTO TERMS COULD MEAN FOR YOUR BUSINESS
Both importers and exporters will need to understandwhat thepotential changes tocustoms and excise procedures will be, and how they affect their business. If there is no trade agreement in place by the end of the transition period, this would mean the UK and EU would trade on WTO terms and would continue to do so until a trade agreement was successfully implemented. Familiarise yourselves with the current rules and regulations concerning exports to countries outside the EU, many of which could apply after the transition period. Read the UK Government’s transition period guidance here or the European Commission guidance here These changes may seem complicated but with Yusen Logistics we make it simple.
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2. REGISTER FOR A UK OR EU EORI NUMBER
The European Union require an Economic Operator Registration and Identification number (EORI) from all businesses which import or export goods to and from the EU. You will already have an EORI number if you currently trade outside of the EU. If you only trade within the EU, you must register. For example, if you ship from the UK to Germany, you will need to register with the UK authorities and your receiver will need to register with the German authorities. EU EORI numbers will no longer be recognised in the UK. UK EORI numbers will no longer be recognised in the EU. We therefore advise all customers to register for an EORI in your own country as soon as possible. Applications can be made through your country’s government website. UK EORI applications only takes 10 minutes UK businesses can register for an EORI number via the Government website here.
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3. WHAT ARE THE INCOTERMS WITH YOUR CUSTOMERS?
The Incoterms® define the point in the shipping process when the responsibilities for a shipment (such as costs, risk and insurance) move from sender to receiver. The sender and receiver agree on the Incoterms®, which specifies who pays for what shipping costs, before goods are shipped. Agreeing the Incoterms® in advance lowers the risk of costly misunderstandings later, such as the sender failing to insure the goods, or the receiver having to pay carrier fees upon delivery. These include: • Where the goods will be delivered • Who arranges and pays for the transport • Who is responsible for insuring the goods and who pays the insurance premium • Who handles customs procedures on imports and exports • Who pays duties and taxes
For more information visit here.
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4. KNOW HOW TO DESCRIBE AND CLASSIFY YOUR GOODS
HS Codes
Value of goods
Origin of goods
The Harmonized System (HS code) is a numerical code consisting of 6 digits that classifies a product for tax, duty and any necessary restrictions. Classified goods enable customs authorities worldwide to identify the contents of your shipment. More than 200 countries use the system which covers 98% of traded goods. Your goods can be classified on your country’s Government website. An online HS code search will also provide a code, just type in a detailed goods. Missing HS codes on the commercial invoice and other shipping documents, could delay the shipment and also risks incorrect duties and VAT being charged to the receiver.
The true value of a shipment i.e. market price of the goods, along with the currency must be stated. If the value appears unreasonable, customs authorities may ask request evidence proving the value you’ve declared on the invoice.
Where your products were originally manufactured may differ from the country of shipment and may be subject to special safeguards or anti-dumping duties. You must therefore confirm the origin of goods and also include all of the ingredients or components that make up the product. UK businesses can find out more about classifying their goods here.
Description of goods
Correctly detailing the type of goods and providing clear and accurate information on every shipping document will enable smooth shipments. For example, instead of listing ‘clothing’ try listing ‘children’s T-shirts 70% cotton, 30% polyester’. Avoid just listing company product codes to describe the goods. Try including brand name as well as the model number and description if the package contains branded items.
Other countries will have similar sites available.
We advise all customers to learn the correct classification, description and value of your goods.
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5. UNDERSTAND CUSTOMS REQUIREMENTS
Businesses may also need to apply for an export licence or provide supporting documentation to export specific types of goods from the UK. For more information on requirements for exporting goods, visit here. We advise all customers to understand how to complete a commercial invoice and the required associated paperwork for all your goods.
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6. MAKE YOUR CUSTOMERS / IMPORTERS AWARE OF THE POTENTIAL CHANGES
Do your customers and importers understand what the potential requirements for imports could be in their country once the transition period ends? Are your customers aware of the potential import tax and duty that they may have to pay? Howareyouworkingwithyour customers toensure there are no delays at the point of importation? Do you have all the correct details for the completion of export and import declarations? We advise all businesses to speak to their receivers/customers, so they understand what the potential impact is for them and are prepared.
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7. DEFERMENT ACCOUNT
What is a Deferment Account?
Some countries in Europe offer a Deferment Account allowing you to pay duties efficiently and cost effectively. This can also ensure that your high-value shipments are cleared quickly. When goods are imported, they may be subject to import tax and customs duties and duties are paid in full to the customs authorities at the time of import. A Deferment Account ensures your payable duties are paid for a certain accounting period on a predetermined due date directly to the authorities. More information can be found on country Government websites.
UK businesses can find more information here.
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RESOURCES
UK and EU guidance.
The UK Government and the EU Commission have published official guidance outlining how to prepare for the end of the transition period.
Find out more from the UK Government here.
Find out more from EU Commission here.
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Supporting customers through Brexit.
We are here to help you navigate through the post-Brexit period. Use our checklist to prepare your business for the changes.
Find out more here.
If you are considering changes to your supply chain and are looking for expertise and support, please talk to us.
Contact us to discuss your plans for trading in 2021 and how we can support you.
CONTACT DETAILS
Call: 01908 364740 Email: internationalsales@uk.yusen-logistics.com Visit: www.yusen-logistics.com
Correct at time of publishing but subject to change.
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