Exporter's Checklist for Brexit Transition
9th November 2020
Exports to the EU will need to follow the full EU import procedures. This means from 1 January 2021 export declarations and UK exit Safety and Security declarations will be required for all relevant goods. Exporters will need to follow the full export process and all relevant documents must be provided for your consignment.
The relevant documents may be
- Commercial invoice
- Certificates of origin
- Licenses and certificates (such as for food and plants)
- The Export or Transit Accompanying Document (EAD) issued by customs
- Export: Combined customs and safety and security declaration
Exporter's Checklist for Brexit Transition
Within this guide is information on what you need to import from the EU to the UK from January 1st – here’s the list with links to the relevant information:
Need Advice on your EU exports' We’re happy to provide it – just get in touch!
It's critical if you export goods to the EU that you prepare changes coming in January 2021.
As we approach the end of the Transition Period it is important that businesses involved in international trade use this time to prepare for life outside the EU, including new customs arrangements. Here’s an exporters checklist to help you to prepare and continue to trade with EU based companies from 2021
1 - Have you got a UK EORI number'
Economic Operator Registration and Identification number. This will be needed for completing and declaring safety and security information. You cannot export if you do not have a valid UK EORI number. If you are not sure whether you have one, search “eori number validation” in your browser and add 3 zeros to the end of your VAT number with GB at the start. If you do not have one, you can obtain one from www.gov.uk/eori or call HMRC on 0300 322 7067. This can take up to 5 working days to receive.
2 - Does your EU customer have an EU EORI number'
Your EU customers will need an EU EORI number to enable their preferred customs clearance agent to complete the EU import declaration.
3 – Have you agreed Incoterms with your customers'
Do you know what tariff codes you’ll use and how much import duty will arise' Have you reviewed your Incoterms to understand whether you or your customer are responsible paying these'
Different countries have different business cultures and languages. It’s a good idea to make sure you have a clear written contract to minimise the risk of misunderstandings. The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms widely used in international commercial transactions.
• 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 and who pays duties and taxes
In the event of a No Deal Brexit, Incoterms will be an important piece of information on the commercial invoice. Review your contractual incoterms as they will determine who is responsible for customs declarations and any EU import VAT and duty.
Our advice would be that if you are exporting on Ex Works terms, as a bare minimum you take over control of the UK Export declaration. You may find FCA is a more appropriate incoterm to use. If you sell on DDP, Delivered Duty Paid terms, be careful, many people can interpret DDP terms as including EU VAT which you will not be able to recover. DAP Delivered at Place is another alternative INCO term which allocates responsibility for Import VAT and duty to the EU importer.
4 – Do you know how to describe and classify your exported goods'
If you want to avoid potential costly delays then check out what’s important and why.
Describe: The key to smooth shipping is providing clear and accurate information on every shipping document. This includes detailing the type of goods you’re exporting correctly. For example, instead of just ‘clothing’ put ‘men’s T-shirts 80% cotton, 20% polyester’. And don’t just use company product codes to describe the goods. If the package contains branded items, include the brand name as well as the model number and description.
Classify: Find out the commodity (HS classification) code to classify your goods for the import declaration. The Harmonized System (commonly known as the HS code), is a list of numbers used to classify a product for taxes and duties and any necessary restrictions. A Harmonized System (HS) code consists of at least six digits. When you have classified your goods, customs authorities all over the world are able to identify the contents of your package. The system is used by more than 200 countries and covers 98% of traded goods.
Commodity codes are needed for customs declaration. They need to be shared with whoever is doing your customs declarations. Commodity codes can be found on the Gov.uk website gov.uk/trade-tariff.
The codes will tell the amount of duty you pay and whether you need an export license for the goods. A comprehensive list of prohibited and restricted goods can be found at https://www.gov.uk/starting-to-export/licences
Value: State the true value of the shipment. This should be the market price of the goods, along with the currency. If the value doesn’t seem reasonable, customs authorities may ask you or your receiver for evidence of the value you’ve declared on the invoice.
5 – Have you documented the origin of the goods being exported'
Establishing the origin of the goods will help to identify whether they qualify for lower or no customs duty under a tariff preference scheme.
There are 2 main categories of origin in the rules:
- goods wholly obtained or produced in a single country
- goods whose production involved materials from more than one country
This second category is the more complex as there are several criteria to consider - eg the origins of the materials, the country in which the final substantial production phase took place and the value the working and processing in each country has added.
6 – Do you know what needs to be on your commercial invoices'
Irrespective of a Trade deal being agreed or not, shipments departing or arriving between the EU & UK from 11.00PM as of 31st December 2020 will be subject to customs procedures. In order to effectively process customs declarations agents will require a full set of shipping documents & this includes a commercial invoice.
Every shipment will require a commercial invoice & the more information contained within will greatly assist customs agents when completing respective entry & exit declarations. Details taken from the invoice will provide specific information for customs authorities helping them to assess whether goods can move in or out of a country and what, if any, controls are needed. It’s vital you provide an invoice with the right information as it reduces the potential for delay.
i) Reason for export
Statement why you’re sending the goods – e.g. Trade.
ii) Shipping date and number
The shipping number is the carrier’s number sometimes more commonly known as a Waybill, Bill or Lading or other unique Transport reference. Your supplier can include their invoice number and order number for admin purposes – but it’s not essential for the authorities.
These are used in determining the distribution of responsibilities between the Buyer & Seller and apportionment of costs.
iv) Goods description
An accurate description of the goods. For example, instead of just ‘clothing’ put ‘men’s T-shirts 80% cotton, 20% polyester’. And don’t use company product codes to describe the goods. If the package contains branded items, include the brand name as well as the model number.
v) Quantity of goods
If shipping different products, you need to state the quantity of each using an applicable unit of measurement. For example, parts and objects are often counted in pieces, shoes - in pairs, liquids by volume, dry goods by weight.
vi) HS Code
This code informs the customs authorities as to what type of goods are being shipped. It also helps assess and calculate any applicable duties and taxes due. HS codes are a required when completing a customs entry.
vii) Declared value
The true value of the shipment must be declared. This should be the market price of the goods, along with the currency. If the value doesn’t seem reasonable, customs may ask you or your customer for evidence of the value you’ve declared on the invoice.
viii) Insurance costs
On the commercial invoice you may need to show the freight and insurance costs as separate items. If not shown separately, customs will calculate these values for you and you may end up paying more than necessary.
ix) Country of origin
This is where the products were originally manufactured – and may be different from the country the shipment is being sent from.
You’ll also need the NET and GROSS weight. GROSS is the NET weight and weight of the packaging combined.
To enable both the EU import and UK export declaration to be made accurately, additional information will need to be listed on your commercial invoices. Delays and problems with customs are likely to occur if the extra information is not on their invoices to you.
7 - Are your export pallets ISPM15 accredited'
Currently for non-EU countries exporting goods to the EU, the EU require pallets to be heat-treated or cleaned to prevent contamination and specifically marked. Due to a predicted shortage for these specific pallets in the UK at this time, we are waiting to hear if the EU will provide a waiver to this legislative requirement for a period of time. Also, if you return pallets or any sort of packaging to an EU customer, this could be classed as an UK export and need an export declaration. There is still no clarification from HMRC on this particular issue.
8 - Do you know what CPC (Customs Procedure Code) will be applied to your exports'
CPC’s identify the customs regimes to which goods are being entered to or removed from. There are a number of codes available dependent on the specific nature of the movement, including but not limited to Permanent Export, Temporary Export, Customs Warehousing and so on. Please feel free to speak with Spatial Global for assistance or visit https://www.gov.uk/government/publications/uk-trade-tariff-customs-procedure-codes/customs-procedure-codes-box-37
9 – How will your EU customers handle the EU import customs'
Have all your EU customers appointed a company to handle the EU import customs formalities; EU import declaration and VAT and duty payments'
Any freight forwarder will do what is necessary to get your export shipments out of the UK and into the EU - but they are reliant on your EU customers to have partners in place to complete EU import customs. An EU import entry will need to be uploaded into their country’s Customs system, their equivalent to CHIEF in UK. Your European customers will need to appoint a preferred agent to do this for them. The process is a lot quicker if they have a VAT and duty deferment account. Spatial Global have access to a network of European customs agents. However, the normal procedure is for the EU importer to appoint their own agent and agree fees in advance.
10 - Have you appointed a company to make your export declarations'
Unless a free trade deal is agreed with the EU, goods leaving the UK for Europe will require the completion of an export declaration. Unless you have staff with customs knowledge, it is advisable to appoint a company to make these declarations for you. The export declaration is your proof of export and should be retained for 6 years. It is the mechanism through which UK VAT is zero rated on your export shipment. Fines can range from £250 to £2500 for failing to place your shipment under the correct export procedure or failing to make an export declaration.
Should you elect to use a Customs Broker or agent to complete customs formalities, you must provide a formal written authorisation, empowering them to do so. Spatial Global can handle your customs declarations under ‘Direct Representative” terms & in accordance with Article 7 of BIFA 2017 Regulations. In a ‘Day One No Deal’ scenario, no forwarder or customs broker should make customs declarations unless they have the written authority from the exporter to do so.
A template page for Direct Representative Authorisation can be found here. If you would like us to make the import declarations for you, copy and paste the text onto your letterhead, sign it and email it to firstname.lastname@example.org.
11 – Transit'
By using Union and Common Transit, you can move your goods quicker to EU countries and Common Transit countries because:
- customs declarations and duties are not required at each border crossing
- you can complete some customs processes away from the border
Shipments requiring Transit will be subject to further documentary requirements and customs formalities they also may, dependent on other influencing factors, necessitate the need for a guarantee covering liability in the event of non-payment of duties/taxes in the applicable country of destination.
Goods arriving directly from the UK to France, Belgium, Holland and Ireland will need to be cleared on entry. There are 2 choices for goods destined for other European countries. They can have their VAT and duty paid in the country of EU entry, normally in France, Belgium or Holland. There are complications with this however. The norm is for a transit document to be raised in the UK to postpone the payment of the VAT and duty until the trailer arrives at the designated border point for the country of delivery.
We've created a guide you may find useful: Common Transit Convention Explained
Need Advice on exporting into the EU'
We’re happy to provide it – just get in touch!
AEO certified & with years of experience in handling customs formalities, Spatial Global have the knowledge and expertise to assist clients in submitting export & import declarations. We access customs directly via our operating system, processing and transmitting numerous entries every day. Simply get in touch with us & we’ll help find the most appropriate solution to meet your specific requirements.
As an EU certified AEO customs operator in many European countries you don’t have to be a customs specialist yourself – leave it to us. Simply get in touch with us and we’ll handle your customs declarations in your own language and in due time.
Information published here is correct, to the best of our knowledge and belief, at the time of publishing but we take no responsibility in the event of incorrect or misleading information. This service is provided free of charge and without liability or obligation.