Importer's Checklist for Brexit Transition
9th November 2020
From 1 January 2021 standard goods imported into the UK from the EU will be subject to customs procedures. Dependent on any trade deal being agreed between the UK and the remaining member states of the EU, this could mean a requirement to pay import duty against your goods in addition to VAT.
In order to help importers through the impending changes, the UK Government has decided to introduce the new border controls in three stages up until 1 July 2021. Some of the easements put in place could allow businesses up to six months to complete customs declarations & defer payments of VAT. Customs duty payments may also be deferred until the final supplementary declaration is made. UK Safety and Security declarations (ENS) will also not be required on imports from the EU for the first six months.
Importer'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 Imports' We’re happy to provide it – just get in touch!
It's critical if you import goods from 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 importers checklist to help you to prepare and continue to trade with EU based companies from 2021.
1 – Have you got a UK EORI number'
You must have a UK EORI number (Economic Operator Registration and Identification number). This will be needed for completing and declaring safety and security information. You cannot import 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 - Have you applied for CFSP (Customs Freight Simplified Procedures)'
Whilst for the first half of 2021 many importers will have opportunity to make use of simplified import customs procedures under what is being termed as CFSP EIDR (Entry into Declarants Records), in order to continue using similar arrangements beyond June 30th, a full application & authorisation from HMRC to operate Customs Freight Simplified Procedures (CFSP) will be required.
To qualify, you must:
- be registered as a sole trader, a partnership, or a limited company
- have access to an electronic reporting system
- have a registered Economic Operator (EORI) number, which HMRC supplies
- declare third country goods regularly against your EORI
- have a good record of compliance with customs and other official bodies
- be financially solvent
- maintain a set of documented procedures which accurately describes the accounting and logistical processes of your business and enables customs to perform audit-based controls
- be able to use your duty deferment facility or that of a third party for payment and security purposes (payments go through the Customs Handling of Import and Export Freight (CHIEF) so traders cannot pay in cash or other methods)
Traders may also have to meet extra conditions, which their authorising officer will tell them about.
If you want to combine CFSP with other customs procedures such as customs warehousing or Inward Processing (IP), you must also be authorised by Customs, and need to apply separately for these procedures.
The authorisations traders and third parties need
Traders, particularly small businesses, often use agents or freight forwarders to process their goods under CFSP, not least because these have the necessary software.
You can complete the process online yourself if you are authorised to use the system. This is called self-representation. There are two other kinds of representation:
- Direct representation, where a third party (such as an agent) acts in your name and on your behalf. You remain responsible for customs debts and you need to be authorised to use CFSP, although the third party does not.
- Indirect representation, where a third party acts in their name but on your behalf. You and the third party share liability for the customs debt. You don't need to be authorised to use CFSP, but the third party does.
To be authorised to use CFSP, traders and agents will have to show that they meet a range of conditions regarding accounting systems and records, customs compliance and financial solvency. These criteria will need to be in place in your business before HMRC can grant authorisation - authorising officers will visit your premises to verify your systems and paperwork.
3 – Have you agreed Incoterms with your supplier'
You must agree Incoterms with your supplier. Do you know what tariff codes they’ll use and how much import duty will arise' Have you reviewed your Incoterms to understand whether you or your supplier is 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. If you are used to ex works terms with your EU supplier, this will place the onus on them to make the UK import declaration. This is not advisable.
4 – Do you know how to describe and classify your imported goods'
This typically is the responsibility of your EU supplier, but if you want to avoid costly delays – then you should check out they understand what’s going to be 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 importing 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 import license for the goods.
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 supplier for evidence of the value declared on the invoice.
5 – What must your EU suppliers commercial invoice detail'
In the event of a No Deal Brexit, goods traded between the EU and the UK will be subject to the same requirements as third country goods under the World Trade Organisation (WTO) rules.
Every shipment will need a commercial invoice
It needs specific information for customs authorities to help the authorities assess if the goods can move in or out of a country and what, if any, controls are needed. It also helps the authorities determine duties and taxes. It’s vital your supplier provides an invoice with the right information as it reduces the potential for delay.
i) Reason for export
Statement why they’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, your supplier needs 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 them assess the correct duties and taxes are applied.
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 supplier for evidence of the value you’ve declared on the invoice.
viii) Insurance costs
On the commercial invoice your supplier should 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 export and UK import declaration to be made accurately, this additional information will need to be listed correctly on your suppliers commercial invoices. Delays and problems with customs are likely to occur if the extra information is not on their invoices to you.
Here’s a link to an example commercial invoice which can be used as a template.
6 - Does your EU supplier have an EU EORI number'
Your EU suppliers will need an EU EORI number to enable their preferred customs clearance agent to complete the EU export declaration. If they haven’t exported outside the EU then they will need to apply for one.
7 – How will your EU suppliers handle the EU export customs'
Unless a free trade deal is agreed with the EU, goods leaving the EU for the UK will require the completion of an EU export declaration. Your ‘goods supplier’ will need to appoint a company to make these export declarations for them into their country’s Customs system. This is not something that can be done from the UK. Should your supplier need assistance with locating an agent, our team will be happy to provide details of agents in countries where we have established relationships.
8 - Have you appointed a company to make your import declarations'
Unless your company has access to CHIEF, the UK Customs system, you will need to appoint a company to make import declarations for you. To ease the flow of vehicles through our UK ports you will have till the 4th day of the month after the import to officially register the import with an import declaration. Your responsibility will be to keep a record of all imports in a particular month in your records and send this to a customs agent so they can make the import declarations on your behalf. They will need your written authority to do this. 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.
9 - Do you know what CPC (Customs Procedure Code) will be applied to your imports'
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 Import, Temporary Import, Customs Warehousing and so on. More information on the codes can be found via the following link or alternatively please feel free to speak with your Spatial Global contacts for assistance. https://www.gov.uk/government/publications/uk-trade-tariff-customs-procedure-codes/customs-procedure-codes-box-37
10 - Do you know how UK import VAT will be handled'
The Government has stated that they will introduce Postponed VAT Accounting (PVA) in the event of a ‘no-deal’. VAT will not be applied on Imports at the point of UK entry. C79 VAT certificates will not be issued for goods using PVA. Instead a monthly postponed import VAT statement will be made available for importers via the Government Gateway service. The statement will indicate the total postponed VAT from the previous month in order to declare this on the quarterly VAT return. If this is your chosen method of payment of VAT you must inform your customs agent id order that the correct code is used during the declaration. You can of course pay any applicable VAT & Duties at time of arrival on completion of a full import declaration.
We’re happy to provide it – just get in touch!
On 1st January 2021, the Brexit transition period will end and new rules governing the movement of goods between the UK and the EU will come into force. Despite transitional procedures aimed at simplifying and streamlining this process, additional requirements will be required from day 1 – are you prepared yet'
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.
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.