Carol Lynch, Partner, BDO Customs and International Trade features in Finance Dublin and discusses the customs procedures that will come into effect 1 January 2021. Revenue have issued letters and made follow up calls to ensure all Irish companies are aware of the fact that a full economic Brexit will come into effect at 11pm on 31st December and understand that there is nothing that will happen between now and the end of the year that will change the Brexit impact.
From a customs perspective, some of the key changes include:
- Lodging import and export declarations for goods arriving in and leaving Ireland for the UK
- The UK will follow similar procedures – unless you are a UK established company in which case you may be able to avail of simplified import procedures between 1st January and 30th June (note this does not apply to exports)
- Pre-Notifications for agri-food products - All updates can be found on the Departments website
- New Labelling requirements, REACH registrations and a host of other Single Market Requirements
Impact of current talks
From a customs perspective, the current talks only concern the introduction of a Free Trade Agreement (FTA) and the subsequent impact on payment of customs duties.
Despite the compliance requirements being clearly established, it is concerning that many importers and exporters are still waiting on the outcome of the current talks to decide on how to plan for Brexit. Time is running out for importers and exporters to put the new procedures in place before 31st December.
As a separate consideration, Irish importers and exporters also need to be aware that they will require proof of origin status to qualify for the FTA. If you import non-EU goods for manufacture and re-export there is, in addition, no guarantee the FTA will apply.
Regardless of an FTA, the critical issue for Irish companies now is to ensure they have all the necessary procedures in place to enable them to continue importing and exporting post 1 January.
Procedures from 1 January
The new customs procedures were clearly set out in the recent Revenue Commissioners Brexit webinars which took place on 5th and 6th October and are essential viewing for all companies.
The webinars, set out the new rules that will apply in 2021 and going forward, can be viewed here
For imports and exports, there will be significant changes including a requirement to lodge import and export declarations for their goods and requirements to lodge a customs declaration (this is a complex process). Business will also need to understand and provide Revenue with confirmation of their:
- tariff classifications of your goods
- origin of goods
- valuation of goods
- terms of trade; and
- 50 other items of information.
These declarations are tax declarations and, therefore, you as the importer/exporter are responsible for the accuracy of information. Bad quality data will lead to audits and checks at the ports.
So, how do you go about understanding and/or lodging these declarations?
The following is a list of viable options for businesses:
- Self- file using a customs software programme linked to the Revenue systems
- Request that your Haulier/Freight Forwarder lodges these declarations for you
- Employ a specialist clearance agency
When advising companies on which option to choose we would always recommend looking at the following:
- How confident are you that you understand customs and customs clearance requirements and are able to inter-act with Revenue and Customs in relation to Customs queries about your declarations? Enterprise Ireland and Skillnet have established Customs Training programmes we would recommend you to complete this course as a first step to customs clearing your own goods.
- Discuss with your Freight Forwarder/Haulier whether they have experience in this area and/or whether they have attended specialist training. Do they have software in-house and have a 24/7 capability to interact with Revenue and Customs on your behalf along with appropriate staffing?
- Outsource the customs declaration service to a specialist agent in the same way as you would outsource your CT returns or VAT returns and filings.
Again, you need to ensure that any agent you employ has experience in this area, has a 24/7 capability to interact with Revenue and Customs on your behalf and has appropriate staffing.
As you are dealing with the Tax authorities in both filing the declarations and addressing audit queries at the Port along with dealing with the Revenue post-clearance audits that will take place, we cannot emphasise enough the importance of having experienced staff or professional service providers.
At BDO, we recognised a shortage of custom clearance experience in the market as there has been no requirements for customs declarations between the UK and Ireland for almost thirty years. In order to find experienced staff, you needed to look at current service providers who are working in Global Trade with knowledge of the requirements for importing and exporting internationally.
Revenue have expressed their concern about the shortage of agents with an estimated figure of 3,000 agents needed to fill the void. As customs declarations increase from an estimated 1.6m to 19m in 2021, this is a clear, high-risk problem that needs to be addressed.
To address this concern, BDO established Declaron, a Customs Clearance Agency, in partnership with Fexco.
Declaron combines Fexco’s Fintech expertise with BDO’s experience in Global Customs & Trade requirements, and our Tax approach to compliance and filing of tax returns. This combination has enabled us to create one of the largest experienced teams in Ireland to ensure:
- Compliance in lodging customs declarations
- Representation with customs and Revenue on a 24/7 basis
- Accurate filing and document retention
- An always on software portal that allows you to enter your shipping details day or night
Traditionally, the lodging of customs declarations has been quite traditional and methodical. Declaron, however, has adapted a modern Fintech based approach utilising Fexco’s award winning approach to manage business solutions and outsourcing. We have a formula that is forward thinking, accessible and transparent as is required in the Fintech world. Our approach combines this 21st century outlook to tax and financial solutions while still maintaining that compliance-based focus.
We are currently working with clients, in advance of 1st January, to ensure they have the correct customs information available for go-live and would encourage anyone planning to import or export to have this process started and in your ERP systems as a matter of priority.
It is the quality of this data and the experience of your service providers that will determine whether your goods are stopped at Customs, held for checks or whether you are at risk in a post audit situation of penalties and fines. It is a priority that you have all of these in place prior to 31st December.
Content adapted from Finance Dublin