Customs: Eight steps to get Brexit ready

With the end of the Brexit transitional period fast approaching, businesses must prepare for a very different trading environment with the UK come 1st January 2021. Unless an extension is sought thanks to the Covid-19 crisis, businesses that trade with the UK must be prepared to meet and pay customs requirements by then. These requirements can be time-consuming and complicated, so it’s important for businesses to allow enough time to prepare as needed.

Transition period

“The UK has left the European Union, and we’re now in transition until January 1st 2021,” explains Carol Lynch, Partner at BDO Customs & International Trade Services in Ireland. “It’s important that businesses use this time wisely in order to prepare for trading with the UK in 2021. Ultimately, trading with the UK will be like trading with any other non-EU country, so if you haven’t traded outside the EU before, it’s essential that you know what to expect and make any preparations necessary to deal with the changes.”

Learning the customs rules and regulations

Essentially customs is another tax, complete with forms and payments, but with the UK being a part of the EU for so long, it’s something that many businesses and individuals won’t be familiar with. “The first step for everybody is to start learning about customs rules and regulations,” advises Carol. “There is a lot to learn, for instance the tariff classification codes and how to fill out an Import or Export Declaration Form, but there is help available. There are many courses currently operating; for instance, Local Enterprise Offices are offering one-day courses and workshops on customs and trading rules, and Enterprise Ireland is offering the online Customs Insight courses. Find out what’s in your area and avail of it.”

“In my view, you need about six months to prepare. There are a number of authorisations that some companies might need and some might not, but to avoid putting pressure on yourself, you really need to start preparing six months in advance. Some steps are very quick, but some take a little time, such as setting up your payment option, so it’s important to allow for this.”

Next steps for your business

Like any other tax return, businesses are responsible for correctly filling out Import and Export Declaration Forms, and paying the correct amount. To ensure you’re prepared, Carol has outlined eight steps for businesses to follow in order to be ready for the January 2021 deadline.

1. Ensure you have a Customs Registration Number – EORI

You simply cannot import or export to the UK without being registered with customs. This can be done online with Revenue at any time and can be completed in literally 10 minutes.

2. Decide how you are going to pay your customs duties

One option is to pay customs through a cash account. Alternatively, another option is to pay through a Deferred Payment Account. This allows you to import goods into Ireland from the UK and pay customs duties and import tax on those goods by direct debit the following month. This requires applying first to Revenue for a Customs Deferred Payment Authorisation, and then to your bank for a comprehensive guarantee to cover the duties. You need to allow for time to get together the information for Revenue and to apply to the bank for the guarantee; I would recommend giving this process at least three months, so see September as the absolute deadline to get this process underway.

3. Classify your Goods

You must know the classification for your goods when filling out your Import or Export Declaration. This is quite a complicated process and takes some time depending on your range and complexity of products – but again, you cannot import or export without giving your goods a classification number. Some think a clearance agent will do this for them, but they won’t – you are responsible for ensuring you have the correct classification codes for your goods.

4. Decide who will lodge Customs Declarations

You have two options when deciding who will lodge your customs declarations – employ a Clearance Agent to act on your behalf when liaising with customs, or train someone in your own company to fill out and lodge the forms. There is a shortage of Clearance Agents both here and in the UK; this is something we’re trying to address in BDO by offering training and advice for businesses.

5. Determine who is responsible for customs paperwork/ charges

Make a list of who you buy from in the UK, who do you sell to. Do you deliver goods to your customers’ door or do you expect them to import their goods themselves? Similarly, are your UK suppliers delivering to your door or do you have to import them into Ireland? Who is responsible for paying the charges? This responsibility must be clearly mapped out using either in-personnel or with broker. 

6. Check additional requirements if you are handling agricultural goods

Additional veterinary checks and certificates may be required along with prior notifications with customs. You must be registered with the Department of Agriculture, Food and the Marine and familiarise yourself with what is needed ahead of the deadline – and ensure you give yourself enough time to complete any necessary checks or forms.

7. Review your VAT position

With the UK out of the EU, the VAT rules have changed for trading between the UK and Ireland, and this could impact your cashflow. Review these and ensure you’re prepared.

8. Check the Rules of Origin

Depending on the form of free trade agreement agreed with the UK, certain goods may qualify for lower or zero tariffs depending on where the product originated. Again, this is where checking the rules of origin and getting the correct classification for your goods is essential in order to establish if your goods qualify under any free trade agreement.