The Custom Rules are Here to Stay

Carol Lynch, Partner, Customs and International Trade Services, shares her insights into difficulties that businesses have been experiencing with customs formalities post-Brexit, aswell as useful tips to help with these initial problems, in Chartered Accountants Ireland.

Since 1 January we are now trading with the UK as we do with any non-EU country.

The requirements for International Trade between the EU and non-EU countries are laid out by the Union Custom Code and there are no derogations to this for trade with Great Britain.

In many ways Ireland, as an International outward facing economy, is well placed to manage this transition. However, we have seen over the last two weeks significant delays on imports arriving in Ireland as a result of

  • New customs systems that companies need to manage to enable imports to be cleared through Customs, as required by the EU rules for non-EU Trade
  • New requirements from the Department of Agriculture (DAFM) in relation to pre-notifications, registrations, and certifications, also as required by EU rules for non-EU Trade
  • A requirement to understand the new rules regarding “origin” in order to be able to take advantage of the Trade Agreement agreed on 24th December

All this, along with Covid, have meant than many Irish firms, who have never traded outside of the EU before, have been very under-prepared in light of both having to deal with the day-to-day pressure of maintaining business in a Covid environment, and prepare for new rules for trade while staff may be pre-occupied elsewhere.

Unfortunately, however, these new rules are here to stay and there is no longer any point in either arguing against them or hoping for a last-minute agreement to resolve them. At this point, businesses need to upskill in relation to customs and put in place new procedures for importing and exporting that comply with Revenue requirements and do not unnecessarily incur customs duties.

BDO's recomendation has always been to prepare and plan as much as is reasonably possible to ensure you can move your goods in 2021.

As a result, our JV Customs Clearance Company, Declaron, established between BDO and Fexco, has a focus on customs preparation and education in order to support the customs clearance process. Declaron encourage all companies to upload their customs data in advance, to ensure it is accurate and compliant, and to take advantage of the many training webinars and videos that Declaron provide to customers to ensure they understand customs requirements. The Declaron focus is on getting the data right in advance and therefore ensuring no delays at the Ports.

This has always been the BDO approach and we spend a lot of our time advising our clients on ensuring correct customs classification, advising on how to determine the value of goods (for example in cases where there is no sale) and, most importantly since 24th December, how to take advantage of the new rules of origin.

The Trade Agreement was a fantastic success for Irish business and means that many can now trade "duty free" between Ireland and the UK. However, as with everything customs related, there are strict rules of compliance. A company needs to:

  • Confirm the tariff classification of the goods they are selling
  • Check the required rule to achieve origin e.g., 50% added value in the EU, or Change of Tariff Heading etc.
  • Ensure the work being done meets the sufficient processing rule. This means that goods need to undergo substantial manufacturing to qualify as originating and if only minimal operations are carried out e.g. minor handling, unpacking, repacking then those goods will not qualify as sufficiently processed. We have seen disputes on this affecting many companies, as reported in the media, and which in particular affect UK distributors importing goods from the EU for onward sale to Ireland. While there are alternative customs rules to resolve this issue, it can be seen that the rules of origin in the Trade Agreement need to be fully understood in order to prevent non-compliance.

Finally, as an added burden, companies also need to comply with the rules for imports of food products, products of animal origin, plant-based products and composite products.

This is a whole new set of rules that work alongside Customs and are particularly complex. However, you will not be able to import your food products into Ireland without compliance with these requirements. Last week, we saw in the region of 50% of all goods being stopped at Dublin Port being stopped for not-compliance with DAFM requirements.

At BDO, we have a long-standing relationship with Irish food companies and have specialist support services to advice on this along with a dedicated cross department Food, Drink & Agri-Business Team.

In conclusion, the BDO advice would be to spend as much time as possible on preparation for the new world and on drafting up new procedures. Freight was light last week and there were still long delays. If you are planning your first imports over the coming weeks make sure therefore to put the required customs planning steps in place now and also resolve your clearance issues with experienced agents using advanced IT solutions. Also ensure your agents have fully scalable 24/7 capabilities as otherwise you may find yourself waiting in line for support.

Content adapted from Chartered Accountants online, 'The customs rules are here to stay'.

Declaron is the new specialist customs clearance service launched by BDO and Fexco.

Do you need a customs clearance agent?


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