The Brexit transitional period is ending and as of 1st January 2021, Irish companies moving goods to, from and through the UK will be required to complete customs declaration forms and pay duties on the goods.
Registering for customs is the easy first step; then you need to decide how to pay the duties and apply for the Deferred Payment scheme if needed. A vital additional step is to decide who will be completing the customs declaration form. According to Revenue, the biggest single reason that goods are stopped at border crossings is due to data errors – so it’s imperative that the person filling out the forms is experienced and well trained.
“It’s a very difficult process,” explains Carol. “There are two essential streams of information that you are including on the form – the first is in relation to customs and tax and the second is in relation to the freight and movement of goods. For the latter, you should be able to provide that information by working with your haulier and referring to the weight, the packing list, the shipping details etc., but the former is a tax declaration so you need to understand custom taxes in the same way you would have to understand any other tax in order to make a return.”
Identify the potential pitfalls
A standard customs declaration form contains over 50 fields; some are straightforward but a lot require a high standard of customs knowledge, such as classification codes – beware, there are tens of thousands to choose from. “Possibly the most important part of the form is the customs classification tariff code,” says Carol. “That code will tell customs what the product is, what group the product falls into, what rate is applicable to your product, and if there is any licensing required. Customs classification is an art in itself – there are some products that are easy to classify, but most products these days are not straightforward as they could be a combination of technologies, or pharmaceutical and cosmetic, or a processed food. You must be able to work through the options and logically apply the one you think is correct. You should be able to explain your choice and understand the rules of classification. If you’re uncertain, you need to get a classification ruling from Revenue."
“Another tricky part is the value of your goods. It’s straightforward if it’s a simple sale of goods to a third party, but what if it’s inter-company or on consignment, how do you work out the value of the goods at that point? In that context, you need to understand the rules of origin.”
It’s also vital to talk to your customers about your international commercial terms, or Incoterms. Goods going in and out of the UK will need both import and export declarations and you need to work out who is responsible for making the declarations and paying the duties. “You need to talk to your customers about who is the importer and who is the exporter,” Carol explains. “With the EU, there were no customs and so goods were simply delivered to the customer, but if that is going to stay the case, then the goods need to be delivered duty paid – which means you have to export the goods and then import them into the UK so there’s a couple of steps. A compromise is that you act as the exporter and your customer acts as the importer, but that doesn’t always work out so you need to clarify this with your customer.”
Employ an agent
Companies can decide to fill through the forms themselves or they can employ an agent – but just like employing an external accountant, you are still responsible for the information on the form. “It’s important to understand customs, even if you’re not going to fill out the declarations yourself,” says Carol. “Look for an experienced agent – but be aware that there is a shortage of experienced agents both here and in the UK, so you need to start looking for one as soon as possible.”
Even more importantly, there is a lot of groundwork to do before employing an agent. “You need to have a master list of everything you buy from and sell to the UK. This is a schedule of all your products listed by SKU number with a description of the product, the tariff classification code and the applicable rate, along with any licences associated with that tariff code. If you only have a few products, it’s not a problem, but if you have 6,000 or more, it’s a big job.”
After that, working with a good agent is relatively plain sailing. “Once you have your agent and you’re beginning to lodge your forms, everything should be running smoothly and it’s really about auditing at this stage. Make sure you keep your master list up to date with any new products, and on an annual basis, review all your products to make sure the tariff classifications don’t change. Every month or week, depending on your volume, take a sample of the imports/exports and carry out your own internal audit.”
Take a training course
Carol would encourage everyone to undertake some sort of training in customs – and there’s plenty of courses to choose from. “Everyone should do some customs training. There are different levels; the Skillnet course is detailed training on how to fill out the form yourself, while Local Enterprise Offices are providing one day training courses on what customs is all about. Enterprise Ireland’s own customs insights course is available on Prepare for Brexit, while the Revenue and Enterprise Ireland customs webinar can be viewed onsite also. This is more than enough for most companies who will be employing an agent. And then Bord Bia is offering specific customs training for food and agri clients. I would urge anyone to avail of the training – it’s free and it’ll take the fear factor away.”
Content adapted for Enterprise Ireland “Brexit: Making sure your customs declaration form is accurate”