Changes are already proposed to British global (or WTO/MFN) tariffs. The British government has issued an information notice regarding their new external tariff that will come into effect from January 1, 2021 and in a change of policy, there will now be positive duty rates applied to imports. They have also indicated there will be a more regulated approach than was expected.
Carol Lynch, partner with BDO Customs and International Trade Services, said last year’s uncertainty over Brexit and the possibility of a no-deal meant that proposed tariffs would have largely remained at zero per cent. Now, however, there are clear signs of tariffs and full customs checks at the borders including agricultural controls on food products.
“With regard to tariffs, the government is opening up consultations to the public concerning the structure of the new UK Global Tariff where consultations will close on March 5,” she said. “The British government has advised that the consultation will provide an opportunity for companies to provide their views on a potential series of amendments being considered. They can also relay specific feedback on specific products or commodity codes of importance to them, including on the corresponding tariff rate.”
Lynch said there is a positive side to these changes too, as Britain intends to simplify its tariffs and get rid of any tariff less than 2.5 per cent. Nevertheless, Irish businesses need to be more proactive than ever and get ready for changes in customs procedures.
“These changes may involve new customs tariffs, depending on the outcome of the free trade agreement negotiations,” she said. “There will be a requirement to lodge import and export declarations with customs, provide advance notification to the Department of Agriculture on certain food products, and requirements for proof of originating status if you wish to take advantage of a free trade agreement.
“The worry now is that Irish companies will take the foot off the pedal and delay putting in place plans until after the summer break – as happened with a lot of companies last year. This meant there was no time available to put in place customs procedures, upskill staff and engage a clearance agent. It takes time not only to apply for customs authorisations but also to receive them and therefore it is important that companies continue their preparation plans during the current transition phase. This is what it is designed for.”
According to Lynch, dramatic changes in customs procedures will come into play January 1 - both in the case of a deal and in the case of a no-deal Brexit – the newly titled ‘Australia Trade Model’. These include: the requirement of customs declarations and the requirement for veterinary checks and the application of Duty rates.
Referring to Authorised Economic Operators (AEO), Lynch indicated that currently most of our international trade operates through the AEO network of companies.
“This helps support the low level of checks at the border - 95 per cent of goods will pass through a border without additional checks,” she said. “The next 3 per cent would be held by Revenue pending checks on the paperwork. The remaining 2 per cent would then be subject to full physical inspections, either because they are assessed as risky, or just due to random control. However, there are now up to 100,000 new companies about to be affected by new trade controls that they haven’t had to deal with before and therefore this will involve significant learning and more risk of delays where the paperwork is not correct.”
Lynch said you must ensure your tariff classifications are correct in order to determine the right duty rates which must be paid. She added that a clearance agent will be necessary to lodge customs declarations on your behalf. “There is a severe shortage of agents in the country, so we have developed training to show companies how to do their own clearance. Enterprise Ireland also provides a ‘Clear Customs’ training programme through Skillsnet. It’s also important to talk to your suppliers and customers to confirm who is acting as the importer and/or exporter of record for your purchases and sale as, if they are delivering on a DDp or duty-paid basis then they are responsible for the payment of the import duties along with customs compliance and may also require VAT registration”.
BDO is currently running training sessions on an ongoing basis to help companies familiarise themselves with the basics of Customs in a post-Brexit environment. If you would like to avail of this training, please contact [email protected].
Put a plan in place to be Brexit-ready, written by Siobhán Maguire, was originally published on The Sunday Business Post.