Brexit: Trade, customs and VAT FAQ
Below are a series of key questions you should be asking in your business, when preparing for a possible 'no deal' or hard Brexit.
Trade and customs
The customs authority facilitates the efficient and timely movement of goods. Revenue is the government agency responsible for customs controls in Ireland. In the UK, the HMRC is the body which provides this service. Trade in certain products, e.g. food and medicines, may be subject to further controls under relevant Government Departments. Companies trading with the UK should develop good contacts on customs and trade particularly with the local Irish officials dealing with your goods.
The customs regime applies if you are exporting goods to a third country, importing goods from a third country, or transporting goods through a third country. Customs duties, if applicable, will be required at the time of entry.
A third country for trade and customs purposes is a country which is not a member of the European Union, or any other agreement associated with lessening barriers to trade and movement of people such as the European Economic Area (EEA), Customs Union or European Free Trade Area (EFTA). If the UK leaves the EU without a deal on 31 October it will automatically become a third country for trade and customs purposes from that date.
- Carry out a Brexit impact assessment on your business.
- If you do not already have one apply now for an Economic Operator Registration and Identification (EORI) number from the Revenue Commissioners.
- If trading products of animal origin, register to access the online TRACES system with the Department of Agriculture, Food and Marine.
- Understand what is needed to fulfil a customs declaration.
- Decide who will do your customs declaration - someone who will be responsible within your company or an external customs agent.
- Identify the Customs CN code of every product you are trading.
- Identify any customs authorisations or simplifications that work for your business model and understand the approval process for same.
- Understand your obligations under the HMRC rules (UK authorities): different facilitations and Brexit arrangements are envisaged by HMRC.
- Understand your obligations under the Irish (EU) customs authorities - contact the Irish Revenue Commissioners with any Brexit related queries by emailing email@example.com.
No. A UK-issued EORI number will not be valid in the EU in the absence of an arrangement on the EU-UK relationship e.g. reciprocal arrangements. In a 'no deal' situation such an arrangement will not be in place. Therefore, in order to continue trading with the UK as a third country, you must apply for an EORI number through the Irish Revenue Commissioners.
Declarations are made online to the Irish Revenue Commissioners through the Revenue AEP System. The accuracy of the data and document is hugely important- incorrect data and declarations will cause delays and increase costs for your business.
Once the declaration is submitted, logistics providers/haulage companies can use their truck registration and/or trailer number to log onto Revenue’s system and identify routing for their journey when they arrive at an Irish port for example Dublin or Rosslare. Routing will then be divided into three options:
- Green – if all declarations are complete and correct.
- Amber – if something is unclear or missing on declaration that can be sorted out quickly (e.g. during the journey on the ship).
- Red – if that load requires checking.
The Common Transit procedure is a useful simplification tool which can be used for goods moving from one member state to another through a third country (e.g. the UK). The UK has negotiated its membership of the Common Transit Convention post Brexit. This is a procedure that can be availed of if no deal on customs is agreed.
Availing of the procedure means that companies may only need to provide one customs declaration instead of four. A comprehensive guarantee (see below explanation) is required for companies to avail of the procedure.
It is important to note that the transit procedure is mainly processed online with the use of barcodes and a Movement Reference Number (MRN) which can be scanned on the ship to facilitate export or import. This requires some additional customs capabilities but means there is limited or no engagement with customs officials at the port of entry or departure.
Revenue has not yet confirmed how mixed load goods will be treated. However, separate transit declarations would be needed if the loads are mixed with EU and UK goods. The transit procedure is the only way to move mixed goods – the Union goods (from the EU) will have duty suspended while in the third country therefore avoiding UK duties. Import procedures would be carried out in Ireland when they arrive. The general advice from Revenue is to avoid mixed loads if possible.
A comprehensive guarantee is needed to avail of the common transit procedure and other customs simplifications. The guarantee ensures security, in the form of a customs guarantee, is put in place to cover potential or existing customs debt for certain customs procedures or facilities. The guarantee allows you to combine all your current customs bonds and guarantees. An authorisation from Revenue is necessary to use a comprehensive guarantee.
In order to apply for a comprehensive guarantee, you will have to meet specific criteria regarding:
- Financial solvency
- Compliance with customs rules
- Control of operations
- Practical standards of competency
You can apply for a comprehensive guarantee online through Revenue’s Customs Decision System.
Guarantees must be held in a financial institution in the EU, so if your company holds its guarantee in a UK bank, this must be moved to a bank within an EU member state. The onus is on companies to ensure this is done before the UK becomes a third country. Companies should, therefore, contact their banks in good time to facilitate moving guarantees. If your guarantee is already held by a financial institution in the EU, and not in the UK, then no change is required. If a company has AEO Status, then only a 30% guarantee of payment is required.
AEO stands for Authorised Economic Operator and is a certified authorisation issued by customs administrations in the EU. It certifies that a business has met certain standards and allows holders to benefit from certain trade facilitation simplifications. AEO will be suitable for some companies but not others, depending, for example, on the size of business and scale of trade. AEO is unlikely to suit SMEs due to the resources required to comply with the authorisation.
If your AEO status was granted in the UK (which may include subsidiaries in Ireland), then the status is no longer valid once the UK leaves the EU. AEO status granted in Ireland with subsidiaries in the UK must also check with HMRC to see if they will continue to recognise AEO status of the subsidiary in the UK.
Yes. There are several special procedures you can avail of to minimise the burden of customs procedures. Here you can find a detailed list of these procedures on the import side and on the export side from Revenue. To avail of these you will need authorisation from Revenue and, in some cases, a comprehensive guarantee.
This depends on what terms the UK leaves the EU. If the UK leaves the EU without a deal on future trading relations, then trade between the jurisdictions will automatically fall back to WTO terms. This means that EU member states would have to apply WTO tariffs on UK goods. To prepare for this, you must classify your goods for customs purposes. Every product has a specific code. This classification code determines the amount of customs duty you will pay on imported goods. You can use TARIC to classify your goods to the appropriate code that you will need to import or export your goods. More information is available here. You can also contact the classification unit of the Revenue Commissioners for advice on classification.
The collection of tariffs (set at EU level) is usually based on a percentage of the value of the product. You can find the tariff rate of your product using the EU’s TARIC database. The tariff is then settled at the point of entry, however there are some arrangements, which must be agreed with Revenue in advance, where the immediate payment of the tariff is avoided:
- Inward processing: if goods are only in the country for additional processing and are then re-exported, then the duty payable could be suspended for the lifespan of the processing, once you qualify under the rules of the scheme. Similarly, if you temporarily export goods for processing or repair you may also be able to claim total or partial relief from import charges. More information on outward processing is available here.
- Deferred accounts: some importers use deferred accounts which facilitate cash flow and suspend payments until the following month. The goods can be released to free circulation from the deferred account- some importers have their own account and some use import agents. More information on deferred payment is available here on the Revenue website.
The UK is now part of the Common Transit Convention (CTC) which allows EU goods into the UK if they are stored in an HMRC Customs-approved warehouse before onward transit to Ireland. Companies must seek approval from HMRC to avail of this facility.
Companies wishing to avail of this can use the transit procedure as detailed above. Warehouse approval is essential, and parties need accurate information on the connection which can be entered into the New Computerised Transit System (NCTS).
In the case of a no deal brexit, yes. If you use wood packaging for importing your products from a third country, then such packaging must be treated and marked in compliance with the ISPM 15 standard. This counts for all kinds of trade that use wood pallets, crates, dunnage etc. for transport and packaging, i.e. not only trade in plant products. The mark is a stamp on the physical pallet consisting of three codes: country, producer and measure applied. The Department of Agriculture, Food & the Marine (DAFM) is the body in Ireland that oversees adherence to this rule.
VAT and cash flow
If the UK becomes a third country without a deal, then UK imports to EU member states will be subject to excise duty at the point of entry, alongside other tariff and customs duties. This means that UK goods could end up being more expensive in the EU market and might also create cash flow issues for business.
The Government has introduced a postponed accounting scheme which allows for deferment of VAT payment for companies to deal with cash flow issues stemming from Brexit. This is part of the Government’s Brexit contingency plan. Postponed VAT payment means that companies will not be required to pay VAT at the point of entry of an import and instead can delay payment. Postponed accounting will initially be introduced for all traders for a limited period to alleviate immediate issues, however following an initial period, at a time to be decided by the Minister for Finance, continued use of the postponed accounting system will depend on fulfilling criteria, which will be set by the Revenue Commissioners.
The movement of duty-suspended excisable goods is managed through the Excise Movement Control System (EMCS). The Electronic Administrative Document (e-AD) contains details of the consignment and can be shared with warehouse keepers and economic traders in other EU member states.
Companies in Ireland will no longer be able to rely on a UK based notified body. Conformity assessment files and relevant certification (compliance, authorised representation) must be transferred to an EU27 Notified Body. You can identify EU27 notified bodies here. Sectors with sector specific product certification should review advice issued by their regulator and sector specific factsheets issued by the National Standards Authority of Ireland.
According to the NSAI, it is likely that post-Brexit, if you buy goods from the UK you will be considered an importer for the purposes of EU product legislation. This means will you will have another set of obligations under EU law depending on the sector.
According to the website of the UK Government, if the UK leaves the EU without a deal you will still, in the majority of cases, be able to use the CE marking to demonstrate compliance with the legal requirements and to sell products on the UK market after 31 January 2020. This is intended to be for a time-limited period. However, in some cases, you will need to apply for the new UKCA marking to products being sold in the UK. Guidance and relevant information from the UK government is available here.
The EU has said that UK Notified Bodies will lose their status as an EU Notified Body including in a ‘no deal’ scenario. UK manufacturers are therefore obliged to use a Notified Body in the EU27 to obtain new CE markings for products entering the EU market. UK goods regulated under the New Approach Directives and placed on the EU market before Brexit will be recognised. Goods that require a conformity assessment will not be recognised however and need to be reassessed by an EU27 based body.