Thursday, December 3, 2020

With 2021 looming, what’s in store for trade?

The end of January brought with it the end of the UK’s member ship in the European Union. Last month, the government began setting out the trading landscape for 2021 and beyond. Gerry Myton, Partner at Streets Chartered Accountants, explains what this actually means.

We find ourselves in 2020, a whole year stretching ahead of us with time to plan, prepare and arrange various measures to deal with our exit from the EU. However, it may not have occurred to many, but this means much more for exporters and importers.

There will now be no frictionless trade with the EU after the end of the transition period. To add to this, customs declarations and checks that currently only apply to trade with non-EU countries will become the norm for goods moving between the EU27 and the UK. A reality check might well be needed for those who have not considered this yet.

In recent speeches and interviews, senior UK Government ministers have confirmed that “The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow.”

This sounds official enough, but what does that actually mean? Here are some clear takeaways:

Full import controls will apply to goods arriving in the UK after 31 December 2020

  • Transitional Simplified Procedures (TSP) will be withdrawn. Anyone authorised to use TSP will need to hold the appropriate authorisations.
  • The proposed special arrangements for exports and imports at roll-on roll-off (RoRo) ferry locations will not apply. Therefore, import declarations or transit movements must be presented on arrival to a Customs Office or via a Port Inventory System. For exports, goods will need to be presented on exit of the UK as happens for exports to non-EU countries.
  • EMCS (Excise Movement and Control System) movements will start at the port of import and not within 24 hours as was proposed.
  • The proposed VAT Postponed Accounting has also been shelved. VAT will be due on imports at the point of importation (cash on the table) subject to the use of deferment accounts and financial guarantees being in place.
  • The ‘Brexit Tariff’ with 88% of goods being imported free from customs duties, has been withdrawn. Instead, the Department for International Trade is consulting on the future tariff and potential removing nuisance tariffs (those under 2.5%) and rationalising others but at the same time protecting indigenous industries, promoting inward manufacturing while not undermining any negotiated free trade agreements.

This lengthy list is clear in its hard facts, but what do businesses need to do now to prepare? A year may well seem like a long time, but these measures will be with us as we ring in the New Year and may still catch some out early on.

To best prepare for this, businesses will need to:

  • Review their terms of trade with EU27 customers/suppliers
  • Consider how declarations will be made and who will be responsible for making these declarations. There will likely be a rush to secure valuable customs agent’s resource in Autumn 2020
  • Review which HMRC regimes could mitigate exposure to the above, such as AEO, warehousing, IP, OP and CFSP
  • Consider transit-authorised consignor and consignee status to start and finish transit movements at your own premises
  • Consider temporary storage authorisations to receive goods inland

It is also worth noting that the EU27 never promised any simplified procedures to importers or exporters, so the UK is mirroring this, but businesses in the UK now have less time to get prepared.

UK businesses need to move quickly to ensure they can continue to operate their supply chains as smoothly as possible.

When it comes to Northern Ireland, the great unknown is what will happen on freight movements between mainland UK and Northern Ireland to ensure goods can move freely between Northern and Southern Ireland, and how the Irish Protocol will be managed and policed.

There does seem to be a divergence between the UK and EU27 over what the words mean.  The UK insists that there will be no border between Great Britain and Northern Ireland, however, we will have to wait and see what agreement is made.

This seems a particularly hot topic that needs to be agreed upon as soon as possible as many will feel let down and could lose valuable time and resource if ample time is not being granted to deal with this along with everything else.

The overarching advice here is to remain vigilant to any announcements that are being made, or to seek help from financial advisers as soon as is possible. There will be teething problems as a whole new way of operating in this sphere change, but as long as preparations are being made then most SMEs will be ready for the switch.

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