Priority Tasks for Brexit

As we move towards the end of negotiations it is clear from the reports from Brussels and the UK that we are in a very dangerous time with a high risk of Brexit happening on March 29th 2019 almost by virtue of the fact that time is running out to agree a deal.

With Article 50 triggered, if a Withdrawal and Transition Agreement is not signed off by the EU and Westminster then the UK will simply stop being an EU Member State on 29th March 2019 at 23.00.

What does this mean?

As we have outlined in previous newsletters this will mean that the UK becomes a non-EU country and will have to be treated as such for imports and exports. Therefore at 23.01:

  • Customs Declarations will be required
  • Veterinary Checks will be required
  • Duty rates will be imposed

How can businesses prepare for this situation?

With a short time frame now left the answer is simply to prepare your business to ensure you are able to import and export from a Non-EU Country. Key steps which can and must be taken at a minimum are:

  1. Ensure your tariff classifications are 100% correct
  2. Ensure you have a clearance agent to lodge Customs Declarations on your behalf
  3. Prepare an application to obtain a Deferred Payment Account, discuss and agree a guarantee provision with your bank, and have the application ready to lodge by end of the year if no-deal has been agreed.

There are no real costs to points 2&3 and point 1- Classification – is a requirement regardless of when the UK ultimately leave and is consequently work which will ultimately be required.

Therefore in terms of investing management time at this point, we would strongly recommend that businesses who are now seriously looking at preparing for the possibility of a Hard Brexit for the first time, start working on ensuring they have all UK imports and exports assigned a Tariff Code as a matter of urgency.

Finally if you need to act as the importer/exporter in both the UK and the EU you will now need a GB Registration (possibly EORI) and an EU validated EORI going forward. A business can get an EU EORI without a Vat registration or establishment but when requesting this in the UK, HMRC look for details of a shipment pending.

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Post Brexit – Shipping goods to/from EU & UK

In a post Brexit scenario goods will be required to move via Customs Transit in order to avoid being hit with Customs Duties on entry into the UK and, again, on entry to Ireland/the EU.

This procedure currently applies in the EU to Union goods where they are moved from one point to another within the customs territory of the Union, and pass through a country or territory outside that territory for example Switzerland without any change in their customs status.

T2 transit declarations are lodged through the New Computerized Transit System (NCTS), which is mandatory for traders using Union Transit in all EU states.

  • Goods transferred under the T2 union transit procedure have to be registered online through the customs electronic system in the office of departure before movement e.g. Poland.
  • Then, in the customs office of transit e.g. the UK going forward, the unique registration number of the consignment can be verified and approved for passage.
  • Finally, upon arrival at the customs office of destination e.g. Ireland, the goods must be presented to Customs or to an Authorised Consignee.

The general rule is that goods placed under the Common/Union transit procedure together with the corresponding documents shall be presented at the customs office of arrival. However authorisation as an authorised consignee allows a company to receive the goods at their premises, or at any other specified place, without presenting them at the customs office.

It is important to note that a Customs guarantee is required to secure all charges on the goods while in Transit.

The UK has applied to re-join to the Common Transit Convention (CTC) when it leaves the EU, which means we would expect that that above processes will be in place post Brexit.

We would therefore recommend talking with your Haulier as soon as possible to ensure they will be able to provide this service to you.

We would also expect that transiting goods through the UK after March 2019 will involve delays as there will be a high volume of traffic now moving under a completely new customs system. It is also advisable therefore to review alternative route availabilities when transferring goods between main land Europe and Ireland and complete a cost benefit analysis in terms of cost and time.

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How the Customs System works in Ireland

The Customs System in Ireland can be complicated with a number of different components for businesses to consider.

By way of the flow chart below we have outlined how Imports and Exports are lodged in the Customs System in Ireland.

An export and import declaration for customs purposes is a legal act whereby a person indicates in the prescribed manner and form, a wish to place goods under the export/import procedure in order to export/ import goods from/ to Ireland.

In Ireland Import/Export declarations are lodged via the AEP system. This system is responsible for the validation, processing and clearance of customs declarations along with the calculation of the Import Duties due. It also verifies that sufficient credit is available in the trader’s account to cover the import liability if the trader operates a deferred payment arrangement.

If you are not familiar with this process we would recommend attending a training course to provide a full overview of the key elements to consider when importing or exporting from Ireland.

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To Infinity and Beyond…!

To Infinity and Beyond...!

When astronauts Neil Armstrong, Buzz Aldrin and Michael Collins came back to earth from the Apollo 11 mission they first had to go through Customs declaring cargo including moon rock and moon dust.

Almost 50 years later a new exciting mission just launched and Copex (a subsidiary of The Rhenus Group) have had their part to play.

Last Saturday, 20th October 2018 BepiColombo launched its first mission to Mercury, the smallest and least explored terrestrial planet in our solar system. When it arrives at Mercury in 2025 it will endure temperatures beyond 350°C and gather data during its one-year nominal mission, with a possible one-year extension. “BepiColombo” is a joint mission between ESA and the Japan Aerospace Exploration Agency, executed under ESA leadership.

A number of companies were involved in this huge project, moving spacecraft and ground equipment. The role of the project and forwarding company was held by an Italian company who appointed Copex (www.copex.nl) as the logistics coordinator in the Netherlands (Amsterdam Airport Schiphol) and responsible for all handling activities, ocean freight and customs declarations. Copex shipped goods to French Guiana back in May ahead of intensive pre-launch preparations.  Copex are now returning the goods (40 x 20’ containers, 8 x 40’ containers and 4 x 20’ flat rack containers) back to The Netherlands.

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Managing Customs across the Globe

Managing Customs across the Globe

The discontinuation of customs inspections within the European Union has significantly simplified the movement of goods between member states.  However nowadays global transport chains often go beyond the outer borders of the EU. Production sites are located in Asia with the USA, China, Switzerland and the Russian Federation all important trading partners of the EU. Professional customs clearance and a profound knowledge of specific regulations are indispensable to ensure that goods are shipped quickly and smoothly. The Customs people within the Rhenus Group can supervise the shipment of your goods beyond national borders.

Some requirements set by national authorities are very high meaning even express shipments can be delayed by minor problems making professional customs clearance all the more important. Rhenus Logistics have decades of experience working as an international services provider. We can take over all the relevant administrative tasks, both for customers with their headquarters in the EU or outside the European single market – up to and including fiscal representation. As a result, we create clear competitive advantages because we can make carriage paid deliveries to your customers in the EU; and all the customs duty and taxes have already been covered too.

Rhenus Logistics in Dublin operates a Public Warehouse Type 1, utilising the simplified procedure of Entry in Declarants Records. This facility allows importers to postpone the payment of VAT and Duty until the month after they are consumed.

Whatever happens with Brexit, Rhenus Logistics have the knowledge and expertise to assist in your moves across the globe.

To discuss the above further contact your local Rhenus Logistics office:

Lynda Barry / Tel +353 (0)1 429 2300 / [email protected]

www.rhenus.com

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Preparing Your Supply Chain for Brexit

Understanding Supply Chains

With Brexit potentially going to take effect as early as March 2019, it is imperative that companies now start mapping their supply chain if they have not done so already.

In this regard it is critical to understand, on a product-by-product basis:

  • WHO IS THE SUPPLIER
  • WHAT WILL BE THE IMPACT ON THEIR SUPPLY TO YOU
  • WHERE ARE THE GOODS MANUFACTURED
  • WHERE THE GOODS ARE SHIPPING FROM
  • HOW ARE THEY BEING SHIPPED
  • ARE THEY TRAVELLING THROUGH THE UK LANDBRIDGE
  • WHAT IS YOUR HAULIERS POSITION
  • WHERE ARE THE GOODS SHIPPING TO
  • ASSESS DUTY AND CUSTOMS COMPLIANCE COSTS ON AN AS IS BASIS AND IDENTIFY OPPORTUNITIES FOR COST REDUCTIONS

We recommend this is completed as a first step in any Brexit review.

For further information please contact BDO.

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Customs Training Ahead of Brexit

Brexit is officially underway and there is now a serious need to ensure that all exporters and importers dealing with the UK understand Customs Rules.

Most companies who are facing importing to and exporting from the UK have limited knowledge of customs procedures. Many companies over the last twenty five years have operated within the Single Market which has removed the requirement to understand how to complete customs forms.

Along with this, in order to move goods with the minimum customs requirements possible, companies are going to have to look to get approved as Authorised Economic Operators (AEOs) or Trusted Traders as this is often referred to.

One of the recently introduced conditions for AEO status is that the applicant, or the person in charge of their customs affairs must have customs knowledge and training.

For example;

a. They must have 3 years’ experience as a guide

or

b. They must have Professional qualifications, undertake training and have passed an examination, consistent with the extent of their involvement in customs activities.

The essential features of training involve:

  1. Completing Import and Export Documentation
  2. How the clearance system works
  3. Information required by Revenue
  4. SAD auditing
  5. Classification of goods and application of tariffs
  6. Understanding Trade Agreements (particularly in the event of a new UK-EU Agreement)
  7. Qualifying for reduced rates under Trade Agreements
  8. Dealing with Customers and Suppliers
  9. Understanding the movement of goods whether by Road, Sea or Air
  10. Developing Customs Reports
  11. Understanding Duty Saving Opportunities

For further information please contact BDO.

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Brexit – Funding and Supports

As a follow on to our piece on this last year we find companies often ask what supports are out there to prepare for Brexit.

There are a number of loans, grants and training programmes which are on offer and it’s a good idea to take advantage of these to start preparing for Brexit.

These can be summarised as follows:

Intertrade Ireland

Intertrade Ireland offers a voucher of up to €2,000 (or £2,000 if applying from Northern Ireland) to help SMEs seeking support and advice in relation to Brexit.

It is important to be mindful of the time frames within which you are required to choose a Service Provider and submit a terms of reference within a month of the voucher being issued.

This money can be used to complete an initial Brexit impact assessment which will provide a guideline for your business for the next year.

 

Enterprise Ireland – Be Prepared Grant

Enterprise Ireland launched its Brexit SME Scorecard in which SMEs can register to assess their readiness for Brexit.

The Be Prepared Grant offers up to €5,000 to assist in the cost of developing a strategic response to Brexit.

This grant is available to Enterprise Ireland client companies who are directly or indirectly exposed to the UK market.

It is important to bear in mind that you do have to also match the €5,000 being spent but this enables a comprehensive Brexit analysis to be completed.

Enterprise Ireland also offer training and one-to-one workshops which companies are well advised to take advantage of.

 

Enterprise Ireland – Agile Innovation Fund

Enterprise Ireland launched its Fast Track Agile Innovation Fund to give companies rapid access to innovation funding.

The fund is targeted at companies looking to respond quickly to market opportunities and challenges posed by Brexit, helping companies develop new products, processes and services for new market opportunities and enabling exporters to respond quickly and maximise export performance.

It allows companies access grants of up to €150,000 in support for product, process or service development projects with a total cost of up to €300,000.

 

Bord Bia

Bord Bia run three month workshops for companies to assist them with developing their knowledge of customs and trade in order to expand their business outside of the European Union.

If you are a Bord Bia client we would strongly advise contacting their Brexit team to take advantage of this.

 

Brexit Loan Scheme

Preparation, innovation and adaptation are key focuses for Irish businesses facing the opportunities and challenges posed by Brexit. Such actions however require working capital.

This has been acknowledged by the Irish Government who announced in October 2017 the implementation of a Brexit Loan Scheme to support Irish businesses and assist them in the preparation of their action plans.

Through this programme the government set aside up to €300 million which is available at competitive rates to SMEs (40% of which are planned to be specifically used to benefit the agri-food sector – acknowledging it as a particularly exposed sector). The scheme excludes farmers and fishermen for whom alternative schemes should be further discussed.

 

CONCLUSION

While different conditions will apply, these offerings will benefit:

  • Traders and manufacturers
  • Companies facing cross border issues
  • SME’s

BDO’s key message is to take action now and plan for Brexit with the resources that are available to you.

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Surveillance Document on aluminium imports from outside the E.U.

In response to the increase of Aluminium imports on 12th May 2018 the European Union introduced prior "surveillance" for certain aluminium products.  It was proposed in order to protect the domestic industry and to register aluminium imports.

EU imports of companies engaged in the import of aluminium products originating from third countries (including Turkey) in the 7601, 7604, 7605, 7606, 7607, 7608,7906 and 7616.999 tariff positions must obtain a Surveillance Document from the competent authorities in their own countries.

The importer should submit a copy of contract of sale or pro-forma invoice. Authorities should issue the Surveillance Document within five working days of receipt of completed applications.  The Surveillance Document is valid for four months and can be renewed. Surveillance Document are not required for shipments of net weight 2,500 kgs or less or for products originating in Norway, Iceland and Liechtenstein.

In accordance with the subject legislation to avoid delays at import customs from 12th May 2018 you must obtain a Surveillance Document prior to entry into EU territory (as is currently the case for imports of Steel to the E.U.).

Rhenus Logistics can assist in your importation of goods from global markets.

 

For further information please contact your local Rhenus Logistics office.

Lynda Barry / Tel +353 (0)1 429 2300 / [email protected]

2443

About Rhenus: Turnover at the Rhenus Group tops € 4.8 billion, making it one of the leading logistics service companies with global operations. Rhenus has business locations at more than 610 locations worldwide and employs 29,000 people. The Rhenus business areas - Contract Logistics, Freight Logistics, Port Logistics and Public Transport - manage complex supply chains and provide a wealth of innovative value-added services.

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Impact of Iran Sanctions on EU Businesses

On May 8th 2018 President Trump announced the withdrawal of the United States from the Joint Comprehensive Plan of Action (JCPOA) (i.e Iran Nuclear Deal) signed in July 2015. Grounds for the withdrawal are national security interests.

President Trump also announced a return to the existing sanctions (prior JCPOA), along with additional measures. These sanctions have an extra-territorial component restricting businesses who carry out business with the US, use US parts, US labour and/or US dollars.

They may also impact on EU businesses doing business with Iran. Indeed President Trump at the recently warned European Businesses that they would face secondary sanctions if they violated US restrictions.

Implementation of the measures

The measures should be implemented in several phases and termination of existing contracts and wind down of activities should be done within 90 or 180 days (depending on the sector). The US government targets the 4th of November 2018 for all sanctions to be re-imposed.

Licensing

US Licences applications under the JCPOA allowing the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services, will no longer be considered.  Specific existing licences will be revoked by August 6th 2018. The current licences application that have been submitted and are pending approval, will not be granted.

Impact on European Markets

Some Billions of euros deals have been announced with some of the biggest European multinational businesses such as Total, BP or Airbus since the Nuclear deal has been in force (2016) and particularly in the oil, aircraft and automotive sector

Impact on Aviation Sector

The US is giving commercial aircraft and aircraft part manufacturers 90 days to end all business with Iran. All licences to export to Iran will be revoked. Non-compliance by this date would lead to secondary sanctions imposed by the US.

As most international aircraft manufacturers rely on American aircraft parts, businesses in the EU might be pushed towards compliance with US measures to avoid sanctions. Indeed, looking at the 15 CFR Appendix Supplement No 1 to Part 740, if the destination is Iran the product will be subject to an US export licence if over 10% of the product comes from the US.

Non-US Airlines operating routes to Iran might also be impacted considering the involvement of banks and insurance businesses mostly based in the US.

EU response 

The EU has not withdrawn from the JCPOA and in particular the UK, France, and Germany are reaffirming their “continuing commitment to the JCPOA” (Joint statement from Prime Minister Theresa May, Chancellor Angela Merkel and President Emmanuel Macron).

The EU is asking for exemptions (or extensions of licenses) for the EU businesses that have been doing business with Iran since 2016, in order to ensure continuity of their economic activities and protect the sectors of energy, automotive, civil aviation and infrastructure.

However, most European Businesses and particularly those with operations in the US would want to avoid additional sanctions imposed by the US and would tend to comply with the US requirements and cease business with Iran if exemptions are not granted by the US government.

Reluctance by European banks to clear transactions involving Iran would also incentivise businesses towards compliance with the sanctions. Businesses need to consider US involvement and in particular US made parts in their operations when engaging in Iran related business.

For further information or to arrange a meeting please contact Carol Lynch on [email protected], or any member of the Customs and Trade Team at your local BDO office.

 

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