As the UK leaves the European Union, it will be forming its own, new, Custom Borders. Government has announced its strategy to help business adapt to the new trading changes.
Last week the UK officially confirmed to the EU negotiating team that it will not be asking for an extension to the Transition Period by July 1st, the deadline to do so. This means that come January 1st 2021, the UK will introduce a new customs and border regime. This means all goods moving across the UK border will be subject to documents, tariffs, and where necessary, checks.
HMRC estimates this will result in an annual increase of 50 million documents to over 300m documents- a two-pronged issue as HMRC tries to develop more capacity and business with no knowledge of the customs processes will have to learn, and fast, or face additional time, costs and even legal penalties
However, Government has announced new a policy aimed to help business understand and adapt to the new border changes, similar to “Transitional Simplified Procedures”, the May Government’s solution to No Deal Brexit borders.
The UK Government plans to gradually phase in UK Customs Borders over a six-month period. From January 1st, only “controlled goods”, like alcohol and tobacco, and relevant health checks, such as live animals, will be subject to full customs and tariff proceedings, while “standard” imports will have up to six months to complete documents and pay tariffs.
From the Spring, health and animal-origin goods will be subject to the border controls, with pre-notification of imports required by the authorities.
Then from July all goods will be subject to documentation and tariffs from the point of entry, dependent on the outcomes of all these new Trade Deals… ahem.
(The Government has already announced its "Global Tariff" for all goods not covered by a Trade Deal, Click Here For More).
While almost all imports will be able to flow freely into the UK until July, business must keep a proper and secure record of their activity during this period for VAT payments and for HMRC retrospective checking.
While the full proposal is still to be announced, there are certain challenges to this system. First, and practically, how will freight be managed at the port to identify which goods can pass quickly over the border, and which require further checks. What does this mean for mixed freight shipping?
Port of Dover did trial a coloured lane system for traffic flows, but this may not be an option for tighter confined ports, however, some ports may benefit from longer shipping lanes, say to the North East, to identify and clear goods on deck, and manage flows before they even leave the carrier.
The other side will be the new administrative burden on businesses to complete, store and maintain compliant customs documentation, and navigating the needs of their goods. It is important that the new system is clearly communicated by HMRC to business, and they are supported in learning and adapting to it.
Finally, this will only be goods coming into the UK, goods exported to Europe and beyond will be subject to at the border checks and payments. It is therefore vital that global business is reviewing and understanding their supply chain models to be best equipped for January 1st, 2021.
The Chamber will be running online award training courses to help business comply with the requirements of International Trade, and also offers an online module course. Please contact firstname.lastname@example.org if you would like to find out more.