Brexit and the Customs Union Preparing for Customs changes Keith Robe Customs Specialist 11th March 2019 Rushcliffe Arena, Kirkby-in-Ashfield

Brexit and the Customs Union The UK is seeking; A “highly streamlined customs arrangement”. This proposal would involve a customs border between the UK and the EU but seek to make it as invisible as possible — and try to cut down or eliminate waiting times A new customs partnership with the EU, aligning our approach to the customs border in a way that removes the need for a UK-EU customs border and allows us to forge new trade relationships with our partners in Europe and around the world’ Trade to be as frictionless as possible

Brexit and the Customs Union Future customs arrangements (15th August 2017) A Future Partnership Paper Customs Bill – White Paper (9th October 2017) legislating for the UK’s future customs, VAT and excise regimes Taxation (Cross-Border Trade) Bill introduced in the House of Commons on 20 November 2017 (Bill 128) The Bill will allow the government to create a standalone Customs regime

Summary of the Taxation (Cross-border Trade) Act 2018 A Bill to impose and regulate a duty of customs by reference to the importation of goods into the United Kingdom; to confer a power to impose and regulate a duty of customs by reference to the export of goods from the United Kingdom; to make other provision in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the EU; to amend the law relating to value added tax, and the law relating to any excise duty on goods, in connection with that withdrawal; and for connected purposes.

Intra-EU trade HMRC advised all businesses currently only trading with the EU; Register for a UK Economic Operator Registration and Identification (EORI) number at www.gov.uk/hmrc/get-eori. You’ll need an EORI number to continue to import or export goods with the EU after 29 March 2019, if the UK leaves the EU without a deal Decide if you want to hire an agent to make import and/or export declarations for you or if you want to make these declarations yourself (by buying software that interacts with HMRC’s systems). Contact the organisation that moves your goods (for example, a haulage firm) to find out if you will need to supply additional information to them so that they can make the safety and security declarations for your goods, or whether you will need to submit these declarations yourself.

CHIEF - Customs Handling of Import Export Freight system for handling customs declarations. Handles more than 60 million Customs declarations per year (Feb 2017). Processes all customs declarations made. Links directly to commercial (air)port systems The collection of £17 billion of revenue each year Has been upgraded to facilitate Brexit but will ultimately be replaced by; Customs Declaration Service (CDS)

CHIEF also: Validates & profiles data in accordance with identified risks Links to OGDs Collects international trade statistics. Contributes to control of restricted and prohibited goods. Provides HMRC archive information.

Declarations - Basic Requirements You must declare your goods to Customs if they are commercial in nature. The declaration is called an Entry. An entry is made on a Single Administrative Document, or SAD (C88). The SAD is used throughout the EU - each country having the same design but in their own language. The entry is completed and sent to Customs, usually electronically.

Basic Requirements continued…….. Import entries made through Community Service Providers (CSP) or software/link to CHIEF (Forwarders/Agents) All export entries made through the National Export System (NES) Simplified procedures for declaring both Imports (e.g. CFSP) and Exports (NES) are available subject to authorisation. All declarations are input to HMRCs CHIEF Prints of all import/export entries should be obtained/retained as part of the audit trail (Management Support System data)

Economic Operator Registration & Identification (EORI) VAT Number PLUS 000 GB123456789000 Entered on all Customs declarations 5/9/2019

Brexit and the Customs Union Current imports and exports will be impacted by the outcome of any UK/EU trade agreement World Trade Organisation duty rates Most Favoured Nation (MFN) rates Intra-EU movements will become imports and exports with a requirement for customs formalities Customs declarations required Duty and VAT applicable

Brexit and the Customs Union Customs Special Procedures Inward Processing - allows businesses to obtain relief from customs duties and import VAT on goods imported from outside the EU to be processed and exported outside of the EU Customs Warehousing - can benefit traders who import goods because it offers a storage facility that delays duty and/or import VAT payments until the goods leave the customs warehousing procedure CFSP - Customs Freight Simplified Procedures (CFSP) is an electronic customs system for imported third country goods. It allows faster release of imported goods, the use of simpler customs declarations and cashflow benefits to importers. Entry in Declarants Records - allows you to enter goods to a customs procedure without the need to provide a full customs declaration at the point of release Guarantees/waivers - a guarantee is required if you want to hold a customs authorisation that defers or suspends the payment of duty. Reductions/waivers subject to meeting AEO criteria Other possible facilitations Freezones Self Assessment see HMRC Notice 3001

Inward Processing (IP) Allows relief from import charges to be obtained on goods imported from outside the EU that are processed and re-exported Helps EU manufacturers to compete in world markets Prior authorisation is required, but ‘Authorisation by Declaration’ is available Guarantee required In order to qualify, the goods must undergo sufficient processing to change HS (commodity) code 4 digit heading Again, post-Brexit goods moving to the UK from the EU will qualify for IP if they meet the criteria giving full relief on UK import duty, there may be import duty when the goods are imported back into the EU – there may be ways of mitigating some of the duty which may be applied by the EU but that would need further explanation

Customs Warehousing (CW) By delaying the time at which goods are deemed to be present within EU, can help cash-flow as charges only become payable on removal from Warehouse. Where Import Licence or Preference document is not yet available, goods can be deposited. Premises must be approved (public/private). Goods can be accepted from port or other customs warehouse. If (re)exported from EU, no Duty or VAT to pay. Guarantee required As an example – Take company selling Christmas novelties and decorations, the cheapest time to buy them is in January and the cheapest suppliers are in China. Under normal circumstances a company importing these goods in bulk in January would need to pay the customs duty (and VAT) up front and would probably not start selling and seeing a return until October. With A CW authorisation, they suspend both duty and VAT until they are ready to take the goods out of Warehouse (October) to sell. If the goods are sold to the export market there is no duty or VAT to pay, this may be more attractive post-Brexit when movements between the UK and EU become imports and exports

Transit The UK will remain in the Common Transit Convention (CTC) after Brexit Allows goods to be transported across CTC member countries without having to pay cross border duties Declaration made at final destination New Computerised Transit System (NCTS) Authorisation required Guarantee required As an example – Take company selling Christmas novelties and decorations, the cheapest time to buy them is in January and the cheapest suppliers are in China. Under normal circumstances a company importing these goods in bulk in January would need to pay the customs duty (and VAT) up front and would probably not start selling and seeing a return until October. With A CW authorisation, they suspend both duty and VAT until they are ready to take the goods out of Warehouse (October) to sell. If the goods are sold to the export market there is no duty or VAT to pay, this may be more attractive post-Brexit when movements between the UK and EU become imports and exports

Guarantees Mandatory for authorisations to operate certain procedures 5/9/2019 Guarantees Mandatory for authorisations to operate certain procedures Required for Potential and Existing customs debts Level of guarantee shall be based on a reference amount and must be sufficient at all times The debtor provides guarantee De minimis threshold increased to € 1000 A comprehensive guarantee is available to cover more that one transaction

The Authorised Economic Operator (AEO) programme The AEO programme is based on the WCO SAFE Framework and provides a workable solution to improve the security of international supply chains. It addresses the risks to those supply chains without obstructing the flow of goods across customs borders. The volume of international trade is increasing year on year so there is an economic need to improve efficiency and reduce the costs of international trade. The AEO programme provides facilitation and benefits to businesses who meet the criteria so allowing custom's resources to target specific risk areas. Customs authorities issue authorisations to traders who can show that they meet the criteria. If a trader holds an AEO authorisation this indicates that they have efficient and compliant customs controls and procedures. AEO authorisation may also indicate the trader operates within a secure supply chain.

AEO and the Union Customs Code (UCC) ITDLO Presentation 09/05/2019 AEO and the Union Customs Code (UCC) Two types outlined in UCC: Holding both is equivalent of current AEOF status AEOC Customs Simplifications AEOS Security & Safety UCC Update

What is an Authorised Economic Operator (AEO)? Event Name Here 12/02/2007 What is an Authorised Economic Operator (AEO)? “An Internationally recognised quality mark which indicates that a business operates within a secure supply chain and their internal controls and procedures are efficient and compliant” In the UK and across the EU the “trusted trader” is Authorised Economic Operator (AEO) status Qualifying criteria Record of compliance with customs and taxation Satisfactory system of managing commercial and transport records Proven solvency Practical standards of competence or professional qualifications Security & Safety standards

Types of business that can apply for AEO Any business can apply for AEO status as long as they are involved in the international supply chain. Here are some examples. Manufacturers – who want to ensure a safe and secure manufacturing process for their products exported to third countries. Exporters – persons on whose behalf the export declarations are made. Freight forwarders – who organise the transport of goods on behalf of an exporter, importer or other party. Warehouse keepers and other storage facility operators – persons authorised to operate a customs warehouse or a person operating a temporary storage facility, or free zone facilities. Customs agents – a customs agent/representative acting either on behalf of a person who is involved in customs related business activities or in the agent's own name. Carriers – the person who actually transports the goods or who operates the means of transport. Importers – operators on whose behalf an import declaration is made. Others – for example, terminal operators, stevedores and cargo packers and others not covered by the previous categories.

Brexit and the Customs Union AEO is the major platform for facilitation and can provide; Compliant & trustworthy economic operator status with enhanced reputation & image Reduced risk rating with HMRC resulting in reduced physical & documentary checks Fast stream when applying for Special Procedures Quick release of intra-EU goods post Brexit (“as frictionless as possible”)? Preferential treatment for global import/export via Mutual recognition (AEOS) Waiver or reduction of guarantees for Duty in suspense and Authorisations with considerable financial implications

Transitional Simplified Procedures (TSP) Specific to goods arriving in the UK from the EU via RoRo or Tunnel Allows goods to enter the UK without making a frontier declaration Authorisation required (including EORI registration) Payment of duty/VAT by Deferment Account or Direct Debit Guarantee may be required (by June 30th 2019) To be reviewed with 12 months notice before any significant changes Full declaration post-clearance https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal As an example – Take company selling Christmas novelties and decorations, the cheapest time to buy them is in January and the cheapest suppliers are in China. Under normal circumstances a company importing these goods in bulk in January would need to pay the customs duty (and VAT) up front and would probably not start selling and seeing a return until October. With A CW authorisation, they suspend both duty and VAT until they are ready to take the goods out of Warehouse (October) to sell. If the goods are sold to the export market there is no duty or VAT to pay, this may be more attractive post-Brexit when movements between the UK and EU become imports and exports

ITDLO Presentation 09/05/2019 Thank you ! UCC Update