Mastering Post-Brexit Trade: Your Guide to Success

In the wake of the UK's departure from the EU customs union, single market, and VAT area, a new trade landscape has emerged, accompanied by amended import and export procedures. The Trade and Cooperation Agreement (TCA) between the UK and the EU, which came into effect on January 1, 2021, defines the terms of trade between the two entities. However, the changes have presented challenges for many businesses and individuals, particularly when it comes to understanding customs rules. This comprehensive guide aims to provide valuable insights and information to help navigate the intricacies of the new trading environment.

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Understanding Tariffs and Rules of Origin

Under the UK-EU TCA, zero tariffs and quotas are secured for goods moving between the UK and the EU, granted they meet the rules of origin (RoO). The RoO determine the "economic nationality" of a product based on the origin of the materials used in its production. The objective is to prevent goods from third countries being routed through the UK or the EU to circumvent third country tariffs.

To benefit from the zero tariff, businesses must demonstrate the origin of their goods. A product is considered "originating" if it is wholly obtained in the UK or EU, or if it has undergone substantial transformation in either market. However, it's important to note that UK businesses re-exporting goods from third countries without significant processing may still encounter tariffs when trading with EU Member States.

Navigating the rules of origin can be complex, as they vary depending on the product. Some businesses may find it challenging or costly to claim zero tariffs due to the paperwork involved. Research conducted by the UK Trade Policy Observatory reveals that while overall UK exporters utilise preferential rates effectively, only approximately half of UK exports in the textile and clothing sector benefited from zero tariffs between January and August 2022.

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UK-EU Customs Processes: What You Need to Know

Customs controls play a vital role in ensuring the collection of duties on goods crossing the UK-EU border, as well as compliance with safety, security, health, and environmental requirements.

Since January 1, 2021, the EU has implemented full customs controls. On the other hand, the UK government has phased in border controls for goods imports from the EU throughout 2021 and 2022. At present, customs declarations are mandatory for all imported goods. The introduction of the remaining controls, including health certification, sanitary and phytosanitary checks, and safety and security declarations, was initially postponed but is expected to be implemented in the future.

The UK government has presented a draft Border Target Operating Model for all goods imports into Great Britain, which outlines a risk-based model of checks for food, animal, and plant products to be rolled out from the end of 2023. Safety and security declarations for EU imports will be required starting from the end of 2024. Additionally, a Single Trade Window will simplify the process of providing import information to the government.

For a comprehensive guide to the current customs processes, both for imports from and exports to the EU, businesses can refer to the Government's Border Operating Model, which was last updated in June 2022.

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Steps for Businesses: Navigating the New Trading Environment

To successfully navigate the post-Brexit trading landscape, businesses need to familiarise themselves with the new processes and requirements. Here are the key steps to consider:

1.?Making Customs Declarations

Since January 1, 2022, traders are obligated to submit customs declarations for all goods being exported from and imported into the UK (excluding those from Ireland). In some cases, a simplified declaration may be accepted.?

2.?Correctly Classifying Goods

Traders bear the responsibility of accurately classifying their goods and recording their origin. Incorrect commodity codes or inaccurate origin recording in customs declarations can lead to incorrect tax or duty charges. While businesses have the option to classify goods themselves, seeking assistance from customs intermediaries is often recommended to ensure proper classification. Additional information can be found on GOV.UK regarding proving originating status and claiming a reduced rate of Customs Duty for trade between the UK and the EU.

3.?Following Safety and Security Requirements

The EU mandates safety and security declarations for imports from and exports to the UK. Presently, the UK government does not require these declarations for imports from the EU. However, when exporting from Great Britain to the EU, traders generally need to submit an exit summary declaration.?

4.?Expert Assistance

Navigating customs declarations can be a complex process. The Government Border Operating Model suggests that businesses consider using a customs intermediary who can handle these procedures on their behalf. HMRC maintains up-to-date lists of customs agents and fast parcel operators for reference.

Additional Information and Support

Traders seeking further information on customs and tax rules can avail themselves of various channels provided by the UK government:

Brexit guidance for travel or business, which offers step-by-step guides on HMRC processes for importing and exporting

Customs & International Trade Helpline at 0300 322 9434, as well as an Export support team hotline and online enquiry service for businesses exporting to the EU

Short films and webinars by HMRC that provide insights into importing and exporting processes

Specific rules apply to Northern Ireland, and businesses involved in goods movement between Great Britain and Northern Ireland can utilise the free Trader Support Service, which can assist in completing declarations on their behalf

The dedicated GOV.UK guide that explains how businesses can export food, drink, and agricultural products.

European Commission guidance on Brexit and new rules pertaining to taxes and Customs, which addresses frequently asked questions about EU customs rules. More detailed technical guidance is also available, and it is advisable to consult the customs authorities of the respective EU Member State for specific cases.

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Conclusion

While this article provides a comprehensive overview of the challenges and procedures arising from trade between the UK and the EU, it is essential to note that it does not encompass every aspect of the import and export process. As the new trade relationship continues to evolve, it is crucial for businesses and individuals to stay informed and seek professional advice when necessary.

At Icymay Business Solutions, we pride ourselves on being a trusted and reliable sourcing partner for businesses in need of support in navigating the ever-changing trade landscape. With our extensive expertise and deep understanding of government procurement processes, we are well-equipped to assist you in successfully managing your sourcing needs. Whether you require guidance in understanding customs rules, ensuring compliance with regulations, or maximising the benefits of trade agreements, our team of sourcing experts is here to provide you with comprehensive solutions tailored to your specific requirements.

What sets us apart is our commitment to delivering exceptional service with a personal touch. We understand the challenges and complexities that businesses face when it comes to procurement and sourcing, and we are dedicated to providing you with the support you need every step of the way. Our team is comprised of experienced professionals who stay up-to-date with the latest industry developments and are well-versed in the intricacies of government procurement. You can rely on us to navigate the complexities of the trade landscape on your behalf, allowing you to focus on your core business objectives.

Partnering with Icymay Business Solutions means gaining a strategic advantage in your sourcing endeavours. We believe in building long-term relationships based on trust, transparency, and mutual success. Our goal is to empower your business to thrive in the post-Brexit era and beyond by providing you with the insights, expertise, and support necessary to make informed sourcing decisions. Trust us to be your reliable sourcing partner, and together, we can navigate the new trade landscape with confidence and achieve your procurement goals.

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Frequently Asked Questions

Q1: What is the Trade and Cooperation Agreement (TCA) between the UK and the EU?

A1: The TCA is a comprehensive agreement that defines the terms of trade between the UK and the EU after Brexit. It covers various aspects such as tariffs, rules of origin, and customs procedures.

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Q2: How do rules of origin affect trade between the UK and the EU?

A2: Rules of origin determine the "economic nationality" of a product based on the origin of the materials used in its production. To benefit from zero tariffs under the TCA, businesses must show that their goods meet the rules of origin criteria, which can be complex and specific to each product.

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Q3: Are there zero tariffs and quotas on goods moving between the UK and the EU?

A3: Yes, the TCA secures zero tariffs and quotas on eligible goods, provided they meet the rules of origin requirements. This allows for continued free trade between the UK and the EU.

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Q4: What are the challenges businesses face with customs processes after Brexit?

A4: Since January 1, 2021, customs controls have been in place for goods moving between the UK and the EU. This means that businesses now need to submit customs declarations for all imported and exported goods. The process can be complex, requiring accurate classification of goods and compliance with safety, security, and other requirements.

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Q5: How can businesses ensure they comply with customs requirements?

A5: Businesses should familiarize themselves with the new customs processes and requirements. This includes submitting customs declarations, correctly classifying goods, and following safety and security regulations. Seeking assistance from customs intermediaries or consulting the Government's Border Operating Model can help businesses navigate these procedures.

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Q6: Where can businesses find further information and support?

A6: The UK government provides resources and channels to assist businesses in understanding customs and tax rules. This includes online guides, helpline numbers, short films, and webinars. Additionally, businesses can consult the Government's Border Operating Model and the relevant customs authorities for more specific information.

Please note that the answers provided are for general informational purposes only and should not be considered as legal or professional advice. It's recommended to consult a qualified professional for specific guidance tailored to individual circumstances.

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Reference:

UK Government. (2021). The Trade and Cooperation Agreement (TCA) between the UK and EU/European Atomic Energy Community (EAEC). [PDF]. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/982648/TS_8.2021_UK_EU_EAEC_Trade_and_Cooperation_Agreement.pdf

Commons Library. (2022). New customs rules for trade with the EU. [online] Available at: https://commonslibrary.parliament.uk/new-customs-rules-for-trade-with-the-eu/ [Accessed 5 Jul. 2023].

For further information and resources, you can Visit

https://www.gov.uk/guidance/new-rules-for-importing-and-exporting-goods