Borders/Tariffs

The UK leaving the EU without a deal will mean that trade between the two will no longer be free or friction-less. The UK Government has indicated that it will minimise checks on entry from the EU into the UK at least for a transitional period in order to ensure continuity of supply. However, there will be tariff impositions on goods traded into the EU and possibly into the UK leading to increased costs for businesses. There will also be delays at the borders as procedures, processes and paperwork change and checks are introduced on consignments and drivers entering the EU from the UK.

Borders

An Economic Operator Registration and Identification (EORI) number is a unique customs ID for businesses.

HMRC have published an EORI mythbuster (published 9 September) which dispels common misconceptions about EORI numbers

EORI codes are essential for anyone dealing with the customs system because they form a register of companies recognised by the customs authorities (HMRC in the UK). It has been announced that all VAT registered companies in the UK will automatically receive a code if they don’t have one already.

Companies that don’t manage any trade, including with the EU, may therefore receive a code that they never use but this will not present any problems.

If you would rather enrol for an EORI than rely on auto-registration then you can still do this: https://www.gov.uk/eori

Non VAT registered small businesses that intend to export may need to deal with customs will still need to apply themselves.

UK EORI codes will only help you gain access to the UK customs system. If you expect to deal with customs in EU countries you will need to register there too.

It depends on how many points of entry into the EU you use for your consignments.  A separate EORI number is required for every national customs authority that you deal with. However, this only applies to your points of entry into the EU. You don’t need one for every EU member state that your products might be sold in.

If in doubt, obtain more EORI numbers because this is a relatively simple process. 

No. However there are certain controlled products for which declarations will need to be made. 

For example – animals and animal products for outside the EU that have not been checked in the EU, tobacco, alcohol and certain oils which are liable for excise duty.

For more information see https://www.gov.uk/guidance/customs-procedures-for-goods-moving-between-ireland-and-northern-ireland-if-the-uk-leaves-the-eu-without-a-deal

You need to establish the basis on which you are currently selling to your customer.

If you are selling on an ex-factory basis where the customer/importer takes ownership of the goods from factory gate then they are responsible for the cost of Freight, insurance and customs procedures including paying tariffs VAT and duties. Under these circumstances you will not require an EU EORI number. 

However in most cases, if you are selling the goods on a delivered basis where you are the owner of the total consignment up until they arrive at your customer(s)  gate(s) you are the exporter AND THE IMPORTER.  You will therefore be responsible for all BIP procedures including the paying of duty.  This will be almost certainly the case for groupage consignments.

As with imports, it is advisable for companies for to appoint a Customs or Clearing agent in the country at point of entry.  Potentially most of your customers will be as inexperienced at doing this as you may be. Most of them will probably expect you to be delivering your goods duty paid.

We will update you with more information when we have clarification on issues such as duty deferment and the possible use of procedures similar to the Transitional Simplified Procedures if available.

Outbound livestock and animal products from the UK into EU 27 will have to pass through a designated Border Inspection Post (BIP) at the point of entry. You can’t just turn up at a BIP; every consignment has to be booked in advance. For cross-Channel shipments, there are BIPs at Dunquerque, le Havre and Caen, but current throughput at the Dunquerque BIP is already at two thirds total capacity.

Ports such as Rotterdam and Calais have made significant preparations for a no-deal Brexit. Importantly, Calais is launching a ‘smart border’ scheme that will prevent delays using a combination of pre-clearance of goods, number plate recognition and away-from-the-border checks.

UK guidance to French customs in the event of a no-deal Brexit can be found here. French Guidance (in english) can be downloaded here.

HMRC has announced Transitional Simplified Procedures, by which registered businesses could transport goods from the EU into the UK without making a full customs declaration at the border and postpone paying import duties until the month after import. Currently, this is only set to apply to roll-on, roll-off transportation. Therefore, it is important to alert your suppliers to register.

It is best to assume there will some delays but, irrespective of this, the better prepared industry can be, the easier it will be to keep goods flowing, even if there are some problems and delays.

This depends on existing practices.

Those businesses that already use a customs agent or software package for non-EU trade will be able to use these to make declarations on EU-UK trade and do not need to register for transitional simplified procedures. However, there will be additional customs formalities to comply with after leaving the EU and companies should contact their agent or software provider to discuss these and ensure they are compliant.

Those not already using a customs agent or authorised to use customs procedures will need to register online here. Before you register, you will need to have obtained an EORI number.

An agent cannot register for Transitional Simplified Procedures on your behalf – you must do this yourself. Once you have registered, your agent will then be able to submit customs declarations on your behalf.

Queuing is difficult to predict with any accuracy. The most optimistic scenario is for only minor delays. At the other end of the scale, tailbacks lasting several hours are conceivable.  

It may vary considerably from day to day and is likely to differ for imports versus exports.   

Delays will depend, in part, on the practices of companies, hauliers and the travelling public. For example, how many will cancel, postpone or re-route journeys? What proportion will travel with the right documentation to clear customs?  

Step 1 has been to encourage companies to prepare for the new procedures. This is to minimise the number of vehicles failing border checks and causing congestion.  It is also important that UK companies encourage their suppliers in the EU to prepare, so that goods entering the UK will turn up at the port with the correct documentation.

Step 2 is a light touch and efficient process at the borders, hence the Transitional Simplified Procedures announced by HMRC.

Step 3 is to encourage some routing away from Dover/Calais and Eurotunnel (expected to be the main bottlenecks) if this proves necessary. Government has urged companies to consider converting from roll on roll off freight to alternatives such as container transport (which flows through different ports such as Thames Gateway), where possible.  

Step 4 would be to respond quickly and pragmatically to any problems that arise on the ground.

No, the infrastructure isn’t available for the authorities to sort, check and prioritise vehicles in this way.

The UK will remain in the Common Transit Convention (CTC) after Brexit, designed for moving goods between the EU and EFTA countries (Iceland, Norway, Liechtenstein and Switzerland) plus Turkey, Macedonia and Serbia.

Goods in transit between France and Ireland will not be subjected to tariffs or other inspections applied to ‘third country’ imports. There will be a ‘green lane’ at the border for vehicles carrying only goods in transit.

The system governing this is called the New Computerised Transit System (NCTS) and various rules apply. Companies who intend to use NCTS for the first time after Brexit are advised to speak to HMRC or their freight companies to ensure they know how this will work.

Currently there has been little published about cross border shipping. The UK government have stated that Irish products can enter Northern Ireland without tariffs however if these products were to be sent mainland GB a tariff would be applicable. For more information Monitor the updates from NI ROI and GB

Tariffs

Unless a free trade agreement is negotiated, to take immediate effect, this would mean the introduction of tariffs on trade between the UK and EU, plus a different set of tariffs for imports into the UK from the rest of the world.

The UK has long operated within the EU Customs Union, which eliminated tariffs between member states and imposed a common set of tariffs across the EU to imports from other countries. Not all products are subject to tariffs but many food and drink items are.

If the UK leaves without a deal, it will no longer be part of the Customs Union so exports from the UK to the EU would become subject to EU tariffs. Under WTO rules, the EU could not exempt the UK unless a formal trade deal is agreed and lodged with WTO.

The UK would introduce its own tariff schedule and has announced its intended ratesgov.uk/government/publications/temporary-rates-of-customs-duty-on-imports-after-eu-exit/mfn-and-tariff-quota-rates-of-customs-duty-on-imports-if-the-uk-leaves-the-eu-with-no-deal

The rates differ significantly from the EU’s. They have yet to be ratified by Parliament and could be subject to change. Under WTO rules, the UK would need to apply tariffs equally to all countries, including those in the EU, except for where it has completed trade deals. 

In other cases, however, you will be liable to pay tariffs.

In March the government announced tariffs and quotas in the event of no deal. These have not yet been approved by Parliament and passed into law. We advise that you work on the basis of the existing announcement for now but stay alert for any updates.

If a withdrawal agreement is reached, then the UK will not need to introduce these until the transition period is complete, by which time it is likely to amend these tariffs to fit the new circumstances.  

The government announced that under a no-deal scenario an estimated 87% of imports by volume would face no tariffs; however, 13% of goods by value would face tariffs and/or tariff rate quotas.

These include a number of agricultural products – beef, poultry, pig meat, lamb and some dairy products.

  • In many cases, the level of tariff would be significantly lower than the tariff applied by the EU to imported goods. However, it also means that many imports from the EU would face import tariffs for the first time (since the creation of the single market).
  • For some products – cereals, potatoes, most fresh produce (except bananas), there would be no tariffs.
  • Tariffs would apply to all countries – EU and non-EU, except for certain existing preferential access agreements that the UK has maintained or negotiated with third countries. In addition, tariffs would not be applied to goods imported from Ireland into Northern Ireland.
  • These measures are temporary although it is unclear for how long the arrangements might last. It is expected that they will be reviewed over the first year and could then be refined, with further changes over time.   

This is a really complex area, and full details of the temporary tariffs can be found on the links below:

HMRC offers a service for helping you classify your goods correctly: https://www.gov.uk/guidance/ask-hmrc-for-advice-on-classifying-your-goods

If you are a member of a trade association, they may also be able to offer guidance.

Guidance on no-deal tariffsgov.uk/guidance/check-temporary-rates-of-customs-duty-on-imports-after-eu-exit

The full tariff of the UK 
assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785939/Tariff_Reference_Document_13_March_2019.pdf

Details of Tariff Rate Quotas (TRQs) that will apply: assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785571/TRQ_-_Ref_Doc.pdf

Guidance on tariffs in Northern Irelandgov.uk/guidance/eu-exit-avoiding-a-hard-border-in-northern-ireland-in-a-no-deal-scenario

The EU’s Generalised Scheme of Preferences (GSP) will be rolled over into UK lawgov.uk/guidance/generalised-scheme-of-preferences-countries

Reliefs from import duty on imported goods for specified usesgov.uk/government/publications/reliefs-from-import-duty-on-goods-brought-into-the-united-kingdom

Guidance on tariff rates and rules of origin applying because of rolled over preferential trade agreementsgov.uk/government/publications/the-customs-tariff-preferential-trade-agreement-eu-exit-regulations-2019

To calculate the tariff for your product, whether in relation to exports to the EU or imports to the UK, you first need to know the product code. The EU (and the UK) use the Combined Nomenclature  (CN) system, which classifies products on the basis of 8 digits, to give an 8 digit CN code.

The first two digits refer to a chapter
e.g. 10 for grains

the 3rd and 4th digits refer to a more detailed heading
e.g. 1006 for rice

the 5th and 6th digits comprise a subheading
e.g. 1006 20 for brown rice

while the 7th and 8th digits provide even more detail
e.g. 1006 2017 for long grain brown rice which has been parboiled

For some products additional digits may be used if extra specificity is required for tariff purposes
e.g. 1006 2017 13 for brown, parboiled, long grain basmati rice

Detailed information and guidance on EU tariff codes, duty and VAT rates can be found here: trade-tariff.service.gov.uk/sections

In addition to the correct CN code, knowing the composition of the product is crucial in obtaining the correct tariff. In some cases, identifying the correct CN code will be relatively straightforward, e.g. butter (04 05 10 00). However, in others, knowing the exact composition of the product is crucial to obtaining the correct tariff.

For example, calculation of EU tariffs for food products made with multiple ingredients, such as those found in chapter 19 (preparations of cereals, flour, starch or milk; pastrycooks’ products) is complicated.  Frequently, they consist of a fixed ‘agricultural’ component plus a variable ‘added-value’ element.  The fixed agricultural element will depend on the balance of ingredients such as grains, dairy, oils and sugar. This means that tariffs for similar products can vary depending on the precise recipe.

If this is unfamiliar territory, it would be sensible to contact a specialist adviser or the relevant trade organisation, using the links below.

Questions you will need to consider when classifying meat are whether the product is raw/cooked/seasoned? Bone-in/boneless? Which cut is it and what do the explanatory notes say on this?

The introduction to the chapters of the EU combined nomenclature provides some helpful guidance on classifying products as do the explanatory notes.

Chapter 02 Meat and edible offal

Some of the key chapter headings are as follows:

0201 Chilled beef
0202 Frozen beef
0203 Pork
0204 Sheepmeat
0206 Offal (red meat)
0207 poultry meat and offal
0210 codes (salted)

  1. For the purposes of subheadings 0210 11 to 0210 93, the term ‘meat and edible meat offal, salted or in brine’ means meat and edible meat offal deeply and homogeneously impregnated with salt in all parts and having a total salt content by weight of 1,2 % or more, provided that it is the salting which ensures the long-term preservation. For the purposes of subheading 0210 99, the term ‘meat and edible meat offal, salted or in brine’ means meat and edible meat offal deeply and homogeneously impregnated with salt in all parts and having a total salt content by weight of 1,2 % or more. (Chapter notes for chapter 2)

Chapter 16 includes Meat Preparations

  1. (a) Uncooked seasoned meats fall in Chapter 16. ‘Seasoned meat’ is uncooked meat that has been seasoned, either in depth or over the whole surface of the product, with seasoning either visible to the naked eye or clearly distinguishable by taste. (b) Products falling in heading 0210 to which seasoning has been added during the process of preparation remain classified therein, provided that the addition of seasoning has not changed their character. (Chapter notes for chapter 2)

Other products

Other chapters may be relevant for meat that is not fit for human consumption or by products.

You could consider sending a sample or details of the product to the customs authority in the market of entry (HMRC for the UK) to get an official classification.