Managing Brexit Challenges through Inward & Outward Processing
Aviation and aerospace companies in Ireland export 60 per cent of their products to the UK, and 40 per cent of that to Northern Ireland, where there is a dynamic industry featuring well-known names such as Bombardier, Takumi, and DPF Engineering. The Emerald Aero Group comprises 14 Irish companies in this sector.
The supply and production chains of aerospace companies can involve multiple movements of parts across borders.
At the ‘Get set for UK customs’ event, David Lucey of Enterprise Ireland introduced Terry Madden, a consultant with LBS Partners, to explain how it had managed to prepare Emerald Aero Group companies for post-Brexit conditions.
This was to help business understand challenges associated with both inward processing and outward processing (IP/OP) in the near future.
- Inward processing allows companies to obtain VAT and Duty relief on goods moving cross-border.
- Outward processing allows businesses to temporarily export outside the EU, for processing or repairs.
VAT and SAD are the main issues
The main concern for the Emerald Aero Group was VAT, and Customs transactions (SAD) and how it they would be administered and/or charged when third parties were involved.
LBS and the Emerald Aero Group worked on how best to achieve efficient IP/OP after Brexit. Madden gave an example of how some aviation components shuttle back and forth across the Republic/NI border several times during their creation.
“We get the raw material in from the UK or Northern Ireland, then it’s machined – then sent back to the UK or NI for painting, back to Limerick for sub-assembly, and then to Northern Ireland, or the landbridge, the UK. So we needed to know the best solution, when you are crossing the border multiple times.” Terry Madden discussing the processes used by the Emerald Aero Group.
Madden told the audience that a Comprehensive Guarantee (CCG) must be in place, presented to the customs authorities, to protect against defaults.
SAD can be good
As part of the process, the aerospace cluster will be submitting their own customs declarations also known as SADs. This declaration is used by EU members for trade with non-EU countries. It states:
- What goods are
- Commodity code
- Customs procedure code
Although the SAD is the simple route, there are still 54 sections to be filled in, unless you employ a software company to create a web service that makes things much simpler.
He also noted that the Comprehensive Guarantee can take eight weeks to set up, and advises not to leave it too late. Madden stressed the importance of this, as it underpins the customs process around inward/ outward processing.
As part of the process to get Inward/ Outward Processing authorisation, an audit is completed by Revenue. Some of the questions included “what is your yield rate?” This could apply, he said, if you manufacture a part from a bar of steel. “What do you do with your scrap? Is it going back to NI or the UK to be scrapped?” All these things have to be considered.
Whatever happens, Emerald Aero Group can rest assured that it is ready for anything now, as Enterprise Ireland hopes all Irish companies could be. “Our SADs are ready, and when Brexit happens we will upload them on 1 January” Madden said.
Understand how inward and outward processing can make customs processes more efficient with Enterprise Ireland’s Brexit: Act On Initiative.