The UK’s trading relationship with Ireland and other EU member states will change fundamentally following Brexit.
At present, there is no real difference to an Irish company between selling goods to a buyer in Longford or London. However, Ireland is set to become a third country as far as the UK is concerned, and that changed status will require the same customs declarations and formalities required for exports to countries outside the EU. This will require companies to register for a customs Economic Operators Registration and Identification (EORI) number with Irish Revenue. This is the minimum customs requirement for trading with third countries.
But that’s just the start. Customs duties, changed rules on VAT, and lots of paperwork are also on the horizon.
Facilitating trade with third countries
Some commentators have painted this as a kind of nightmare scenario for Irish exporters, but Chris Houghton, Managing Director of UK freight forwarder Freedom Logistics is quite sanguine.
“While we don’t know what will happen, there are contingencies in place,” he says. “There are four options at present, deal or no deal, and a customs union or no customs union. And in all of those cases, it’s quite straightforward really. We are in the business of facilitating international trade. If in the future that means all EU countries will be third countries, the processes to deal with that already exist.
The main issue for many companies will be the prospect of delays. “The thing about the EU is that most freight comes in and out by truck,” Houghton notes. “Because there are no borders and no customs clearance at present, the fear is the system will not be able to cope in future and that there will be delays. But, whatever happens, we will have a process to facilitate the continued movement of goods. There might be some physical delays at the outset, and it might not be as smooth and fast as we would like but I’m confident that we will address that quite quickly.”
Managing UK customs procedures
While there are changes on the way for UK customs declarations, he doesn’t believe these should be of great concern to Irish exporters. “The only thing we can say is that whatever happens we will be able to facilitate customs clearance in the same way as we always have for customers around the world. We already have processes in place to charge back customs duties and VAT to sellers and we have partners in Ireland to facilitate that.”
Another fear for Irish exporters is that their UK customers will require them to look after the payment of all duties and tariffs. This is known as the DDP (delivered duty paid) basis of shipment. “A UK customs broker or freight forwarder can pay the duties on behalf of the exporter and charge them back later. We already do this for customers outside the EU and we would be happy to extend credit to Irish companies if they approach us.”
Indeed, the service can go further than simply paying duties and VAT. “We have a customer in Australia, and we have registered them for VAT here in the UK and we store their products in our warehouse for onward sale to their UK customers. As far as the UK customer is concerned, they are buying from within this country and not importing.”
Engage with your logistics provider
He doesn’t advise Irish companies to get involved in setting up complex new systems to deal with possible changes which may or may not arise. “Most goods come in by truck and most of the exporters will have a relationship with a trucking company. Those companies will have arrangements in place to ensure that goods keep moving to and fro, so the first thing an exporter should do is talk to their trucking company. If they don’t have anything in place they should look to find a customs broker in the UK. The British International Freight Association (BIFA) has a list of members on its website (www.bifa.org). The UK customs broker will be able to arrange warehousing facilities and financial representation in the UK if required. Our job is to make trade as seamless as possible and we’ll continue to do that.”
Get your paperwork ready
There are some changes which exporters should start making straight away, however. “It’s not so much the customs process but the additional information required that could cause the problems,” Houghton points out. “The invoice is critically important, for example. It has to detail precisely
- what is being sold
- where it is coming from
- where it is going to
- who is selling it
- who is buying it
- the value
At the moment you simply put the goods on the truck and worry about the paperwork later. After Brexit, if you don’t have the paperwork on the truck it will be held up at customs until the information is available.”