As 2022 approaches...
It has almost been a year since the end of the Brexit transition period, meaning most businesses will have started settling comfortably into their new routine. However, it is important to remember that the new trading relationship between the UK and EU is still evolving and 2022 is the host of some big changes.
For example, certain easements that were introduced to facilitate trade will expire, multiple new systems will be introduced, and sanitary and phytosanitary controls will commence for the first time on many goods from the EU.
So, if you think your business has mastered trading across the new border, then think again.
In this article, we outline three pitfalls that could disrupt your supply chain and what you can do to avoid them.
#1 Not communicating with your business partners when using GVMS for UK imports.
What’s happening? From January 2022, goods arriving in the UK via certain ports (mostly Ro-Ro ports such as Dover) will have to be declared to HMRC using a new government system called the Goods Vehicle Movement Service (GVMS). GVMS allows the haulier to present one reference at the frontier to prove that the goods have pre-lodged declarations (i.e., customs declarations submitted before the shipment arrives in the UK).
Whilst the goods make their way to the UK, various forms of risk-based analysis will be carried out. If HMRC wish to inspect a shipment, the driver will be informed to travel to an inspection site. If all goes well, goods will have been successfully cleared in HMRC’s system by the time they arrive in the UK.
However, what happens when things don’t go smoothly? What if the driver is instructed to travel to an inspection site but does not comply? Who is responsible?
What to do to prepare? It is crucial that a business communicates with its partners in the supply chain so that goods are moved in a compliant manner. Given the lack of clarity in the UK’s customs legislation on matters relating to GVMS, it is also in everyone’s interest to be clear in commercial arrangements who is responsible for when things go wrong. As always, having clear written instructions can help avoid mistakes in the first place.
If you already have contracts and written instructions in place with your service providers, it is time to review if they are still fit for purpose in 2022. If you do not already have contracts and/or written instructions, consider putting them in place this year.
#2 Confusing supplier’s declaration with statement on origin.
What’s happening? When a business imports using the EU-UK Trade and Cooperation (TCA) agreement, preferential rates of customs duties are claimed on the basis that the goods meet the requirements as stated in the agreement. The language used in the EU-UK TCA may appear deceptively simple but the definitions of key concepts are far from it. For example, a supplier’s declaration is not the same as a statement on origin made by the exporter.
Given the EU-UK TCA was released at the end of December to give businesses more time to adapt to it, an easement lasting 12 months was introduced. The easement allowed businesses to make a statement about the origin of the goods before it has had time to collate written evidence from its suppliers. This easement is expiring on the 31st December 2021. From January 2022, without having first collated written evidence from suppliers, businesses will not be allowed to make a statement on origin. This means the customer will not be able to use the EU-UK TCA to claim preferential treatment.
What to do to prepare? As such, businesses should be looking at how they are making statements on origin right now, and whether they are able to get supplier’s declarations to support their statements covering 2021 and beyond.
Given the deteriorating relationship with the EU, it is anticipated that more checks will be introduced. One of which could be checks on the originating status of the goods. The time to action is now, not when your goods are stopped at the border.
#3 Thinking that CDS is similar to CHIEF so there is no need to prepare.
What’s happening? From September 2022, the Customs Declaration Service (CDS) will replace the Customs Handling of Import and Export Freight (CHIEF) for imports. It will eventually become the UK’s single customs platform from 31 March 2023.
What to do to prepare? This change will impact all importers regardless of what you buy and where you buy your goods from. It is a misconception to think that as an importer, this change is irrelevant because the customs agent will take care of the import declaration. However, it is the importer’s responsibility to make sure that what is declared to HMRC is accurate. Therefore, importers must also learn about CDS.
Even for experienced traders, not learning about CDS will cause problems. For example, such traders may currently have internal process documents indicating the post-import checks they need to perform. They may also have instructions to customs agents regarding what to include in the import declaration. However, CDS is a different system to CHIEF meaning it has its own separate “language”.
The same instructions given for importing goods in CHIEF may not work for CDS. Therefore, learning about CDS is not only the job of the customs agent. It is also relevant to the importers themselves.
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Contact us today to get a bespoke plan to help you prepare for 2022.
This article was written by Jessica Yang, Director (JY XBorder Consulting LLC) and Toby Spink, Director (BKR Consultants Limited).
Jessica is a close associate of BKR and a fellow customs and trade practitioner based in London, with a presence in Zurich. She focuses on helping businesses tackle complex technical challenges in the rapidly evolving world of customs.
Want to learn more about customs compliance but don’t have much time?
Explore the crash course we have created in co-operation with the Customs Knowledge Institute. This course covers the key principles of customs from both the UK and EU perspective. It can be taken from anywhere, at any time, at your own pace.
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