Customs Declarations and Logistics after Brexit – some legal and practical considerations?
As of 1 January 2021, and following the United Kingdom’s withdrawal from the European Single Market, the UK is now seen as a ‘Third Country’ by the EU, meaning that the UK is treated similarly to other non-EU member countries, such as China or the USA. UK-based companies engaging in international trade with the EU will also now have to treat EU member states differently when importing or exporting goods. This means that, for anyone moving goods in or out of the UK from or to the EU, customs declarations will be needed. Set out below is an explanation of the new rules and how they now affect cross-border trade with the EU.
Customs declarations are only one part of the documentary requirements for importing goods into the UK from the EU and others are required. In this article we have focused on the customs declarations element but if you would like advice on other elements, please feel free to contact us to discuss further.
Ultimately, the process and requirements of importing goods into the UK from the EU are complex and therefore many businesses are appointing specialist agents to undertake and manage the process on their behalf.
If your business is looking to appoint such an agent we recommend that an appropriate written contract is put in place with the agent to ensure that your business is suitably protected – if you would like advice on this, please don’t hesitate to contact us.
What is a Customs Declaration?
When goods are presented to customs on import to the UK, a Customs Declaration must be made. A Customs Declaration is a document providing information about the goods crossing the border into the UK. The document must contain a number of specified pieces of information, including but not limited to:-
- The consignor and consignee;
- The correct commodity code (see below);
- The country of origin of the goods;
- The value of the goods for customs procedures; and
- A full description of the goods and packaging.
When should a Customs Declaration be made?
The declaration can be made up to 30 days prior to the goods being imported, and within 90 days of the goods being presented to customs.
To assist with the transition period, a temporary measure was implemented in which most Customs Declarations on imports from the EU can be deferred until 31 July 2021. On 11 March 2021, an announcement was made in the House of Commons that this deferral option would be extended until 1 January 2022 to allow more time for businesses to adjust.
Who should make the Customs Declaration?
Any person who is able to present the goods to customs on import is able to make a Customs Declaration in respect of those goods. This could be, for example, the buyer, the seller or an agent acting on one of their behalves.
Generally, the person making the declaration must be based in the UK, except in certain specific circumstances.
Why are Customs Declarations needed?
The document has a number or purposes, including to help:
- Protect the countries’ environment, security and/or economy;
- Prevent the import or export of prohibited products; and
- Allow authorities on either side of the border to control the goods that are to enter or exit the country.
Incoterms®
Depending on the terms of the contract in question, the obligation to deal with importing and exporting the goods can lie with either the buyer or the seller. This may also depend on which Incoterm® rule, if any, is incorporated into the contract. For further information on the Incoterms® Rules, please click here to see our previous article. Of course, not all contracts incorporate Incoterms in which case the terms of the contract themselves will need to be considered to ascertain obligations.
For example, if the goods are sold incorporating the Ex Works (EXW) Incoterms®, the buyer is responsible to collect, transport and clear the goods for exportation from the UK.
Similarly, if a UK buyer was to purchase goods incorporating the Delivered Duty Paid (DDP) Incoterms® from an EU exporter, the seller would be responsible to clear the goods for export out of the EU and to clear the goods for import into the UK.
There are numerous other Incoterms® available for use and which may be incorporated into your contract so we recommend reviewing the contract to ascertain what, if any, Incoterms® apply and what the implications are of this.
Commodity Codes and Customs Tariffs
The correct classification of goods on the Customs Declaration is crucial for determining whether or not the goods are liable to import duty, and if so, at what rate the duty applies.
There are several codes to choose from which apply in different circumstances depending on the product and the country of destination or origin. For assistance in selecting the correct commodity code, please see: https://www.trade-tariff.service.gov.uk/sections.
Practical Points
Practically speaking businesses may find it a simpler solution to appoint an agent for the purposes of making Customs Declarations due to the specialised knowledge and software required to do so. As mentioned above, where an agent is appointed, we recommend an appropriate written contract is put in place between the parties governing this arrangement.
However, an important point to note is that, irrespective of the contractual terms, incorporated Incoterms® or whether an agent is acting, the ultimate liability for the information provided on the Customs Declaration will lie with the importer or exporter of the goods as the case may be. In any event, all records of imports and exports should be retained by businesses in case of a customs audit from HMRC.
The main focus of this article has been on Customs Declarations, but there are many other elements to take into account when deciding to import goods into the UK and further documents to consider. If you require advice on these further elements or required documents, please do not hesitate to contact us.
If you have any questions about contents of this article or how we could help you or your business, please contact Mark Chapman or Cesare McArdle on 01276 686222 or via email: mark.chapman@herrington-carmichael.com or Cesare.Mcardle@herrington-carmichael.com.
This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.
Mark Chapman
Partner, Corporate and Commercial Law
Cesare McArdle
Partner, Commercial and Construction Law
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