On 25th June companies which have opted to defer their UK import declarations will need to start dealing with the consequences. 25th June marks the first of a series of dates when the UK will tighten its border controls. Will there be chaos or barely a ripple? What happens at the end of June could give us a window to the future.
The EU took an uncompromising approach to the imposition of border controls on imports from the UK. Full controls were imposed as soon as the clock ticked over into 1st January 2021 (CET). Meanwhile, the UK took a more facilitative approach. The implementation of various controls for EU imports has been deferred, including the need to submit full import declarations to HMRC, and many companies have been taking advantage of this. There is a catch, however. These imports must still be declared, and for those who imported goods on the 1st January, the deadline for making these declarations is fast approaching.
To better understand what is happening, it will help to explain an existing UK customs mechanism called Customs Freight Simplified Procedures (CFSP). This allows qualified companies to defer import declarations for up to one month by making their own record at the time of import (Entry in Declarant’s Records or EIDR) and making a Supplementary Declaration to HMRC at the beginning of the next month. There is more to it than that, but for the sake of simplicity, we can consider the post-Brexit arrangement in these terms but with three big differences:
- The Supplementary Declaration can be delayed up to 175 days from the date when the import is registered in the company’s own records.
- The option to defer declarations is open to all companies (except if you have been specifically told you can’t by HMRC or if you are importing controlled goods).
- You don’t need a CFSP registration or a duty deferment account … until you submit your first Supplementary Declaration.
It is not clear how many companies have taken advantage of this easement, but it clearly provided an attractive option to reduce complexity during a difficult period. Considering that there are roughly eight million shipments entering the UK from the EU each year, there could be a considerable volume of Supplementary Declarations to clear. We have seen something similar recently with the process of 'importing' to Northern Ireland from Great Britain. Here again Supplementary Declarations are used, but heavily supported by the government funded Trader Support System (TSS) and with a much lower volume of shipments. Even so, the transition was hardly seamless.
So, we can expect some extra administrative work, but this is not all. There will be some companies that have forgotten, or never understood, the new import requirements. After 175 days, people could be forgiven for letting everyday issues crowd out thoughts of yet more Brexit deadlines. Record keeping may not have been sufficient, leaving gaps in data. Surprises may be in store, with companies realising they have been importing controlled goods or that their imports incur duty because the goods do not qualify as having EU origin. Discrepancies could also arise between import records and VAT returns. Trying to work out what really happened and what might have gone wrong with a six-month time lag will not be straightforward.
The opportunity for most companies to manage this in-house has passed. HMRC state that CFSP registrations must be made at least 60 days, and preferably 120 days, before making your first Supplementary Declaration. At least for the moment, therefore, outsourcing is the only option, but this does not mean an abdication of all responsibility. The importer is ultimately accountable for their imports. They must ensure that accurate and timely declarations are made. There is also the ongoing question of capacity and cost in the brokerage industry. It is easily possible that some businesses will end up paying hundreds of thousands to clear their declaration backlogs.
Now is not the time to delay. You may need to take immediate action to maintain customs compliance, you may feel trapped in an inefficient mode of operation or you may want to be better prepared for the next Brexit cliff edge. Here at Centigo, we have over 300 consultants who are highly qualified, well trained and deeply experienced across a wide range of industries. In particular, we have experts in efficient supply chains, customs and border clearance who have helped businesses large and small through this kind of process before. We can bring to the table tried and tested approaches which can be tailored to your specific needs.
If you need help or have concerns, please contact our Partners in the UK: