Brexit update February 2021
We are now well into February and we at Easy Customs are delighted to report that the team at Easy Customs have been working hard to ensure that all of our customers goods are moving smoothly. Well done Team!! A great achievement. We are now ramping up in anticipation of increased demand in quarter 2 of 2021 due to lockdowns being lifted and also the trader stockpiles reducing.
Now is a good time to take stock & review some points that have become clearer since 1st Jan 2021:
A Deal was agreed, that means no tariffs, right? – Not exactly, A deal has been reached but this is no ordinary deal. This is the first agreement in history where both parties will trade on less favourable terms with each other than before the deal was reached. As always, the devil is in the detail.
Rules of Origin – Origin is essentially the economic nationality of the goods being traded. In some cases, this is easily established. These are instances where products are what is known as wholly obtained in a country. This means they have been entirely produced in that country without any goods from other countries being utilised in the end product.
In some cases, it is easy to establish origin (i.e. fruit, vegetables etc). However, it can get more complicated with prepared foods with many processes in different countries and ingredients from different places. So, a ready meal made in the EU, but with many of its ingredients sourced from around the world. Origin in this case would be where the last “substantial transformation” has taken place. This is determined by looking to where the most value has been added (value added rule). So, if the finished ready meal is worth much more than the constituent raw materials then the origin could be determined as the EU.
The Trade and Co-operation Agreement resulted in no tariffs for EU/UK origin goods trading between the 2 jurisdictions. However, the so called “Percy Pig” scenario means that EU origin goods which are in free circulation within the UK lose their EU origin status and thus a tariff would apply. This is very common, especially in cars with a 10% tariff applicable.
Exporters – If you are sending goods under €6,000 to the UK you need to ensure that you include a statement of origin on your invoice and paperwork. This will allow the importer to claim a relief from duty.
REX – If the goods are over €6,000 then the exporter Must be REX authorised. This is the EU registered exporters system.
Postponed VAT accounting – for imports into Ireland VAT should be deferred using postponed VAT accounting. This means that there will be no cashflow impact for businesses as a result of importing. If your customs agent is making you pay VAT on import, then you may be missing a trick.
NI protocol – There have been difficulties at a political level regarding the implementation of the Northern Ireland Protocol. For those who are willing to adapt to the new regime we do see many positives for Northern Ireland traders as a result of the protocol. For example, we had one customer who before BREXIT shipped their goods to a GB warehouse. These goods were then added to by UK suppliers before then being shipped onto mainland Europe. With our help, the customer has now reversed their supply chain so that the goods from GB are now shipped into NI and then NI/ROI goods are added to the load before shipment direct to Europe. This is a much more efficient process and requires much less paperwork for the customer.
The lesson in this is that there are opportunities for local traders to use the protocol to our advantage in a perfectly legal manner.