Are you prepared for the new rules on exporting to the EU in 2021?
Francesca Lombardi summarises the new customs rules that will apply to exporters from 1 January 2021.
The government has provided details of the new trading rules that will apply to businesses exporting from the UK to the EU following the end of the Transition Period. Businesses that regularly export to the EU should prepare for these new rules that will take effect on 1 January 2021, regardless of whether or not the UK and the EU agree a new free trade deal.
We summarise below the actions which businesses are likely to need to take to ensure they can continue exporting to the EU in 2021.
Economic Operator Registration Identification (EORI) Number
Ordinarily, an EORI number is required to move goods between the UK and non-EU countries. However, from 1 January 2021, GB exporters to the EU will need to obtain one for completing and declaring safety and security information. A separate EORI number may be required for GB exporters to Northern Ireland.
Businesses can apply for an EORI number online and it can take up to a week to receive one.
An EORI number is not usually required for businesses that only provide services or move goods between Northern Ireland and Ireland.
Businesses will need to check whether they are required to apply for an export licence/certificate to transport specified goods, such as food and livestock, to the EU.
The Customs Process
At this stage, businesses will need to decide whether they wish to complete the customs process themselves or appoint a customs intermediary to do so for them. The customs procedures are complex and, according to HMRC, most businesses use an intermediary. However, each business is different, and the decision will depend on its capacity and level of expertise to carry out these procedures in-house.
Appointing an intermediary
Businesses can appoint a person or company to deal with the customs process, such as freight forwarders, customs agents, or fast parcel operators. The government has published a list of customs agents and fast parcel operators on its website. However, it has warned that they are expecting a high demand for these services in the run-up to Christmas.
An intermediary can be appointed as either a direct or indirect representative.
Direct representation is where the intermediary acts in the exporter’s name. The exporter will be solely liable for keeping records, the accuracy of information on customs declarations and any customs debt. However, provided the exporter gives clear instructions, the intermediary may become jointly and severally liable if it makes a deliberate or unreasonable error.
Indirect representation is where the intermediary acts in its own name, but on behalf of the exporter. In this scenario, the exporter and intermediary are equally responsible for the accuracy of the information and jointly and severally liable for the customs debt, meaning that HMRC can seek payment from either.
An intermediary cannot act without written instructions from the exporter and such instructions will need to state whether the intermediary is acting on a direct or indirect basis.
Completing the process without an intermediary
If a business decides not to instruct an intermediary, it will be required to make its own customs declarations using the National Export System (NES), for which it will need to register. Due to the complexities of submitting declarations, the government suggests that businesses receive training and they can also purchase software to facilitate the process.
Once an export declaration has been completed using NES, the exporter will receive a unique reference number, which is needed to get the goods across the GB border.
Crucially, however, businesses will need to ensure that the EU importer has completed a similar process, namely that it holds an EU EORI number from the relevant EU authority, has obtained any required import licences and has completed an import declaration, to ensure that the goods are able to pass through EU customs.
Records of all goods exported to the EU should be kept for six years, as these may be required to apply for any appropriate reliefs or refunds.
Whether businesses decide to appoint an intermediary or not, they should take steps to prepare themselves for the new rules to ensure they can continue exporting to the EU after 31 December 2020 without disruption. Given that these rules are not dependant on any UK/EU trade deal, this is an area where businesses can ready themselves with a degree of certainty.