In the event of the so-called hard Brexit by which United Kingdom leaves the European Union on 29 March 2019 (may also apply to new exit date on 31 December 2020), there would be an immediate obligation to undertake customs procedures on imports and exports between the United Kingdom and Ireland. The obligation would apply on every occasion of an import and export to require a declaration both to the Irish Revenue Commissioners and UK Revenue authority, HMRC.
The United Kingdom has passed legislation to replicate EU customs law in full so that on day one of Brexit, it would have the same customs rules as the EU but they would be provided for as UK law. Therefore in most cases what is provided for in the EU rules would apply in an equal and opposite manner in the UK under the new UK rules.
The UK has published some temporary simplifications which may be available to UK established importers and exporters, in no deal scenario. This will ease trade partially only, as the corresponding customs process on the EU/ Irish side, will still be required in each case.
The UK has published the temporary suspension of customs duties and processes in almost all cases of RoI to NI trade. There may be some mitigation for trade across the NI/ RoI border, on the Irish /EU side, but these would require significant and unprecedented changes to EU customs law.
The default position under customs law is that goods should be presented for inspection. In practice, under the current customs regime with third countries (i.e. non-EU countries) import customs declarations are made in advance and 92% of movements through the ports are ultimately green routed, and take place without any intervention by customs. Approximately half of the remainder are subject to documentary checks and physical checks respectively.
Every carriage of goods through the Great Britain landbridge from Ireland to continental Europe would require transit declarations and the following of transit procedures. Effectively, this is a process which seeks to ensure the goods leave and re-enter the EU in the exact same condition and intact. Much of the same information required in import and export declarations must also be returned when making a transit declaration.
Irish Revenue Approach
After Brexit, it is estimated that the number of decorations to Revenue will increase from approximately 1.7 million to 20 million per annum. Many traders will never have dealt with customs before so that there is significant possibility that there will be considerably more friction in trade than applies to trade by existing businesses with third countries.
The Revenue have indicated that they may undertake interventions, at least initially, away from the land border insofar as possible in the event of a hard Brexit. Revenue indicate they are aware of the challenge involved and will seek to facilitate the free flow of trade insofar as possible. However Revenue are bound by EU customs rules and indicate that there will be changes and friction does not now exist, in the event of a hard Brexit. They will use facilitation available in EU customs law where possibile.
Every export from one territory (the EU) to the other (the UK) is an import into the other. Customs obligations arise both for each export and each import. Because of the risk issues from the respective revenue authorities involved, the controls in relation to exports are lighter than those in relation to imports.
Irish Revenue – Northern Ireland Border
The Irish Revenue has not yet felt able to publish any information as to how it would deal with border controls on the island of Ireland in the event of a hard Brexit. It has acknowledged that customs requirements would apply from day one of Brexit, but it has indicated (in public seminars) that there would be no controls at or near the border.
The Irish Revenue has indicated that there has been contingency planning in respect of the Northern Ireland border but that in view of the declared intention of both the Irish government EU and UK to avoid a hard border in Ireland, it has proceeded to date on the basis that there will be no infrastructure at or near the border. It is acknowledged in presentations that in the event of a hard Brexit there would have to “difficult conversations” at Irish/EU level.
UK Approach and Concessions
The position in relation to the risk of a hard Brexit is evolving daily. If the risk increases in the countdown to 31st October 2019 (may also apply to new exit date on 31st December 2020), extra facilitations, waivers and measures may be provided for and announced by the EU authorities and UK authorities. It is therefore important that traders follow the sources of information on the Irish Revenue or HMRC websites.
An important consequence of an immediate Brexit is that the United Kingdom would be free to make its own customs rules. The European Union customs code and associated regulations made by the Commission is a single common rulebook which applies EU wide. The European Union has exclusive competence in customs and trade matters. Ireland is bound to implement the European union customs rules, in effect, on behalf of the European Union and does not have the same flexibility as the United Kingdom, in allowing the facilitations and waivers from the strict rules.
Across an important number of areas, the United Kingdom has announced waivers and facilitations, varying the strict customs and regulatory rules for a period of months, in the event that there is a hard Brexit. It is not apparent whether the European Union will extend the same waivers and facilitations for UK imports.
The United Kingdom has very recently acceded to the Common Transit Convention. This has the effect that the UK recognises the EU transit procedure for where goods move from one part of the EU (Ireland) to the other (continental Europe), (or in the other direction), through the Great Britain landbridge under a single EU transit procedure. Unlike the case with exports and imports, there is no requirement for a separate transit declaration and return to the UK Revenue authorities (HMRC).
Customs Procedures and Declarations
The detailed provisions on customs are set out in other parts of this website. Almost all customs declarations are now made electronically. Paper declarations are rarely used in practice.
The format for the single administrative document in its paper form is set out in another part of this website. The single administrative document is a common worldwide form of document developed in the 1980s under a World Customs Organisation initiative which gathers together in fields which are largely populated by numerical or alphanumerical codes, the critical information required for revenue authorities worldwide to assess customs declarations.
Both the UK and EU will continue to use electronic forms of the single administrative document. Accordingly the relevant online fields and codes for insertion will take a common format in returns to UK Revenue, HMRC and EU authorities such as the Irish Revenue. There are respective sets of fields in the single administrative document which cover import declarations, export declarations and transit declarations.
In effect the key data required for each of the relevant declarations are contained in the fields of the single administrative document and are entered populated and returned electronically.The information required for an entry summary declaration and exit summary declaration, comprising a more limited number of fields than the principal declarations are also contained in the single administrative document.
Transport logistics firms and freight forwarder may themselves enjoy formal and informal simplifications which they have qualified for and obtained from Revenue on the basis of their trusted status. Businesses who import and export, freight forwarders transport and logistics companies may be authorised economic operators for customs and or for safety and security.
The former status focuses on risks and issues around duty payment. Some simplifications and reduced requirements may be available in that regard. The latter status focuses more on physical security and they require particular infrastructure at a premises. It may allow reduced requirements around these risks.
Making the Declarations
Traders may make declarations and undertake customs formalities themselves, using customs software, purchased or provided as a service. This is most easily done where the trader undertakes its own transport and distribution.
Where, as is usually the case, a third party carrier moves the goods, it is necessary to liaise with the carrier in order to get and pass back information in order to complete the customs declarations. There are certain overlapping data and returns which the carrier or its agents are also require to make, which may be assisted or substituted for by the trader making a prior declarations.
Customs agents and customs brokers provide a range of services from advisory services around customs arrangements, advice on particular issues, completing declarations to the provision of the full range of customs services and advisory requirements.
Where, as is commonly the case, traders use external transport and distribution service providers, those providers commonly also provide customs export or import declaration services.
Logistics firms may provide a range of services from advisory services to being a full-scale complete integrated multinational transport and distribution provider. Similarly freight forwarder provide a range of similar services which focus principally on the arrangement of the movements and distribution of goods. Many providers now offer real-time tracking of goods. The range of services offered by providers varies significantly from agency arrangement to the provision of transport and distribution service as principal.
Much of the same key information including in particular the classification, timing and tracking of movements is assembled digitised and used as part of transport and logistics service, is required in the context of customs declarations.
Classification of Goods and Application of Tariff
The issue of classification of goods for customs purposes is not always self-evident. Issues of interpretation and classification may arise. See generally the other sections of this website in relation to the principles for interpreting the tariffs.
A trader runs the risk of charging customs duty where it is not due with obvious financial and economic costs. Alternatively, it may incorrectly declare the relevant duty with the risk of a later Revenue audit with interest and penalties as well as arrears of duty.
Traders logistic providers and intermediaries can qualify for formal simplifications under the EU rules which allow a simplified form of entry supplemented by more detailed forms of entry after month end. There is a formal simplification by which a business or transport/logistics intermediaries be qualified to undertake entries in their own books in lieu of certain of the customs return and entry requirements.
Third parties undertaking customs controls may do so as as agents on behalf of the trader or made themselves hold the relevant customs procedure and have the requisite responsibilities. In the latter case they would require undertakings guarantees et cetera from the relevant traders.
Importance of Accuracy and Complete Documents
Regardless of whether a trader undertakes customs returns itself or through a transport/logistics provider or customs brokers or agents, it retains responsibility for the accuracy of the information provided in the returns made. It will remain liable in a Revenue audit for under-declarations non-declarations and misreporting.
A major cause of delay and increased costs for customs compliance arisies from failures to provide the requisite correct information. The onus will be on traders to ensure that they can categorise the goods for the purpose of the customs code and supply this with the other requisite information to the service supplies as part of the goods movement. This will require integration of the customs information into existing IT systems dealing with goods movements and inventory control.