Ascertaining the Logistics provider’s Capacity

The nature of freight forwarder and logistics providers services differs from provider to provider. In some cases, a freight forwarder is more of an agent arranging transportation and undertaking customs services. In other cases, the forwarder is more of a carrier providing a whole range of services either directly or subcontracted out.

We have set out separately, the full customs information that could be required, not all of which would be required in all cases. It is indicated where the information is mandatory in making customs declarations.

Traders’ carriers should be competent and trusted by Revenue and HMRC either in practice or preferably enjoying formal customs simplifications. Traders need to consider the logistics providers traders now use and seek assurance and comfort from them that they have the capacity to undertake the declarations both on traders’ behalf as importer and buyer and  the supplier as an exporter or a combination, in both the UK and Ireland as required.

They should have the ability to generate the necessary compliance documentation and furnish it to traders in a form that is available and can be used even if traders were to cease to use them. They would be required in the event of an audit which could happen up 6 years down the line.

If they have clear credible ability to offer the service as well as giving traders the assurance that the compliance documents will be available, then traders should ask them to let traders know what precisely they will require and through what channels it will be required. Traders should seek to ascertain whether there are any additional costs.

It may be that traders could furnish a commercial invoice for each sale with most of the requisite details and that this would suffice. Traders need to consider what way traders send information to the logistics provider when ordering the movement. It may be that traders can email a scanned copy of the invoice and that this will suffice. Some logistics providers have online systems / portals which traders might be required to use to which traders might need to populate with particular data.

The costs of import declarations are higher than for export declarations. Import declarations may be of the order of €60-€80 foe external provider while export declarations may be of the order of €20-€40. The logistics provider may not be willing to quantify the costs explicitly. The cost may be rolled up with the cost of other services.

Information Required by Logistics Provider

Traders’ logistics providers should be able to identify what information they will require from traders to complete. They should be able to identify and designate the channel through which this information is to be communicated.

Ideally, this should be part of traders’ existing interface/access point with the logistics provider, through either a dedicated terminal in traders’ premises or access through an online portal. Traders should consider how the existing order system can be supplemented on traders’ side to cover any additional details required.

It may be that the logistics provider enjoys simplifications which reduce the number of data items which is required on the ultimate entry. It may be that traders’ logistics provider gathers the information from basic information supplied by traders plus physical inspection of the goods.

It may be that the tariff lines for goods involve additional requirements, but this would be relatively unusual. Identification of any such requirements should be undertaken by way of a review of the tariff categories which can be done in the context of checking the duties. Some categories of products might involve some special handling considerations or be likely of their nature to have the relevant requirements. Traders should have come across these requirements in the case of the goods which traders already import from outside the EU.

Documents and Audit

The logistics provider must be able to provide traders with copies of the requisite customs declarations and other records they hold in electronic form for the purpose of satisfying traders’ obligations to maintain documentation. This could obviously arise in the event of an audit. The Revenue will hold traders responsible for traders’ customs obligations.

If there are failures which are attributable to the logistics provider this will not excuse traders in terms of traders’ obligations to Revenue. Traders might have very little recourse against the logistics provider under its terms and conditions or just in practical terms. Particular problems may be due to matters the logistics providers can say are traders’ input errors, even if traders’ personnel could not have understood the issues involved.

VAT Information

As mentioned in separate chapters, the VAT treatment may change. The change should be from the present EU acquisition or movement treatment to import / export treatment from a VAT perspective. This is dealt with separately in a further chapter.

It may be that traders’ existing system can accommodate the changes if they arose because no new type of VAT treatment is involved that does not already exist. The software may have an existing capacity to deal with export / import treatment from a VAT perspective.

Contract Terms with Logistics Provider and Agency

It is desirable to consider the contractual terms on which customs services may be provided by traders’ logistics provider. It might be hard to get a wholly satisfactory contract as they are likely to be in a strong market position in the event of Brexit. With any service provider, there may be small print whereby they can charge traders for additional unanticipated services.

There are two types of relations with agents as far as Revenue and HMRC are concerned. In one the logistics provider acts as traders’ agent and could be primarily liable for duty due and other compliance obligations. They would require back-to-back arrangements and security as well as cash if applicable before they would undertake these types of responsibilities on traders’ behalf. This is an indirect representation and is very hard to achieve. In practice, traders may be unable to find a customs agent provider will undertake indirect representation.

An alternative type of arrangement is where traders remain liable and traders’ logistics provider is more a representative than an agent who acts in traders’ name. This is a direct representation. It is the norm.

Traders would need to establish with traders’ logistics provider the exact terms of which they would undertake customs responsibilities on traders’ behalf. If there are any other requirements in terms of acting as traders’ agent, having an account and guarantee and paying duties and money for duties, this needs to be teased out with the logistics provider as part of the contingency planning. They may seek a power of attorney from traders, the terms and implications of traders should consider.

Other Customs Services

Customs brokers and agents are not regulated as such. They differ in the range of service they provide. The term customs broker/customs agent can be confusing as logistics providers and freight forwarder usually provides customs agent services. This can be a core part of their function.

There is really a continuum between freight forwarders who may be more in the nature of advisers who organise carriage and to do customs declarations as part of their services to freight forwarders who work out logistics and undertake carriage themselves while also providing services such as customs declaration services.

Customs agents and brokers usually provide additional services beyond declarations. It may be that traders’ experience shows that traders have more interventions by Revenue than anticipated with the result that these other services become more important. Customs agents brokers may give traders a wider strategic perspective than traders’ own logistics provider.

The customs agent or broker may be able to bring value-added services in terms of advice on traders’ processes and best overall practice. They may be able to assist better if there are complications at the border in some cases. They may be able to coordinate traders’ customs requirements better if there were a number of logistics providers involved. However, traders could purchase these services as required, without using the broker / agent to make routine declarations.

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