FSPA Brexit Customs Checklist

With the political situation somewhat uncertain, FSPA members are advised to turn their attention to preparations for the United Kingdom leaving the EU with no deal. This document will focus on what businesses should consider when developing a contingency plan in order to have the best change of continuing to trade with customers in the EU after Brexit.

Currently goods can travel freely between the UK and EU member states, so in theory it is as easy to ship goods from London to Paris as it is from London to Manchester. If there is a no-deal Brexit, this is likely to change and there will undoubtedly be significant amounts of friction at the border which FSPA members will need to factor in to their operations.

If a business already trades with non-EU member states, it should have a solid foundation on which to begin its preparations for importing and exporting to the EU. If a business does not, it will need to ensure that it has the appropriate registrations in place.

In order for any business to import or export, it should register for an EORI number (Economic Operator Registration and Identification number). Without this registration, it is very difficult for an importer to recover import VAT, and difficult to zero-rate goods for export, meaning that VAT could be unnecessarily be incurred, making products uncompetitive.

Members should be aware that their products may in the future be subject duty on goods imported from the EU. Whilst it is not possible to say what duty rates the UK will choose to apply in the event of a no deal Brexit, the working assumption is that the UK will charge the current EU duty rates. Traders should look to identify what these rates will be and be prepared to account for the corresponding amount of import duty. The business must decide whether it is prepared to absorb the extra duty cost, or to pass the cost of the duty on to its customers. Conversely, UK goods may also be subject to import duties into the EU, and the duty rates will be the same as the EU applies to third-country trade in the event of no-deal.

Goods will undoubtedly have to meet product standards as they do now, and we are in the position of knowing what those standards will be for goods destined for the EU market. However, we do not know what standards the UK will apply. EU safety standards are expected to remain the same, but UK safety certification may no longer be acceptable after Brexit, so consideration should be given to how businesses will continue to certify that products meet EU standards, and this may mean partnering with an EU certification agency where required.


Importers and exporters should ensure that the following points are considered.

  • EORI number – Businesses need to be issued with an EORI number in order to import or export goods.
  • CDS – Importers will also have to register on HMRC’s new customs declaration system, CDS.
  • Delays – It is likely that goods shipped through ports such as Dover and the Channel Tunnel could face heavy delays. This should be factored into logistics lead-times and consideration should be given to alternative routing such as through existing EU/UK container ports where the customs infrastructure already exists.
  • Terms of trade – Contracts with customers should be reviewed to ensure that it is clear who is responsible for customs clearance and for paying import taxes. If the exporter is responsible, it could trigger a VAT registration and accounting requirement in the country of destination which may be avoidable. In addition, this may also trigger a requirement to register for corporation tax in EU member states.
  • Beware of trade between branches – Customs authorities do not allow sales between branches of the same company to be used as the value for customs purposes, and will often insist on another method of valuation being used. If you operate a branch structure this point should be carefully considered.
  • The last sale before import is key – If you sell goods from one country to another, for example your customer is in the Republic of Ireland, the last sale in a chain of transactions is the sale that any duty liability in the Republic of Ireland would be based on. This means that duty would be paid on your margin if supplying goods that have previously been imported into the UK to a customer in the EU.
  • Instruction of freight agents – Freight agent (those making customs declarations) will need to have certain information in order to make a customs declaration. Although the agent makes the declaration, the importer/exporter is responsible for the accuracy and therefore clear and accurate instructions are vital to ensuring compliance.
  • Agent empowerment – An agent will need to be empowered to act on the business’ behalf, but the business shouldn’t make this empowerment so open that it absolves the agent of all responsibility.
  • Customs procedures – There may be some benefit in using customs procedures. For example, customs (bonded) warehousing will allow a business to store goods in the UK and subsequently export those goods without incurring the UK import duty; and Inward Processing will allow an importer to bring in components duty free, process into a finished product and export without incurring duty. Any business with such a business model should explore the many facilitations on offer to UK traders.
  • Fulfilment – Beware that if you fulfil the EU from the UK, or the UK from the EU, it is possible that if goods are stored in one country, the future use of any trade agreement such as GSP may be disallowed on import into the final destination, and therefore more duty cost than envisaged may be incurred.

Importers should ensure that the following points are considered.

  • Duty deferment – How a business pays import taxes at the border should be considered. An agent will usually charge a percentage of the cost of the taxes for settling these charges on the importers behalf. A business can however apply to HMRC for its own duty deferment account, but it will have to provide a bank guarantee for the duty.

Exporters should ensure that the following points are considered.

  • Beware of Ex-Works terms – If a business trades on ex-works terms, it is vital to ensure that if the customer is exporting the goods the business gets provided with acceptable evidence of export in order to allow zero-rating of the transaction for VAT purposes. If the business does not hold such evidence, HMRC could disallow the zero-rating and the business may incur the VAT which would be difficult to recover from your customer.
  • Export controls – UK export controls for “dual-use” goods may apply to shipments to the EU. If a business’ exports could potentially be used for an unintended purpose such as torture or human rights abuse, or the business is supplying an organisation such as a nuclear installation or military/police force, the shipment could be subject to export restriction.
  • Product standards – Businesses must ensure that they can provide evidence where required that goods meet the relevant product standards