Practical Help with Brexit Customs from Declaron
To say that it has been a stressful year for businesses is a massive understatement. And while the innovation and grit of Irish businesses and Irish people through 2020 has been nothing short of inspirational, there is no denying that for the larger part of our economy, COVID-19 has taken its toll.
The signs of lethargy are clear, as we emerge each time from the ring, wondering how many more rounds we can go. Unfortunately, while we’ve been focused on navigating the pandemic, a killer swing from Brexit lies in wait. In recent research commissioned by Declaron and conducted by Behaviours and Attitudes, up to 90% of businesses said that COVID-19 had directly affected their Brexit customs preparations.
Declaron is a new Customs Agent, launched on the market by BDO and Fexco specifically to address the need to lodge Customs Declarations for trade between Ireland and the U.K.
As a Customs Agent Declaron’s focus is on ensuring compliance and the accurate completion of declarations. This minimises the risk of delays at the ports and prevents audit risks later on. Whether your business has prepared or not, Declaron can help.
They support their customers by providing webinars, practical guides and educational initiatives focused on customs clearance requirements. They’re also offering the following to support all Irish businesses:
- A Practical Steps Guide for Getting Prepared for Brexit Customs requirements, with all the links and documentation you need.
- An Easy-to-Follow Guide for Assessing Your Customs declaration filing Options as a Business (Below)
- An Automated Self-Assessment Tool for Understanding your Brexit Readiness and Declaron’s fit as a solution
- A Live Webinar on Brexit Customs and Q&A on Wednesday 16th
Additional resources (such as training on tariff classifications) are also available to registered customers who will be represented by Declaron as their agent to Revenue and will be using the Declaron platform to create traffic and manage their customs declarations through the real-time dashboard.
An Easy-to-Follow Guide for Assessing Your Customs Options as a Business.
While Brexit talks are still ongoing, the purposes of this guide is not to address the impact of a successful or unsuccessful conclusion but to address the new procedures coming into effect on 1 January irrespective of these talks. As part of this, Declaron will also set out the cost-benefit analysis for a Small, Medium and Large Company in determining whether or not to
1) Look to self-file customs declarations
2) Use their Haulage Company using traditional clearance
3) Sign up to a service like Declaron
Importing and Exporting from 1 January
Webinars from Revenue, available here, set out the new rules that will apply in 2021 and forward. For imports and exports, there will be significant changes as follows
- All Importers and Exporters need to lodge import and export declarations for their goods.
- There will be two systems to use
- AEP which is the customs system currently in force and which will remain in place for exports
- AIS which is the new import procedure which came into effect on 23rd
- Additional requirements will include a Pre-boarding Notification, Entry Summary Declarations for imports and a requirement to provide information to Customs 2 hours prior to departure.
- A confirmed customs clearance entry will be required in both Ireland and the UK prior to accessing the ports.
Responsibilities in lodging customs declarations – and risks for non compliance
Ø Tax, Customs, Legal
Lodging a Customs Declaration is an increasingly complex process with substantial impacts on tax compliance and a broadening definition of the debtor under customs legislation.
Brexit places a significant onus on Importers and Exporters to ensure their customs declarations are completed accurately and factually and that all items of information which Customs require is provided without error.
For example, you need to understand and provide Revenue with confirmation of the
– tariff classification of your goods
– origin of goods
– valuation of goods
– terms of trade
along with other items of information and there are strict rules associated with how to determine this information..
This is why it normally takes three years training and experience in order to produce a qualified customs clearance agent. Unfortunately experienced agents are in short supply in Ireland with the attendant risk of inaccurate completion of declarations and ensuing auditing, penalties and fines.
Ø Supply Chain, Purchasing, Sales
Along with the Tax and Customs risk inherent in supplying inaccurate information to Customs which is of concern to FCs and Tax Directors (along with reputational damage for the Board); there is also the supply chain risks of delays which will impact on those in logistics, shipping, purchases and sales.
Bad quality data will inevitably lead to audits and checks, delays to achieving clearance, trucks being parked up and attendant risks of missing sailings.
The cost of this in real terms in significant both for the purposes of
Ø Haulage Companies, Driver times and additional costs for new bookings
Ø Failure to meet customer delivery deadlines and potential fines for same
Ø Failure to secure supply to meet manufacturing and retail deadlines
Ø Staffing, HR and Office Hours
As we know Ferries operate 24/7 and as a result the customs clearance function will now also have to operate 24/7.
Revenue Customs staff will be operating 24/7 from end December and will be clearing goods to meet sailing requirements so queries can arise at any time day or night.
You will need to understand what your rhythm will be for making movements, will you be moving goods over the weekend, will you be putting goods on ships outside office hours? If you are making a 2am sailing then you will need to have someone on call for this. To have a single person available in a full 24/7 cycle requires a team of 5 people at a minimum.
Ø Technical support
If integrating directly yourselves to submit declarations there are a number of points to consider. The first is the cost of technical submission, you will need to know if the system you are using will charge you for every sent submission, even those that generate errors. This can often end up costing you 2+ submissions for every successful submission you make.
Secondly, you should also factor in the high level of likelihood that there will be ongoing changes to requirements over the next 12 months as systems get developed and bedded in.
So how do you go about deciding how to lodge declarations?
You have three options
1) Self- File using a customs software programme linked to the Revenue systems
2) Request that your Haulier/Freight Forwarder lodges these declarations for you
3) Employ a specialist clearance agency
You will need to undertake a cost-benefit analysis to not only include cost but also tax risks, supply risks and staffing.
Considering the critical impact of accurately completing these declarations for Revenue, when advising companies on which option to choose we always recommend looking at the following
- Decide how confident your business is, in your own understanding of customs and customs clearance requirements of both AEP and AIS, and whether you are able to address and handle error reports, orange or red routings and interact with Revenue and customs in relation to customs queries about your declarations.
If you do not have extensive experience in customs as well as clearance this is going to be extremely difficult to learn over the next 5 weeks.
- Discuss with your freight forwarder/haulier whether they have experience in this area and scalability.
For example, have they attended specialist clearance training and if so for how long? What customs software are they using? Have they a 24/7 capability to interact with Revenue and Customs on your behalf?
Are they experienced in relation to technical customs queries. (They don’t just enter data – they need to spot errors, address error queries, manage Orange and Red routings and interact with the Customs Authorities on audit queries arising).
Are they scalable? How many staff are in place to handle customs? (Typically completing a declaration will take 20-30 minutes)
Do they have additional resources available at supervisor and manger level to address the errors and audit queries?
- Investigate outsourcing to a customs declaration service – a specialist agent in the same way as you would outsource your CT returns or VAT returns and filings. To this end Declaron has a cost benefit analysis available here.