Basic Customs Obligations
It will no longer be possible simply to sell directly to a customer in another EU state. In order to bring goods out of the United Kingdom, a detailed exit notice and export declaration describing various particulars of the goods including the precise classification valuation identification points of transit must be made to HMRC in advance.
The EU importer will be required to make a detailed import declaration to the customs authority in the EU state and pay or secure any customs duties and import VAT. A prior entry notice must be given and the carrier will also have an obligation to furnish a manifest with much of the same details.
Prior notice of the transportation is required HMRC or more likely, the importing EU’s states revenue authority may require to examine the documents of the goods by way of policing and risk management. Any customs duty that arises and VAT are payable in the country of import on arrival unless they are deferred under guarantee.
In the event of a free trade agreement between the UK and EU, it will be necessary to produce proof of UK origin of the goods in order for the sale to qualify for the reduced or zero preferential rates. This may be simple in many cases and simplified certification of origin may apply. In other cases, a deep delve into the composition of the particular goods will be required to ascertain that the sufficient UK content to qualify for the reduced or zero tariffs.
The procedures will apply in reverse to imports from the EU into the UK. This is an issue both for importers and distributors of finished products and UK businesses which import inputs and components in products manufactured or assembled in the UK.
Practical Issues
If the UK export does not have a corresponding importer who is willing and able to undertake all the customs obligations then the UK exporter its agents, transport companies or distributors will have to undertake the relevant steps on its behalf. It may have to give customs guarantees to the UK authorities and the customs authorities in the EU state of import.
It may be necessary that the goods are imported and brought to a distribution point within the other EU state pending sale onwards to consumers, from a logistics perspective. In order to avoid the cash flow cost of paying VAT and perhaps customs duties and other charges at the point of import into the European Union, it may be necessary to provide or enter an arrangement with a provider of customs warehouses within the EU state. Bonding or security would be required. Procedures must be followed on the release of goods from a customs warehouse.
All of the above procedure presupposes that the customs authority either in the UK or EU does not require the goods to be physically presented and examined. Once revenue authorities are familiar with the trader and effectively regard its activities as low-risk then physical checks at or near the border are less likely and less frequent. Both HMRC and the customs authority in the EU state of import will take a risk management approach.
Agriculture and Food
In addition agricultural products including live animals most foodstuffs. vegetable plants et cetera in and out of the European Union are subject to much more rigorous controls which involve inspections whether documentary or veterinary in almost all cases.
It might be that some food and agricultural product safety and control compliance arrangements are entered between the EU and UK which provide for some degree of mutual recognition, which may ease this burden somewhat. However, it is not apparent whether this will be possible. It is likely to require ongoing equivalence in food standards which may be incompatible with the UK entering trade agreements third countries which do not follow standards.