Getting ready for Brexit

Detailed plans for all scenarios

Getting ready for Brexit

Detailed plans for all scenarios

DPD is fully engaged in the Brexit process and has detailed plans in place.

Since the Brexit vote DPD has:

 

  • Formed a dedicated Brexit working group

  • Hired political affairs and customs experts

  • Lobbied the governments and authorities to keep trade agreements

  • Worked with key departments and authorities – Customs, EU Commission, UK Treasury – to have our say on behalf of our customers

 

What will DPD do next?

  • Remain fully engaged in the Brexit process
  • Publish regular updates to our customers
  • Ensure our interests are taken into account

The diagram on the page opposite shows the five potential scenarios the UK and EU currently face. Of the five scenarios only the first includes a deal being agreed by all parties and would enable a seamless orderly Brexit with trading remaining as it is today. While DPD is working extremely hard towards and remains committed to helping the governments achieve a trade deal, we have to plan for the scenarios in which the UK leaves the EU without a deal in place. To this end we have produced a short guide outlining the key changes that would be required in order for our customers to continue cross-border trading.

Brexit scenarios

Our thanks and acknowledgment go to the Institute for Government (UK think tank) for the above diagram

Of the five likely Brexit scenarios, only one leads to an orderly Brexit.

  • Four scenarios lead to a no-deal Brexit.
  • No-deal Brexit will impact international trade and cross-border parcel movement.
  • DPD has therefore prepared contingency plans, which are outlined in the following sections

Working with our customers in a no-deal Brexit world

With no trade agreement in place DPD would need to treat your UK-bound parcels the same way we currently treat your rest of world (ROW) parcels.

 

Exporting and importing from the UK

Businesses are advised to: Put steps in place to renegotiate commer–cial terms to reflect any changes in customs excise procedures and any new tariffs that may apply to UK-EU terms.
Businesses must use product classification codes and check whether any of their goods need an export licence. This will be essential to ensure your customers pay the right amount of duty and we recommend that you start the process early by contacting Customs authorities. In the event of no trade agreement being in place, you will need to provide commercial or pro forma invoices in the form of data for us to be able to export your goods.

 

Typically the data required includes: 

  • Description of goods and classification code
  • Value of goods
  • Where the goods have been manufactured
  • Shipper address
  • The VAT number of the importer
  • Receiver’s address and telephone number

If you already use DPD for non-European countries, then this process will already be familiar to you. For our customers selling to UK-based consumers, it’s important to capture a valid mobile phone number and email address and to check that this information is passed to us in your data. As with all shipping data, it is important to check all elements of the address, telephone number and email address and ensure these are sent to DPD so we can give the best delivery experience to your customers. In a post-Brexit no-deal scenario, DPD would also need this information in order to contact the recipient to pay Duties and Taxes where applicable. This would have to be done be-fore goods can be cleared by Customs and subsequently delivered to your customers. Alternatively, DPD could offer you a Deli–vered Duty Paid (DDP) service, where you pay the duties on behalf of your customers.

Important initial measures

Commodities (HS code)

Start looking up HS (Harmonisation) codes for the products that you wish to export from the EU. These HS codes are also known as Commodity Codes. These codes let Customs know what your product is, and what VAT or Duty rate to charge for the goods. Goods cannot be exported or imported without these HS codes. If you have a number of different products to sell, you should start compiling these codes now.

Here is a link for the Taric site for the EU: https://ec.europa.eu/taxation_customs/

This site will help you to find your HS codes.

Structure of the TARIC codes and of the additional codes:

 1 to 6 are world wide identical (except some countries)
7 to 10 : details of the commodities
11 to 14 : additional code at import impacted the duty code

Commercial invoice

It is mandatory to issue a commercial or pro forma invoice when you ship goods. It is mainly a declaration including all information relating to goods, which will be used by customs authorities in order to evaluate the duties or taxes to pay. A commercial invoice is used when the goods are related to a commercial transaction or for resale. A pro forma invoice is used when sending goods without any commercial value (for example samples).

1. Sender details
Sender

2. Reason for export
For example: sale, repair, return after repair, gift, sample, personal use, not intended for resale, replacement or personal stuff.

3. Incoterms
Indicate the Incoterm that best describes the conditions of the transaction. For example, DDP (Delivered, Duty Paid).

4. Description of goods
Generic or imprecise descriptions are not authorized and are sources of additional delays when clearing customs. The description must include the denomination of the articles, the quantity per article, the composition, unit value and intended use. For example, qualify articles only by the terms "samples", "parts" or “spare parts“ is not acceptable for customs classification and security.

5. Customs classification
This is the product identification code used by the exporting country for the classification of export goods. Indicating the customs nomenclature of each product facilitates customs clearance and avoids delays.

6. Country of manufacturing / origin
It is the country where the goods were manufactured and not the importing country.

7. Shipping costs
The transport rate charged by the carrier and paid by the sender.

8. Total declared value
This is the total value of the transaction for the customs according to the Incoterm selected. The total value indicated on your invoice must match the value declared on your waybill.

Handelsrechnung

Fazit

Negotiations between the UK and the EU are still taking place as this guide is being prepared. It is impossible to predict whether or not a trade agreement will be reached.

Whatever the outcome: In the case of a no-deal scenario, we at DPD know what to do. This guide gives you a thematic overview. As negotiations continue, we will publish further documents and recommendations at regular intervals.

We will be following the progress made in negotiations with the 27 EU Member States, the border options for Ireland and the likely future scenarios. At the same time, we will keep you, our customers, informed of how these factors affect our business activities and how we can turn them into an advantage. The key questions – ‘Will it cost more to send parcels to the UK after Brexit?’ and ‘Will parcel deliveries take longer?’ - cannot yet be answered, but we can assume that transport costs and delivery times will change in the event of a hard Brexit. We will continue to monitor this situation and keep you informed of the latest developments.

A guide to Brexit jargon

No Deal oder Harter Brexit
Britain leaving the EU with no formal agree–ment on the terms of the UK’s withdrawal or new trade relations. The UK will default to WTO rules.

Note
A no-deal scenario is one where the UK leaves the EU and becomes a third country at 11pm GMT on 31 October 2019 without a Withdrawal Agreement and framework for a future relationship in place between the UK and the EU.

Soft Brexit
Leaving the EU but staying as closely aligned to the EU as possible. It could keep the UK in the single market or the customs union or both. It could involve British compromises on free movement of people, allowing EU citizens rights to settle in the UK with access to public services and benefits.

Three examples of Soft Brexit exist:

Soft Brexit – Norway Model
Eine Vereinbarung, bei der das UK den freien Personenverkehr erlaubt, einen Beitrag zum EU-Haushalt leistet – geringer als der aktuelle Beitrag – und sich den Entscheidungen des Europäischen Gerichtshofes beugen müsste, um im Binnenmarkt zu bleiben.

 

Weicher Brexit – Kanada Modell
Refers to a free-trade agreement between the EU and Canada which removes lots of barriers to trade between the two, but not as many as the Norway model – which involves signing up to more EU rules, contributing to the EU budget. Very limited Duties and Taxes applicable.

 

Soft Brexit – Customs Partnership (Chequers plan)
This proposal, also known as the hybrid model, would enable trade in goods between the UK and Europe without the need for customs checks. Some say it would help solve the Irish border question too, as the UK would collect the EU’s tariffs on goods coming from other countries on the EU’s behalf. If those goods stayed in the UK and UK tariffs were lower, companies could then claim back the differ–rence. Duties and Taxes with reduced rates applicable on specific goods only.

 

Sources

https://www.instituteforgovernment.org.uk/brexitbrief

https://www.gov.uk/government/brexit

https://www.gov.uk/government/publications/classifying-your-goods-in-the-uk-trade-tariff-if-theres-no-brexit-deal

https://www.gov.uk/government/publications/trading-with-the-eu-if-theres-no-brexit-deal

https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal

https://ec.europa.eu/info/departments/taskforce-article-50-negotiations-united-kingdom_en

 

Imports of goods into the United Kingdom

New mandatory VAT registration for imports of GBP 135 or more into the UK: If you are shipping GBP 135 or more parcels to the UK, you must register with HMRC, the UK Customs Office, to pay VAT. Registration is simple.

 

A full description can be downloaded here.