Getting ready for Brexit

Getting ready for Brexit

 

  •  Following the decision of the EU Council on the night of 10 to 11 April, the deadline for Brexit has been postponed from 12th April to 31st October 2019.

    This decision of the EU council applies immediately to the UK and to the rest of the EU, without further need for confirmation, ratification or votes from Parliaments.
    The UK has formally accepted the extension on Thursday 11 April, morning. During the extension period that can last up to the 31st October 2019, the UK is still a Member State of the EU.

    The goods keep circulating between the UK and the rest of the EU as they do today, without declarations nor Customs checks.
    Therefore, during this period DPDgroup will continue to operate between the UK and the EU as today.

    The DPDgroup Brexit project keeps going, to ensure that the group is “Brexit ready” and takes advantage of the extra time to fine tune its services.

  • The new regulatory configuration between the UK and the EU will imply new procedures, in particular Customs declaration and controls. DPDgroup is an Authorised Economic Operator that understands customs clearance operations because the group daily ships parcels worldwide.

  • DPDgroup is ready for a no deal scenario, and will ensure that trade continues to be as frictionless and smooth as possible. The group has developed operational processes to be implemented after Brexit, to include customs clearance services in dedicated gateways.

  • DPDgroup is working on plans to mitigate risks, including alternative road-based routes, and or air-based routes. DPDgroup is also investing in its customs clearance teams and facilities to be able to provide customers with an integrated and smooth service.

  • All parcel operators are facing the challenge of uncertainty regarding Brexit. Questions related to transport lead times and additional costs triggered by the new procedures cannot be fully answered at this time as there are still significant parts of these procedures to be closely defined.

For the goods with a value below 135£ that are shipped to the UK, the import VAT will apply and will have to be paid by the shipper

After Brexit

Exports to the UK -  Goods below 135£

No deal scenario

With no trade agreement in place, the parcels being shipped to and from the UK will have to be managed the same way the parcels to and from the rest of the world are currently being managed.

Exporting and importing to/from the UK

Businesses shall renegotiate their commercial terms, to reflect any changes in customs procedures and any new tariffs that may apply to UK-EU terms.

It is highly recommended to acquire a customs software and/or engage a customs broker. The product classification codes must be used and it is crucial to check whether some goods need an export licence. This is key to ensure that the right amount of duty is paid. This process can be triggered as early as possible, by contacting the Customs authorities.

Mandatory data to be provided for exporting goods to the UK

  • Description of goods and classification code
  • Value of goods
  • Where the goods have been manufactured
  • Shipper address and EORI (Economic Operator Registration and Identification) number in EU and/or UK
  • Receiver’s address and telephone number

4 necessary steps for businesses

EORI Number

EORI stands for Economic Operator Registration and Identification number. For any scenario, this number is mandatory for exporting and importing goods to/from the UK.
Apply for an EORI number if you do not already ship goods outside the EU. The registration for the EORI can be done via the website of local customs authorities. It can take up to 3 days to get this EORI number.

EORI Number = Country code + unique national number
Example of EORI number for a Polish exporter (country code PL) whose unique national number is 1234567890ABCDE → PL1234567890ABCDE

Commodities (HS code)

The HS codes are also known as Commodity Codes. These codes allow customs to identify the type of product, the VAT or duty rate that applies to the product to be exported. Goods cannot be exported or imported without these HS codes.

The HS codes can be found on this website: http://ec.europa.eu/taxation_customs

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

Commercial invoice

A commercial or pro forma invoice is needed when you ship goods outside the EU.

  • 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)

Both documents are a declaration including all information related to goods, that will be used by customs authorities in order to evaluate the duties or taxes to pay.

Data

For shipments done either via API (Application Programming Interface), an integrated system or EDI (Electronic Data Interchange), there will be necessary IT updates to be done in preparation for Brexit to ensure that data such as descriptions, values or HS codes are included and on DPD format.
Potentially, if data is not complete and/or incorrect, parcels will not leave the sending country.

Glossary

EORI number

Economic Operator Registration and Identification
The EORI system started on 1 July 2009. In EU, an EORI number is assigned to importers and exporters by local Customs, and is used in the process of customs entry declarations and customs clearance for both import and export shipments travelling to or from the EU and countries outside the EU.

HS (Harmonized System) code

The HS codes are also known as Commodity Codes. These codes allow customs to identify the type of product, the VAT or duty rate that applies to the product to be exported. Goods cannot be exported or imported without these HS codes.

No Deal or Hard Brexit

Britain leaving the EU with no formal agreement on the terms of the UK’s withdrawal or new trade relations. The UK will default to World Trade Organization rules.
A no-deal scenario is one where the UK leaves the EU and becomes a third country at 11pm GMT on 12 April 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:

  • Soft Brexit – Norway Model
    An arrangement in which the UK would have to allow freedom of movement of people, make a contribution to the EU budget – smaller than it currently makes – and abide by the rulings of the European Court of Justice, in exchange for remaining in the single market.
  • Soft Brexit – Canada Model
    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.

Find out more about the data to be provided by customers

Read our "Brexit Guide"