Businesses' initial plans for post-Brexit trading rules tended to be focused on protecting existing supply chains and trading relationships. Karen Robb explains why now is the time to be reviewing those decisions and considering whether a more strategic approach to customs is needed.

Customs can impact many teams within a business. From procurement, through finance and operations, to sales, strong customs processes built around a clearly defined strategy can improve customs management within an organisation.

In preparation for Brexit, many businesses focused heavily on short term operational challenges and made decisions based on perceived commercial threats. As the immediate risks have been resolved, more businesses have been working with us to evaluate the decisions that were made at the time and determine whether alternative solutions may now be available that offer more efficient supply chains, mitigated duty costs or better customs processes and controls within the business.

Key considerations in customs strategy

  • Reviewing duty reliefs, such as inward processing, temporary admission, and customs warehousing –were these implemented in haste and you’re not seeing the benefits you’d hoped for? Or might such duty mitigation help ease cost pressures now that short term operational pressures have eased?
  • Understanding ways to improve the customer experience for EU-based customers by taking responsibility for more of the physical and fiscal aspects of the transaction
  • Improving knowledge of the free trade agreements the UK has signed and ensuring procurement teams appreciate the opportunities available to mitigate duties when deciding where to source goods from
  • Optimising procedural controls for customs to reflect the tax and accounting compliance requirements of schemes such as SAO and BRR+
  • Developing knowledge within the business of customs compliance requirements and determining where within the organisation customs is managed and monitored

Now is a great time to revisit the management of customs and consider whether a fresh look at the strategy will offer improvements or cost mitigations or both.

Advanced valuation rulings

Recently HMRC has launched a new service that allows importers and exporters to apply for a binding ruling on the correct customs valuation of goods. This ‘completes the set’, as binding rulings are already available for the classification and origin of goods.

Customs declarations require a value to be declared. For multi-national businesses trading goods between connected parties, and for situations where no sale of the goods occurs, there can be uncertainties when applying the customs valuation rules.

While the on-line application process is straightforward, we would encourage potential applicants to consider the detailed nature of the customs valuation rules and how these apply to the specific circumstances before submitting an application. This is particularly true where the interaction of transfer prices and customs valuation needs to be considered or where target net operating margin models result in post-shipment changes to the value of the goods.

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Northern Ireland Protocol/Windsor Framework

In February it was agreed that changes would be made to the Northern Ireland Protocol (NIP). These included the planned introduction of ‘red’ and ‘green lanes’ from October 2024, where goods could be declared ‘not at risk’ of entering the EU’s single market.

An expansion of the certified trader scheme was also announced. It will be called the UK Internal Market Scheme and businesses established in GB or NI can apply to become authorised. The application requires details of the records, systems and controls used to support trade with NI. The application is made through HMRC’s website with the scheme becoming active from the end of September 2023.

Approved businesses will be able to make simplified customs declarations that require the completion of fewer data fields. For GB established business, an indirect representative will be required in NI although for most this will continue to be the Trader Support Service (TSS).

The movement of parcels between GB and NI should also become simpler as further easements have been introduced in this area. Single item shipments, to businesses or consumers, weighing less than 100Kg will usually fall within the definition of parcels under the agreement.

HMRC has also confirmed that reclaims can now be made for customs duties paid on the import of goods into NI from GB upon which duties were originally paid as the goods were considered ‘at risk’. Claims will need to be supported by evidence that shows the goods didn't enter the single market.

Applications for the UK Internal Market Scheme have opened and we would advise those that send goods to NI to begin considering drafting an application. Authorisation will be required to make use of the ‘green channel’ once the scheme is fully operational.

A number of important customs changes are in the process of being implemented. Now is a good time to check that you're making the most of the reliefs available, up-to-speed with the changes, and are comfortable that compliance is sound. We're working with a number of clients on the strategic nature of customs operations given the changes afoot and would be pleased to have an initial discussion with you concerning similar matters.


For more insight and guidance, get in touch with Karen Robb.