What impact will the new rules have on EU products arriving in Britain?
January 1 saw stricter post-Brexit customs rules introduced for companies trading with the EU
New Year’s Day 2022 marked a year since the unprecedented trade agreement was struck between the UK and EU. On the anniversary, new customs rules were introduced to help implement the deal’s policies. Initially, checks are expected to be minimal, but will become increasingly stricter throughout the year.
What new rules are being introduced?
On January 1st, a new set of stricter post-Brexit customs rules came into effect, placing further restrictions on companies trading with the EU. Although the new rules will take some time to be fully integrated, there are some clear changes to adhere to.
Exports between Great Britain and the EU will now be subject to full customs controls. This means that any goods being brought into Britain will now require all necessary paperwork to be completed before entering. It also mean they’ll require customs clearing before being allowed to leave the port. Moreover, any extra tariffs due must be paid at the time of importation.
What checks must take place?
The rules state that any animal and plant-based products require statements of origin certificates to support them. However, these don’t have to be submitted for thorough checks at this time, as is currently the case for goods arriving in the EU and Northern Ireland from Britain.
All drivers must now also declare their goods and point of origin, however checks are expected to be kept to a minimum until the summer, when regulations are certain to be tightened and checks will be more stringent across the board.
Why are they being introduced now?
The changes come just a year after the EU-UK Trade and Cooperation Agreement with the European Union. Last year’s landmark agreement is the world’s biggest zero-tariff, zero-quota free trade deal; enabling British businesses to trade freely with Europe while also having access to new, international trading opportunities.
The new rules mark the anniversary of the agreement, after what’s been regarded as a ‘transition year’ for post-Brexit Britain. As the trade deal is phased in, rules and policies around trading in the EU will be introduced to support it, as administrative checks are accelerated.
What impact will the new rules have on EU products arriving in Britain?
Goods arriving into Britain now require all checks and forms to be filled out and completed at least four hours before arriving, or they risk being rejected at the border. Prior to the new changes, HM Revenues and Customs permitted a delay of 175 days for companies submitting customs declarations.
But as of January 1 2022, the ability to delay submissions will end entirely. It’s therefore vital that businesses submit their customs declarations as early as possible, to minimise any potential delays in transportation. There will also be marginally stricter rules on country of origin documents, with goods arriving into Britain requiring declarations. These rules are also expected to be escalated throughout the year.
Prime Minister Boris Johnson says that the government will “go further and faster” in taking advantage of the “enormous potential that our new freedoms bring” in 2022. Although there is good reason to be optimistic, businesses should prepare for further disruption as new regulations are enforced.
What will change in the summer?
From July 1 2022, transported goods will undergo more meticulous checks, similar to those already taking place on food products being sent to the EU from Britain.
Some of the necessary requirements will include:
Animal products e.g. meat, milk, eggs and honey, must include a “Products of Animal Origin” certificate. Similarly, plant-based food products also require a certificate of origin.
All checks will be conducted at the designated Border Control Posts (BCPs) or Control Points, potentially leading to delays and issues at the border. Some of these checks are happening already, for goods arriving in the EU and Northern Ireland from Britain.
Will further restrictions be introduced?
From September 1, 2022, the same certification and physical checks are set to be introduced for all dairy products imported from the EU. In November, certification and physical checks will be introduced for all remaining regulated products of animal-related products, including fish.
Since the introduction of new rules post-Brexit, HMRC has taken a fairly lenient approach when it comes to punishing drivers showing incorrect documentation. Few penalties have been issued to those showing paperwork discrepancies, but this will change no doubt moving forward.
Currently, both Northern Ireland and the Republic of Ireland are exempt from such changes, whilst politicians continue negotiations around the Northern Ireland protocol. Goods coming to Britain from the Republic of Ireland will continue under the same rules as before, meaning the 175-day delay will remain in place. Checks on goods going from Britain to the island will also remain the same for now.
“The retailers that have taken the time to get the right guidance will be at the front of the queue going forwards. The EU is a huge market that can’t be turned off, you should keep that door open and continue to do your homework.”
Early this week, our friends at Fruugo, the online trading platform that makes it easy to buy and sell products from around the globe, hosted an hour-long webinar to discuss how the first two months of Brexit have affected international trading. Our Chief Commercial Officer, Mark Elward joined industry experts, Fruugo’s Chief Revenue Officer, Hakan Thyr and Matthew Clark from PwC.
Mark began, “at Huboo, preparations started in September. We made internal amendments to the dashboard and platforms to incorporate drop-down fields to include HS codes, countries of origins and information for the new rules beginning Jan 1st. Beginning in October we also initiated conversations with our portfolio of six international parcel carriers.”
“The impact of the delays in January! These were huge delays, some courier’s businesses shut down for a week or two with no shipment to the EU and just an email to us. We were left with thousands of parcels waiting to go to the EU, no fore planning could have prepared us for that.”
Mark explained by firstly sharing the unanimous shock felt by the UK in January was in stark contrast to predictions made in months previously. “What was felt by us and our clients alike was as long as the UK achieved Brexit, we would trade as normal, however, that wasn’t the case at all.”
Huboo saw our first wave of challenges in, “inaccurate information like incorrect commodity codes and vague goods descriptions which lead to delays and confusions with shipment carriers.”
“Going forwards retailers have had to understand HS codes, accurate product descriptions, country of origin etc, all the relevant information to enable a smooth process. The understanding of shipping goods in the EU has helped because clients are aware of, for example wanting to offer a DDP service, they know what they want, and they have the knowledge to voice that.”
Mark praised our clients’ efforts, “their increased knowledge in a small space of time has been phenomenal, we’re in a much better place now.”
“In January we initially saw price increases and surcharges. We tried to compare like for like and as we use a range of carriers, we’ve seen different charges depending on DPP and DUU. These charges are reflective of the uncertainty in Brexit regulations. Luckily, some have now been levelled out and reduced, especially administration charges.”
Encouraged by the latest results of an upwards trajectory, seen at Huboo in this month, Mark replied. “We saw a dip in sales volumes in February. Lower-volume sellers pressed the pause button on selling, due to surcharges. However, we’re currently seeing an upward trend.”
“For me no, I don’t think so. It’s more about education, which we aim to do with your clients. Luckily once you grasp the basics, it’s not as tricky as it seems. Do the workshops, do the open days. Global marketplaces need to be opened, we’ll push forward and get over this and the rest of the year we’ll be in a really good place.”
“The boom in eCommerce is set to stay. With audience conversion, whole new generations of people will begin to and have been, shopping online. We’re watching eCom go from strength to strength.”
Naturally, an upsurge in online purchases go hand in hand with a rise in items being returned.
“Returns is where Brexit has forced us to do something drastic! Ecommerce and fulfilment are all about creating a seamless experience for our clients, therefore we’re currently implementing returns software where duties and taxes are being calculated.”
“Our priority as an eCommerce/ fulfilment business is to offer a seamless process for our clients where they can bring orders back into the UK.”
Mark also noted an interesting point that many fulfilment centres in mainland Europe are desperate to have UK based warehouses for local customers, showing that there is huge demand there.
To round off the webinar, Fruugo’s Hakan posed a question calling for advice or sellers.
“My key advice is always to seek professional guidance. Ensure you’re aware of charges and tax requirements, we know this will increase in the upcoming months. At Huboo we’re trying to help steer our clients through this process so they can get to the front of the queue and into that huge market growth going forward.”
You can watch the full panel discussion here.