Be prepared: new border requirements on EU imports are coming in from January 2022

Be prepared: new border requirements on EU imports are coming in from January 2022

Overview

Although the UK Government has recently announced that certain border requirements are being postponed until the middle of next year, it is currently sticking to its plans to require full customs declarations on goods imported from the EU as of 1 January 2022. This change has the potential to disrupt UK supply chains. We explain below what is changing and what you can do to prepare.


What is changing?

At present, as a temporary measure, most goods imported from the EU are allowed to enter the UK without providing full customs paperwork "upfront" (as is currently required for goods entering the UK from non-EU countries). Instead, most businesses can make customs declarations and pay any applicable tariffs "in arrears" (within 6 months of the point of import). Similarly, import VAT does not  have to be paid at the point of import; it can be paid at a later date, by using postponed VAT accounting (in the case of VAT-registered businesses).

But from 1 January 2022, customs declarations will be required "upfront" and any applicable tariffs must be paid "upfront" as well (although VAT-registered businesses will still be able to use postponed VAT accounting to avoid having to pay Import VAT at this stage). There is also likely to be a higher level of physical checks (currently these are limited to "high risk live animals and plants"). The postponement announced by the UK Government only relates to the following measures, most of which are relevant to agri-food imports only:

  • There is effectively an additional grace period to comply with requirements for Safety and Security declarations (for all types of goods), export health certificates (for products of animal origin) and phytosanitary certificates (for products of plant origin) – these will not now be introduced until 1 July 2022.
  • An equivalent grace period will apply in relation to the requirement for all agri-food products to undergo physical checks at Border Control Posts – so this too will not apply until 1 July 2022.
  • Finally, the requirement for pre-notification of agri-food imports – originally planned for 1 October 2021 – is being postponed until 1 January 2022.

This follows the postponement of the requirement for all relevant products to be labelled with the new UK CA safety mark instead of the EU CE mark (originally scheduled for 1 January 2022 for most products); that has now been delayed until 1 January 2023.

Impact of the postponement

Whilst the postponement may reduce the risk of disruption to some degree, a failure to provide the correct paperwork from 1 January 2022 will mean that goods cannot clear customs and enter the UK market. It also remains to be seen how well UK customs IT systems and other border-related infrastructure will cope with the change. It follows that, despite the postponement, there remains potential for disruption to supply chains – indeed the experience of UK firms exporting to the EU (where upfront paperwork has been required from 1 January 2021) suggests that this could be significant. With a view to mitigating the risk of disruption, some businesses are likely to stockpile ahead of the changes, which may itself create shortages. There is also a risk that media coverage of the postponement will make some businesses think that they no longer have to prepare for change on 1 January 2022 - which is not the case.

What can you do to prepare?

To mitigate the risk of disruption:

  • Make sure your business is ready to comply with new border processes – see further our Brexit Goods Q&A. In particular, engage with your suppliers to ensure that they can provide you with all the relevant information/paperwork needed to secure clearance of goods through UK customs (bear in mind that EU suppliers may have been lulled into a false sense of security by the postponement of most UK border processes until 1 January 2022).

  • Stockpiling goods is a logical way of mitigating the risk of supply chain disruption, but commercial warehousing space is likely to be in short supply, partly because of the run up to the Christmas period and partly because of stockpiling by other businesses ahead of the changes on 1 January 2022. Given these constraints, and with additional pressure on finances because of the impact of COVID-19, businesses may wish to explore measures such as altering or repurposing existing premises or using shipping containers for storage on a temporary basis.

  • It is also worth exploring the availability of alternative sources of supply, should your existing suppliers be unable to deliver on time. Contractual mechanisms such as priority supply obligations, options and rights of first refusal can be put in place to support this.

  • The risk of disruption is highest at ports focussing on roll-on-roll off traffic, which do not have tried and tested systems to cope with high volumes of traffic requiring customs clearance and related border checks. Businesses may be able to avoid the disruption altogether by switching to other routes, such as short sea shipping to or from UK ports which are already well used to dealing with customs processes (because they handle higher volumes of traffic from non-EU countries). Short sea shipping usually involves unaccompanied containers which are then unloaded onto an HGV at the port of arrival, for onward distribution to their final destination.

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