UPDATE to HM Government Guidance in the event of a “Day 1 No Deal” (D1ND) BREXIT on 1st November 2019.
KC Group Shipping Ltd advises its customers that HM Government Brexit advice has been re-issued recently. All customers engaged with trading to and from the EU after 31st October 2019 are advised to read carefully and act upon the appropriate government and trade association guidance and notices including but not limited to:
HM Government and British International Freight Association (BIFA) Web pages:
General guidance to business of importing and exporting to/from the EU: https://www.gov.uk/brexit#business
British International Freight Association (BIFA) industry guidance: https://www.bifa.org/information/exiting-the-european-union
Transiting French ports: detailed guidance from French Customs: https://www.gov.uk/government/publications/french-customs-guidance-after-brexit
BIFA and HMRC Presentations:
Overview of the change in HMG’s Competent Authorities’ border procedures in the event of Day 1 No Deal (D1ND): https://www.bifa.org/media/4383615/20190828-customs-update.pdf
Day1 No deal (D1ND) detailed guidance /HMRC presentation for RoRo: https://www.bifa.org/media/4377606/hmg-d1nd-roro-business-requirements-document-v5.pdf
KC also wishes to reassure its customers that in the event of a “No Deal” Brexit KC Shipping will work diligently to mitigate and minimise any possible disruption to its own and its clients’ existing businesses.
Updated guidance published: KC Group Shipping 16th September 2019
RISKS AND OPPORTUNITIES TO TRADERS WITH EU COUNTRIES IN THE EVENT OF A ‘NO DEAL’ BREXIT.
In our previous article BREXIT: UK “UNTESTED” CUSTOMS SYSTEM WITH EU. We discussed how KC Group's Authorised Economic Operator status (AEO) could be crucial in a post-Brexit landscape.
In response to a number of customer enquiries and drawing off our BIFA trade association latest guidance, which was relayed in turn from government website and supplemented by a National Audit Office 'Border Readiness Report' issued in late October 2018, KC Group have put together some bespoke guidance and information for our customers and suppliers, which can be read below. We hope you find it sheds some light on areas of concern in the event of a 'No-deal Brexit'.
- Delays at the two new borders to exports and imports to/ from the EU (including the Republic of Ireland).
- Possible restructuring or redesigning of road haulage services due to expected queuing at both entry/exit borders because of possible additional physical and clearance checks, with knock-on effects such as disruption and a reduction in haulage capacity.
- State of readiness of HMRC’s new Customs Declaration (CDS) System and all associated and linked systems expected to be phased in before Brexit, but only just before.
- Implementation and readiness of carrier (haulier, short sea operator) interface to EU’s and UK’s Safety and Security Import Control System (ENS) of all imports into the EU and UK for EU at least 2 hours before arrival at the port of entry. A similar regime will apply to all exports under the Export Control System with EXS declarations required to a similar timescale. This system is entirely separate from Customs Clearance Declarations of the cargo itself and only applies currently to deep-sea container carriers, who alone will have all the installed and tested software using a different set of declaration criteria (24 hours prior loading).
- HMG has identified 145,000 VAT registered companies who trade only with the EU as of now, but there are only 1500 BIFA members, not all of them by any means able to lodge entries, generating unprecedented demand for customs clearance services in the event of a ‘no deal’ Brexit.
We intend to update the guidance as and when any new or relevant information becomes available. The UK Government has completed its negotiations over a Brexit ‘deal’ but the coming weeks will determine what the UK ends up with as a deal, a no-deal or even a withdrawal of article 50 letter or a new vote.
MANAGING BREXIT: KC GROUP SHIPPING GUIDANCE NOTES: JUNE 2019
1. Executive summary:
KC Group Shipping has been monitoring the development of government Brexit plans since June 2016. Primarily monitoring and taking advice as appropriate from our industry body, BIFA and HMG’s published and regularly updated Brexit guidance. It also involves liaising with its vendors, suppliers as to their state of readiness with respect to EXS and ENS Carrier declarations and of KC being ready to implement HMRC’s new CDS system as it replaces CHIEFS and if CNS successfully integrates with other governmental systems regulating cross-border trade and movements. This Guidance is principally for a “No deal”, worst case, scenario.
2. KC’s Management Team monitoring Brexit
- David Milne, Managing Director
- Dale Minks, Systems and Process Manager
- Joanne Bell, Commercial Director
3. Current status of planning for Brexit:
- Scenario for 100% customs declarations is in place and additional support for goods currently in free circulation being planned.
- Consultations with hauliers who now undertake the transport of goods in free circulation between member states but could be subject to full customs EXS and ENS declarations post – Brexit is in progress.
4. Principal management team contacts:
5. Measures in place or planned in the event of a ‘no deal’ or hard Brexit
- Staff in UK head office (and on North West Continent, a network of trusted partners) are already in place to complete additional customs declarations if and when required. KC’s strategy is to follow the forwarding and logistics industry’s (BIFA) guidelines: https://www.bifa.org/information/exiting-the-european-union
- HMG has produced on 31/10/2018 with updates up to 08/04/19 offers some advice called “Partnership Packs”: Partnership_pack_prepare_for_no_deal_changes_at_border 4_19.pdf
- For Exporters: Guide for exporters
- For Importers: Guide for importers
- Being prepared for HMRC CDS to replace CHIEFS between 2019 and 2020 over a short transition period determined by the trader once its software and HMRC’s platform is ready. CDS is being designed to handle an increase in customs entries if goods in free circulation between the UK and EU have to be subject to customs declarations in future. The readiness of HMRC’s CDS for the interface of forwarders’ integrated software, however, is not expected however until some point in 2020.
6. Anticipated Risks for shipping and transport between the UK and the EU from 29th March 2019
i. Exports and imports to/from the Republic of Ireland. Currently in free circulation. Irrespective of Brexit HMG is not expected to re-introduce border/customs controls between the UK and the Irish Republic as this could contravene the Belfast (“Good Friday”) peace agreement. This may not, however, bind the EU into not re-introducing a hard border under its own rules (see v. below)
ii. Exports to the rest of the EU will require (in a no-deal scenario) departure (GB) and arrival customs clearance entries and revised arrangements for Excise Goods and Import VAT.
iii. Continuity of and possible redesigning of services from existing haulage/short sea providers in the light of new (deep-sea/foreign/3rd Country) scenario and risk of significant delays at borders (in addition to new EXS and ENS compliance requirements as per v. below).
iv. Readiness of HMRC new Customs Declaration (CDS) System and all associated and linked systems expected to be phased in before Brexit, but only just.
v. Implementation and readiness of carrier (haulier, short sea operator) interface to EU’s and UK’s Safety and Security Import Control System (ENS) of all imports into the EU and UK for EU as per Regulation (EC) 648/2005 and as amended by the Union Customs Code Regulation (EU) 952/2013 at least 2 hours prior to arrival at port of entry. A similar regime will apply to all exports under the Export Control System with EXS declarations required to a similar timescale. This system is entirely separate from Customs Declarations of the cargo itself by the trader or its Direct, or Indirect Representative on both sides of a new border.
vi. HMG has identified 145,000 VAT registered companies who only trade with the EU. There are 1500 BIFA members, many but not all, able to handle customs entries and clearances.
7. Control of expected risk
i. Risk: hard border for Ireland
Risk control: In the unlikely event of a hard border KC can extend the current arrangements to cross-border clearances. KC will also be seeking assurances from hauliers that preparedness is in progress. See HMG ‘Partnership Pack’ pages 9-14 and as per ii. Below.
ii. Risk: hard border for the northwest continent – full consignments and application of Customs duty, Excise duty and Import VAT on British goods exported into the EU and vice versa.
Risk control: KC Group Shipping will offer customs clearance service for current exports of Excise Goods and other goods now in free circulation to EU for departure (GB) and, if consignee requires for import clearances on arrival, using KC’s existing partners in the EU. Import VAT will, as a special arrangement by HMG, be able to be accounted for on the importers’ VAT returns. See HMG ‘Partnership Pack’ pages 9-14 (imports) 15,25,41 (Excise goods) and pages 19,23 (Import VAT).
iii. Risk: Interruption in the continuity of, redesigning of services (e.g. international road hauliers)
Risk control: meeting vendors to discuss their state of readiness and agree to contingency plans for the ‘what if?’ scenarios (in addition to v. below). However, KC, under its BIFA Scotland 2017 terms and conditions of trading (including, but not limited, to clauses 19, 24B, 25 of the terms) cannot assume responsibility instead or on behalf of the customer for unpreventable costs and direct or indirect consequences of border delays.
iv. Risk: Readiness of HMRC new Customs Declaration (CDS) System and all linked systems.
Risk control: Monitoring, phasing in, and training for CDS underway which is expected to be completed by early 2019 but HMG appears ready to ‘deprioritise’ the contemporaneous approval/ monitoring of quotas, tariffs and duty collections over safety, security and then the flow of people and goods after 29th March 2019. Paper-based declarations may be re-introduced if CHIEFS/CDS is not fully functional or interfaced electronically to traders’ software.
v. Risk: Readiness of carriers to comply with EXS and ENS Safety & Security: road hauliers (driver accompanied vehicles only) and/or ferry, short sea & tunnel operators (containers and unaccompanied trailers only) must submit EXS Exit / ENS Entry Summary Declarations.
Risk control: Carriers’ (road hauliers and short-sea operators) readiness to implement the required software or to deploy alternatives (manual). Being prepared for the possibility of redesigning services into the EU when the EU applies the same ICS criteria as already apply to existing 3rd countries or territories. ENS declarations of movements to/from EU must be transmitted to EU & UK Customs at the exit and entry ports within a deadline of latest 2 hours prior departure/arrival by short-sea vessel or train. (Deep-sea, 3rd country carriers already employ this technology). See HMG Partnership Pack pages 28,29 (hauliers) and 30,31 (short sea & rail operators) .
vi. Risk: 145000 ‘new traders’ applying to have goods customs cleared for the first time.
Risk Control: No information yet as to the 1500 BIFA members’ ability to absorb such an increase in customer volume (+100 per forwarder?) However KC’s own existing ‘EU bound’ customers would be prioritised. See HMG Partnership Pack pages 26,27,32,33.
8. Percentage of cargo already being shipped outside the EU (same as a ‘no-deal’ scenario)
As a provider of transport services 90% of KC’s business is ‘deep-sea’ and therefore already outside the EU for which scenario KC Group Shipping is fully conversant.
9. Provision of customs clearance services in the UK and the EU
All customs clearance work for GB is performed in-house, using our electronic MULTIFREIGHT interface with HMRC. Trusted partner companies can provide these services in the EU or outside the EU on request. As an HMRC “Direct Representative” all information on correct tariff headings is supplied by the customer for input to HMRC CHIEFS/CDS by KC.
10. Assessment of overall risk
As 90% of KC’s existing business is between the UK and non-EU origins and destinations the impact of even a no-deal Brexit is expected to be manageable for the overall business albeit ‘very busy’ with exports by road and Excise Goods to/from the EU/ROI. However, one as yet unmitigated risk appears to be the EU and UK Import Control System (ICS) ENS Pre-notification (2 hours prior arrival EU/UK port of entry) requirements where carrier EXS and ENS declarations will apply to export departures by road and short sea/ferry/Channel Tunnel. This could force changes to haulage and short-sea services which may have to be redesigned to adapt to new requirements placed on carriers (hauliers and short sea operators) if the software is not working in time. Separate from the above, an additional resource for extra customs entries performed by KC is planned to be available to cover new requirements but only for existing customers initially.
11. Implementation of advice to exporters and importers in the event of a ‘no deal’ Brexit
- Traders, hauliers, lines and forwarders should study carefully the new HMG Partnership Packs issued on 31/10/2018 and updated information (last published 08.04.19). These cover all likely and anticipated new requirements.
- Notices will be sent to the trade, in good time, with respect to any new requirements (including for worst-case scenario) for customs clearance of exports and imports (to from EU) offering KC’s /partners’ separate customs clearance services at a reasonable charge.
- Advice will also include anticipated lead times and any new requirements for Export Cargo Shipping Instructions, NES declarations, EU and UK Carriers’ Export Control System (EXS declarations), EU and UK Carrier’s Import Control System (ENS declarations), SOLAS, Import clearance instructions as currently apply to non EU exports, in the event same may apply in future to/from EU.
12. Authorised Economic Operator (AEO) – Customs Simplification status
KC Group Shipping was awarded AEO C status on November 2016. Certificate number GB AEOC 00271/16. KC, therefore, is a ‘Trusted Trader’ able to offer its customers the tangible benefit of AEO before, during and after Brexit.
13. Further information supplied by HMG for importers and exporters:
The National Audit Office (NAO) report (24.10.18) for UK Parliament on UK border: Preparedness for EU Exit: This report presents a sobering study of preparedness and seeks to apply ‘risk ratings’ to projects being pursued by HMG’s Border Delivery Group (BDG).
Draft Agreement: EU withdrawal Draft Agreement
Draft Agreement Explainer: EU withdrawal Draft Agreement Explainer
BIFA Executive Summary of NAO Report: NAO Border readiness report