Facing the Challenges of Brexit Together

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FACING THE CHALLENGES OF BREXIT TOGETHER...

[email protected] | +44(0) 2080 049747 | www.nucleus-uk.com Contents

About Us ��3

Current Government Guidance ��4

The Importance of Incoterms and Understanding Your Responsibilities ��5

Most Frequently Used Incoterms for Road Freight Shipments ��6

Commodity Codes ��7

Anticipated Post-Brexit UK to EU Export Procedures ��8

Exports from UK to EU Flowchart ��9

Anticipated Post-Brexit EU to UK Import Procedures ��10

Imports from EU to UK Flowchart �� 11

Your MUST HAVE Checklist �� 12-13

Goods Exported Under ATA Carnet ��14

Customs Freight Simplified Procedures (CFSP) �� 15

Pre-Lodged Import Customs Entries ��16

Additional Items to Consider �� 17

Glossary ��18-19

Facing The Challenges Of Brexit Together 2 About Us

Who are we? Why choose Nucleus?

Nucleus International Cargo is a Global Shipping company • Each client is personally • We give clear advice based in the UK providing Freight Forwarding, Supply Chain handled, no help desks or that is aimed specifically Management and Outsourcing solutions to a global client service centres at what you and your portfolio. Nucleus International Cargo proudly offers over 28 business need • Contactable 24/7 - 365 years of experience in every aspect of Global Logistics. days a year • Global Network of Strategic Alliance partners Nucleus International Cargo promises to fully manage • Providing competitive costs every aspect of your Global Shipping and Supply chain all year round. We broker • We outsource all non-core requirements, whilst at all times keeping in mind what it independently and are activity. This means lower considers to be the Vital 3 “C’s” of good cargo management: therefore able to match the running costs for us and COST, COMMUNICATION and CARE. right job to the right service lower bills for you! at the right price

Our Services Include:

• Import/Export • Personal Effects

• Ocean/Air/Road Courier • Warehousing

• Global Representation • Order Fulfilment

• Quality Control • HMCE Compliance

• Customs Formalities • Brexit Ready

Facing The Challenges Of Brexit Together 3 Current Government Guidance

On 1st January 2021 the transition period with the EU will end and the UK will operate a full, external border. Customs controls will be placed on the movement of goods between Great Britain (GB) and the EU.

The UK Government published a Document on Thursday 8th October 2020 titled The Border with the European Union - Importing and Exporting Goods. The full document can be found here: www.gov.uk/government/publications/the-border-operating-model

For Brexit information from the EU’s European Commission please find their website here.

Facing The Challenges Of Brexit Together 4 The Importance of Incoterms and Understanding Your Responsibilities

The use of Incoterms in European Road Transport takes on a far greater significance as from the 1st January 2021. This is one of the most important parts of the process, and we need this information to be able to progress. Intercoms are agreed between buyer FREIGHT COLLECT TERMS FREIGHT PREPAID TERMS and seller and not ANY MODE OR MODES SEA AND INLAND ANY MODE OR MODES GROUPS with your logistics OF TRANSPORT WATERWAY TRANSPORT OF TRANSPORT provider and/ EXW FCA FAS FOB CFR CIF CPT CIP DAP DPU DDP or Customs Carriage & Delivered at INCOTERM® Ex Works Free Carrier Free Alongside Free on Board Cost and Cost Insurance Carriage Paid Delivered at Delivered Duty broker Insurance Paid Place Unloaded (Place) (Place) Ship (Port) (Port) Freight (Port) & Freight (Port) To (Place) Place (Place) Paid (Place) To (Place) (Place) At Buyer’s On Buyer’s Alongside On Board On Board On Board At Named Place At Carrier At Carrier TRANSFER OF RISK Disposal Transport Ship Vessel Vessel Vessel Unloaded OBLIGATIONS & CHARGES

Export Packaging Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Loading Charges Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Delivery to Port/Place Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Export Duty, Taxes & Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Customs Clearance

Origin Terminal Charges Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller

Loading on Carriage Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller

Carriage Charges Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller

Insurance Negotiable Negotiable Negotiable Negotiable Negotiable Seller** Negotiable Seller** Negotiable Negotiable Negotiable

Destination Terminal Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Seller Charges

Delivery to Destination Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller

Unloading at Destination Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer

Import Duty, Taxes & Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Customs Clearance

*CIF requires at least an insurance with the minimum cover of the Institute Cargo Clause (C) (Number of listed risks, subject to itemised exclusions) **CIP now requires at least an insurance with the minimum cover of the Institute Cargo Clause (A) (All risk, subject to itemised exclusions)

Facing The Challenges Of Brexit Together 5 Most Frequently Used Incoterms for Road Freight Shipments

For International Road Transport Shipments to and from the EU the most frequently used Incoterms have been:

• The Seller/Exporter is selling on an Ex-Works basis and therefore has no EXW involvement in the onward costs. Ex-Works • The Buyer/Importer will need to organise the transport of the goods, payment of any Export Duty, Taxes and Customs clearance.

• The Seller/Exporter is selling to the Buyer/Importer on a DAP basis. DAP • The Seller/Exporter will organise the transport of goods to a specified location Delivered and the Export Documentation. At Place • The Buyer/Importer will be responsible for the Import Customs clearance, plus any Import Duty or Taxes including VAT.

• The Seller/Exporter is selling to the Buyer/Importer on a DDP basis. DDP • The Seller/Exporter is responsible for all Transport, Customs documentation Delivered and any Duty or Taxes. Duty Paid • Note - the VAT can be zero rated but to take advantage of this you must engage with a Fiscal representative.

In our opinion we would suggest DAP will be the most suitable and possibly the simplest option for most clients.

Facing The Challenges Of Brexit Together 6 Commodity Codes

Prior to shipment, all cargo needs to be classified with the appropriate Customs Commodity Code and this can be incorporated into your commercial invoice.

We must have at the minimum the first 8 digits of a 10 digit code for each product on your invoice, as per the example illustrated below. For help classifying your goods, visit: https://www.gov.uk/trade-tariff

Alternatively: https://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp The good news is if you currently trade internationally, you will be completing an Intrastat and will already have commodity codes for your products.

Facing The Challenges Of Brexit Together 7 Anticipated Post-Brexit UK to EU Export Procedures From the 1st of January 2021

Following the latest iteration of the Border Operating Model, October 2020

01. A Customs export declaration must be submitted to CHIEF 05. If the Goods Vehicle Movement System (GVMS) is in place (Customs Handling of Import and Export Freight) whilst the from the 1st of January then the MRN from the T-form will be goods are at the trader’s premises (unless the transport uploaded onto the GVMS Platform by the Carrier. operator has a DEP accredited facility). Once the export declaration has been cleared, the goods will be granted P2P 06. An EU Safety and Security declaration into an EU platform (Permission to Progress) and the goods can be loaded to a may be required subject to EU/UK negotiation. vehicle. The trader is defined as the Exporter/Manufacturer or a Logistics provider operating a DEP. 07. Driver reports to Ferry/Train operator who will physically check the T-form or, if GVMS is in place, will be asked for the GVMS 02. Customs Agent or Freight Forwarder or Exporter prepares a MRN to verify the driver has the appropriate Customs T-form and pre-lodges it to the Customs NCTS System. documents and can then ship.

03. Prior to the T-Form being raised, a Customs Broker in the EU 08. Driver presents the T-form to the Customs authorities on arrival must be nominated by the UK Exporter, unless the goods are in the EU who will scan the barcode on the T-Form. being shipped to an Authorised Consignee. 09. Driver proceeds to the Customs clearance point and presents 04. The Vehicle reports to an Authorised Consignor or a Customs the T-form. office of departure where the T-form is processed generating a Master Reference Number (MRN) and Barcode against the 10. EU Customs Broker or Authorised consignee arranges Import T-form. Driver will also be issued with a paper copy of the Customs clearance, paying relevant taxes and discharges the T-form. T-form.

Please See Guidance on Page 14 regarding Exporting Using an ATA Carnet

Facing The Challenges Of Brexit Together 8 Exports from UK to EU Flowchart

EXPORTER/AGENT/ EXPORTER/AGENT/ UK EXPORTER HMRC TRANSPORTER TRANSPORTER GB-EORI Export Permission EAD Export entry to CHIEF at Export T-Form raised number to Progress - P2P Trader’s premises MRN issued with required info

AGENT/TRANSPORTER AGENT/ TRANSPORTER ensures all documents are present & correct via Smart Freight T-Form authenticated by HMRC MRN scanned at Port at Authorised consignor or HMRC office of of Departure Departure

AGENT/TRANSPORTER/ AGENT/TRANSPORTER IMPORTER MRN document scanned Vehicle proceeds to designated at Arrival Port Calais/ Clearance point. T-Form discharged Dunkerque & Customs clearance effected

It is vital that the EU Importer has the relevant EU authorisations for example VAT registration number, EORI number or any other requirement. The UK EXPORTER is responsible for ensuring that their customer has the appropriate registrations/authorisations.

Facing The Challenges Of Brexit Together 9 Anticipated Post-Brexit EU to UK Import Procedures From the 1st of January 2021

Following the latest iteration of the Border Operating Model, October 2020

01. EU Customs Broker/Freight Forwarder/EU Exporter prepares Export 06. The Pre-lodged import entry number or CFSP Approval Number or Accompanying Document (EAD) and permission to progress is Importers EORI Number is communicated to the driver by the granted. Haulier. 02. Goods are loaded and the driver is issued with the EAD which 07. If the port of departure is Calais, by the use of ANPR Cameras, the SI incorporates a Master Reference Number and a unique Barcode. Brexit system will either send the driver to a Green lane or a Red lane. Green lane traffic moves directly to the Ferry Port. Goods 03. When travelling via French Ports the vehicle registration, trailer diverted to the red lane will go to a holding area to resolve any number and the EAD MRN are uploaded by the Haulier to the Customs issues. French SI Brexit System/Smart Border. 08. The Driver gives the ferry/train operator the pre-lodged Import entry 04. Subject to Brexit negotiations, a separate Safety and Security number or the CFSP Approval Number or EORI Number. declaration may be required to be submitted into a new UK Government platform which is called UK S&S. 09. Goods arrive in the UK and deliver. 05. If using DAP, the Importer must decide how the cargo is to be 10. Pre-lodged Customs entries must be made live on CHIEF by the end Customs cleared. The two most commonly used methods are either of the next working day after arrival. For Supplementary a Pre-Lodged Import declaration which accounts for VAT/Duty at Declarations a six month easement is available to importers the time of import or Supplementary Declarations via Customs choosing to use CFSP (a more detailed explanation of this is found Freight Simplified Procedure (CFSP) which allows a six month on page 15). easement for goods imported before the 30th June.

Private Importers moving their normal homes to the UK will need Please note VAT Registered importers can choose to use to apply for Transfer of Residence (TOR) approval from HMRC Postponed VAT Accounting when using Pre-lodged import before moving their shipment to the UK. A Customs agent would entries and MUST use postponed VAT accounting when using then need to be appointed to complete a Customs declaration in CFSP. Importers must confirm in writing what method of VAT advance of the shipment arriving in the UK. If approval is not Payment they are using. granted Customs Duties and VAT will become applicable.

Facing The Challenges Of Brexit Together 10 Imports from EU to UK Flowchart

AGENT/TRANSPORTER EU EXPORTER EXPORTER/AGENT/ TRANSPORTER EAD covers transport to EU port of EU EORI Departure Accompanying Doc & MRN to be number EAD raised MRN issued scanned at Port

AGENT/TRANSPORTER UK IMPORTER (See Note) UK Customs intermediary UK Importer to specify Customs Clearance completes import instructions to Customs intermediary declaration

AGENT/TRANSPORTER On arrival in UK vehicle is either: • Given OK to Exit Port and proceed or • Selected for Document/Examination

NOTE OR Check that all relevant Docs Use pre-lodged entry. All UK Importers must have a GB EORI Number, & VAT present & correct. To effect Entry must be “Arrived” Registration Number. Customs Clearance there are 2 options before the end of the next A Duty Deferment account is recommended. working day. Use Importers own CFSP We are unable to assist companies without the above. authorisation. Details require loading to UK GVMS.

Facing The Challenges Of Brexit Together 11 Your ‘MUST HAVE’ Checklist

Customs Clearance formalities will have to be undertaken in both the UK and in Europe

All shipments will require both Export Customs Clearance from the Seller’s Country and Import Customs clearance in the Buyer’s Country. Nucleus can facilitate the UK Customs procedures but you will need to appoint Customs Brokers in Europe to act on your behalf. Should you require Nucleus to complete T-forms you must tell us the NCTS code where the T-form will be discharged and the company responsible for doing so. If you require Nucleus to make an Import declaration on your behalf we need you to have signed a Letter of Direct Representation with us. We will require you to sign a legal letter of indemnity making you responsible for any Customs debt. You must understand your company’s responsibilities when Customs declarations are made on your behalf and if possible to obtain indemnities from your own clients that mirror ours. All Importers and Exporters MUST HAVE an EORI Number.

Without an EORI number you will not be able to move goods between the UK and EU. The EORI application process takes differing amounts of time in different countries, if you don’t have this number please register today.

In the UK - please visit www.gov.uk/eori

Facing The Challenges Of Brexit Together 12 You must....

...be able to provide the following information a minimum of 72 hours prior to your freight being loaded. This enables Nucleus to have prepared your Customs documents. For shipments from the UK to the EU “Permission to Progress” will be gained and the freight can be collected. For shipments from the EU to the UK Nucleus can lodge your import entry prior to the freight arriving in the UK.

The information opposite can be UK EXPORTS UK IMPORTS incorporated into your Copy Export Invoice and Packing List Copy Export Invoice and Packing List commercial invoice, packing list Exporters EORI Number Importer’s Name and address and any other accompanying Vehicle/Trailer Number Importer’s VAT Number/ EORI Number documents. Port of Export Duty Deferment account if applicable Invoice Number Chosen Method of VAT Payment Clear Description of goods Vehicle Number Commodity code(s) Port of Arrival Consignee Name and Address Invoice Number Country of Destination Clear description of goods Country of Origin Commodity code(s) Number and Type of Packages Country of Origin Net and Gross Weights Net and Gross Weight Value Value Incoterms Incoterms Customs Procedure code Freight and Insurance charges Export licencing requirements Customs procedure code NCTS Clearance Code Number and Type of Packages Agent/Responsible party for EU Clearance Import licencing requirements Any Special instructions Any special instructions

Facing The Challenges Of Brexit Together 13 Goods Exported Under ATA Carnet

If you are shipping goods to the EU on a temporary basis that will return in an unaltered state, for example exhibition goods, horses for racing or vehicles participating in motorsport, the ATA Carnets could be beneficial to you.

ATA Carnets are provided and completed by UK Chambers of Commerce in advance of the goods being dispatched.

The shipper will be required to provide detailed information of the goods being exported to the issuing office. Once adequate information is received then the Chamber of Commerce will be able to produce the relevant Carnet.

When in possession of the ATA Carnet the holder can then approve the loading of the shipment for export. Once loaded the ATA Carnet must accompany the goods to an approved Customs location for export and there presented to a UK Customs official. The ATA Carnet is endorsed (stamped) by UK Customs and returned to the driver.

Once the driver has the stamped document in his possession he can proceed to the port of export. European Customs will then endorse the ATA Carnet to allow the consignment into Europe and the goods are then in free circulation.

When the consignment is ready to return in an un-altered state this process in reverse is followed.

Facing The Challenges Of Brexit Together 14 Customs Freight Simplified Procedures (CFSP)

UK Importers are able to take advantage of a special If Importers wish to take advantage of this method they must be temporary arrangement from the 1st January up to 30th registered for VAT in the UK and accept to use Postponed VAT Accounting. At the time of Import you will be required to keep your June 2021, which allows non-controlled goods to ship to own Entry in Declarants Records (EIDR) as detailed in the the UK without Customs clearance taking place at the Government’s Border Operating Model. border on arrival. When you are ready to submit your first delayed Customs Importers are required to make an entry in their own commercial declaration you will need to either hold your own CFSP approval records (EIDR) at the time of arrival into the UK, and then follow this number or have an agreement with a Customs Intermediary with a with a supplementary declaration to be submitted to HMRC within 6 CFSP approval number that they will represent you. Access to a months of the time of Import. This approach simplifies requirements deferment account will be required to pay import duties. for the vast majority of goods until July 2021. From the 1st July 2021 the 6 months easement will be withdrawn and We suggest you check the relevant Customs requirements, which Importers will need to be in a position to submit their Customs are quite specific. declarations, for example for goods imported in July 2021 by the 4th August 2021. https://www.gov.uk/guidance/using-simplified- declarations-for-imports If Importers choose to engage the services of a Customs intermediary you will need to sign a letter of Direct Representation Our opinion is that UK Importers give this method serious making yourself responsible for any potential Customs debt. consideration - the advantages are: Please note deferred declarations replaces Transitional Simplified • You can avoid possible delays Procedure (TSP), which has now been revoked. • There is no requirement for a pre-lodged Customs entry • There is a potential cost saving

Facing The Challenges Of Brexit Together 15 Pre-Lodged Import Customs Entries

Pre-lodged imported Customs entries are the alternative to CFSP and is the conventional approach to Customs clearance that we use for third country imports today. There are however a number of changes for EU Goods from the 1st of January 2021.

01. A Customs entry must be in place before the 04. The Customs entry must be made live to shipment arrives in the UK. CHIEF with taxes being accounted for by the end of the next working day after arrival in 02. The arriving vehicle will not have to go to an the UK. inland clearance facility unless subject to CLIENT examination or if there is a requirement to 05. When GVMS is introduced if a pre-lodged discharge an inbound transit T-form. entry is NOT in place your vehicle will not be permitted to ship into the UK. 03. Import Duty will have to be collected by Duty Deferment but an importer can choose to use Postponed VAT Accounting (PVA) for their VAT. Communication is vital between all parties CUSTOMS IMPORTER BROKER

As with all Customs processes clear lines of communication between all parties, particularly the Importer, Customs Broker and you, the Client, is vital.

Facing The Challenges Of Brexit Together 16 Additional Items to Consider

Even IF a Trade Deal is negotiated between the UK and the EU Customs clearance processes must still be followed.

From the 1st of January 2021 safety and Security declarations may Importers may wish to consider what other Import regimes could be be both an EU and UK requirement. For Driver-accompanied freight beneficial to them once the UK leaves the EU. For example: Customs it is the Haulier’s responsibility for this to be completed. warehousing, Inward Processing Relief, Outward Processing Relief. MoreMore Info Info > > From the 1st of January 2021 there will be a number of new and largely untested IT Platforms where information will need be Companies exceeding the Intrastat thresholds will still be required to uploaded by the Haulier to enable the goods to move to or from the make Intrastat Declarations beyond the 1st January 2021. EU. Exporters sending goods to Europe on a temporary basis with the In France it will be “SI Brexit”, in Holland “Portbase” and in the UK, goods returning in an unaltered state may wish to explore using ATA “Check your HGV is border ready” and from the 1st of July 2021 Carnets. GVMS (Goods Vehicle Management System). There may also be a requirement for the Haulier when in the UK to have obtained a “Kent Some goods may require Certificates of Origin. Permit” which allows a Vehicle to use the Kent road network and Please ensure all wooden pallets are to the correct standards - ISPM access Eurotunnel or the Port of Dover. 15 approval. MoreMore Info Info > > Importers may consider having a Duty Deferment Account, Import duties will be collected at the time of submitting the Customs declaration so an importer will either need their own deferment or an We expect there to be considerable delays in the agreement to use an Intermediary’s deferment. Documentation process as from 1st January 2021, which will impact on transit times. You may wish to take advantage of Postponed VAT accounting processes, if so, please advise your Customs Clearance Agent that you are able to meet the Governments criteria and wish to use this process. MoreMore Info Info > >

Facing The Challenges Of Brexit Together 17 Glossary of Terms

Term Definition ANPR Automatic Number Plate Recognition. Authorised Consignee Status This will allows a company to receive goods under the Common Transit Convention or Union Transit at their own premises rather than at a Customs office. Authorised Consignor Status This allows a company to start the movement of goods under the Common Transit Convention or Union Transit at their own premises rather than at a Customs office. CFSP Customs Freight Simplified Procedure. CHIEF Customs Handling Import & Export Freight, the computer system of the United Kingdom’s Revenue and Customs services, HMRC. Clearance Agent/Broker An entity, such as Harbour Shipping Ltd, that specialises in Customs paperwork and can act on your behalf for relevant Customs processes. DEP Designated Export Place. This is a location, such as a warehouse, designated by an Authorised Consignor/Consignee where goods can be approved rather than at a Customs’ location. EAD Export Accompanying Document. EIDR Entry in Declarant’s Records, relevant to CFSP. ENS Entry Summary Declaration, a type of Safety and Security declaration. MoreMore infoInfo >> EORI Economic Operator Registration & Identification.

EXS Exit Summary Declaration, a type of Safety and Security declaration. MoreMore infoInfo >>

Facing The Challenges Of Brexit Together 18 Glossary of Terms

Term Definition GVMS Goods Vehicle Management System. HMRC Her Majesty’s Revenue and Customs. MRN Master Reference Number. NCTS New Computerised Transit System that allows you to submit electronic Union Transit (UT) declarations. T-Form This allows non-EU goods to Transit across other EU countries before it reaches its destination that prevents the goods from incurring duty or VAT liability on the way. TOR Transfer of residence. TSP Transitional Simplified Procedures. This was put in place in 2019 but has since been discontinued. The next closest alternative would be CFSP.

Facing The Challenges Of Brexit Together 19 Thank you for reading this document. “With our valued Clients’ support, patience and assistance we will adapt and thrive together.”

[email protected] | +44(0) 2080 049747 | www.nucleus-uk.com

The enclosed information is provided in good faith and as a guide for our clients based on the Directors’ experience gained over many years. Nucleus International Cargo cannot accept responsibility for any consequences arising from the use of this Brexit guide.