Trade with the UK, the 'real' Brexit begins
From 1st January this year, the new customs procedures following Brexit come into effect. Instead of the previous legislation, which allowed those exporting to the UK to prepare the customs declaration within six months of crossing the border, the new provision requires EU companies to deliver the complete documentation already at the time of the introduction of the goods into UK territory
One year after the entry into force of the Agreement with the United Kingdom (Trade and Cooperation Agreement, TCA) and as a result of a series of postponements, the real Brexit begins in January 2022, with many significant changes for the Italian and European logistics supply chain.
A number of new requirements affect EU companies exporting to the UK, from the introduction of full customs controls at the UK border, to the need to hold all supplier declarations to benefit from zero customs duties.
Underlying this 'phase 2' is London's choice to extend the effects of the TCA by one year, suspending customs controls and taxation for the whole of 2021. Even though the Agreement concluded between the EU and the UK provided for perfect symmetry in the management of obligations on both sides of the English border, the UK has chosen to unilaterally postpone the effects of Brexit. On the UK side, obligations were suspended through delayed declarations that allowed traders to prepare customs declarations and pay tax within six months of crossing the border.
As of 1st January 2022, this simplification is no longer operational, with the result that EU companies exporting to the UK must provide all the necessary references and documentation to enable a full customs declaration to be lodged when the goods are brought into the UK. Operators must also clear customs at the time of clearance, unless they have a duty deferral authorisation.
In 2022, the Authorities have started normal checks on products imported into the UK, which may involve documentary checks and physical analysis of the goods. The full implementation of UK border controls and the requirement to submit a full customs declaration could lead to delays in the handling of customs clearance and to stopping goods that need to be analysed or tested.
In order to avoid bottlenecks at the UK border, UK Customs has activated, as of 1st January, the Inland Border Facilities (IBF), new internal control points that will reduce waiting times at the main UK ports. To take advantage of this simplification, traders will have to lodge a common transit declaration when their consignments leave the European Union. It should be noted that during 2021 this solution gave rise to widespread problems, due to the failure to complete export procedures combined with customs transit, leading in some cases to major disputes by the Customs Agency.
Important changes concern the proof of preferential origin in trade between the EU and the UK. From 1st January 2022, traders must be in possession of a valid supplier's declaration to certify the preferential origin of goods and to benefit from zero customs duties at the UK border.
It is therefore essential for Italian companies to analyse their supply chain, i.e. to trace the various components and processes that have contributed to the final product. As you know, in order to benefit from zero duty at UK Customs it is necessary that the exported products meet the preferential rules of origin established by the TCA and that the goods are accompanied by a proof of preferential origin, represented, in almost all cases, by self-certification by the exporter registered in the Rex system and, only in residual situations, by the knowledge, by the British importer, of the preferential origin of the products.
Essential to the accuracy of the exporter's proof of preferential origin is the supplier's declaration, which contains a clear indication of the origin (EU or non-EU) of the materials used in the manufacture of the product exported to the UK (Annex ORIG-3 of the TCA). This declaration certifies, for the benefit of the exporter, the origin of the goods, enabling him to make the declaration of preferential origin himself.
In order to allow a gradual adaptation to Brexit, European Commission Regulation 2254/2020 of 29 December 2020 allowed EU businesses to self-certify, throughout 2021, the preferential origin of products exported to the UK, even in the absence of a declaration from their supplier. The only condition was that such documentation was then recovered by 1st January 2022.
As clarified by the Customs Agency with the notice of last 12 December, if by 1st January 2022 exporters are not in possession of the supplier's declarations relating to transactions concluded during 2021 and are unable to prove the originating status of the product by other means, the statement on origin will not be considered valid, with important legal and economic consequences. In the absence of such documentation, it will be necessary to notify the UK customer by 31st January 2022, triggering the need to pay the ordinary customs tariffs also for the transactions already carried out in 2021, given the loss of the conditions for preferential treatment provisionally recognised at the time of importation into the UK.
It should be noted that the exporter is responsible for the correctness of the declaration of origin and the information contained therein (Art. ORIG.19) and that, in the event of infringements, penalties are provided for, as well as contractual responsibilities with the UK customer.
Finally, it should be noted that in a communication dated 2nd December 2021, the British International Freight Association allegedly invited British operators to ask European exporters to specify, in the declaration of origin of goods, the 'made in' of the products, indicating the individual European country of production (Italy, France, etc.) and not the commercial block of origin (EU). According to this note, from 2022 onwards, British importers could request from EU companies a series of additional information, motivated by the needs of British trade statistics, but clearly unrelated to the rules of the TCA, according to which operators must declare the "EU" origin of the goods and not the individual European country (Annex ORIG-4 of the TCA).
The communication from the British International Freight Association has caused great concern among Italian exporters and logistics operators, even though, to date, it does not seem to be supported by official communications from Her Majesty's Customs.
