Preparing for Brexit

With the Brexit negotiations now competing for headline space with the coronavirus crisis, many businesses are anxiously trying to assess what action they need to take with the UK’s transitional agreement with the European Union (EU) set to expire on 31 December 2020.

Transport and logistics businesses are at the sharp end of this debate, but the Government continues to share some guidance.

In the latest update, HM Revenue & Customs (HMRC) wrote to every VAT-registered business in the UK, setting out the actions required to continue trading with the EU from 1 January 2021. The letters included more detail on the new processes for moving goods between the UK and the EU. Key points include:

  • businesses must have a UK Economic Operator Registration and Identification Number (EORI), which will be required for the customs declaration;
  • businesses must determine how they will make customs declarations moving forwards; and
  • businesses much check whether imported goods are eligible for stage import controls.

Importantly, all of these actions will be required irrespective of how the Government’s negotiations with the EU on a trade deal eventually turn out. For more information, see here

Another Brexit-related update is also worth mentioning. HMRC has announced that UK VAT-registered importers will be able to apply for postponed VAT accounting (PVA) on their customs declarations for goods being imported into the UK. The PVA will allow importers to account for and to recover VAT, typically in the same period as their VAT return, rather than having to pay at the point their goods arrive in the UK.

The PVA will be available to all UK VAT-registered importers with no pre-authorisation required. Businesses will need to add the appropriate entry on their customs declarations and then provide their EORI and VAT registration numbers. The process will then allow goods to pass through the border with no requirement to pay the VAT before they’re released. But PVAs will only be available to VAT-registered importers. More information here.

Meanwhile, the Government has also provided further guidance for importers into the UK on the use of approved temporary storage facilities. From 1 January 2021 until 21 December 2021, goods with pre-lodged temporary storage declarations may be imported into the UK and transported to a temporary storage facility without going through the current customs control systems. To find out more about how to apply to open such a facility, see here.

In addition, the Government has announced changes to the rules currently applying to businesses using the bulk customs declaration process. From 1 October 2020, businesses using this process will need to be approved by HMRC as meeting the eligibility criteria for the new regime.

HMRC will contact businesses already using the bulk process individually, to advise them of what to do next. Some will need to apply, while others should simply be able to rely on an authorisation letter from the tax authority. But for businesses not currently using the bulk process, but looking to do so in the future, HMRC has provided an application form they will need to complete. More information is available here.

Quarantine procedure clarified for HGV drivers

Meanwhile, new government guidance clarifies the position of HGV drivers arriving in the UK from countries where quarantine provisions normally apply on returning travellers. HGV drivers are exempt from such rules, this is designed to ensure the continued movement of goods, but they’ll still be required to complete an online passenger locator form before entering the country. This also applies to drivers travelling from countries for which no quarantine restrictions are currently in place.

Drivers who haven’t completed this form before they arrive may find they’re held up, as they’re asked to fill in the documentation at the border. Arriving at the border, drivers will need to produce a printed copy of the documentation attached to the confirmatory email they receive after submitting their forms online. Alternatively, they could show a copy of the email on their phone. UK Border Force will then scan the QR code in the documentation to confirm compliance. Note that forms can’t be submitted more than 48 hours in advance of arrival in the UK.  For more information, see here.

Shipping rates move even higher

Containerised shipping rates have continued to rise over the past week, reaching near-record levels across many key trade lanes. The increases are driven by a combination of rising demand and careful capacity management on the part of leading carriers.

Such increases are causing widespread concern. The Chinese authorities have in recent days engaged with carriers to discuss future pricing and capacity, particularly on the trans-Pacific route, with rates there now standing at a new record. China’s Ministry of Communications says discussions centred on avoiding further increases in spot rates and the reinstatement of sailings to ease pressure on demand. Maersk this week announced it wouldn’t increase rates for trans-Pacific trade during September.

However, carriers are conscious they would normally expect demand to fall as we move out of the current peak season. In this context, the Alliance, 2M and MSC have announced they’re cancelling scheduled sailings in October, following the Golden Week holiday during the first week of the month.

There are also concerns that container shortages in Asia are worsening, to the extent that this could have a detrimental impact on broader supply chains because Chinese and Asian manufacturing hubs are unable to get hold of containers for international trade. Large numbers of containers are stuck in ports across the US and Europe, with carriers struggling to repatriate them back to Asia where they’re required. This has scope to put further pressure on shipping charges.

Air carriers boost infrastructure

The International Air Transport Association (IATA) is urging governments around the world to plan ahead for the distribution of coronavirus vaccines. IATA is concerned that without such plans, many countries will be forced to wait for vaccines because of air freight carriers’ capacity constraints.

IATA itself has therefore launched ONE Source, an online platform to match shipping needs with infrastructure capabilities and service providers. The platform will independently verify information, and list the latest operational data on airlines, airports, handling facilities and logistics operators. The aim is to provide more visibility of capabilities and facilities across the supply chain.

Access to the One Source platform will be free of charge. More information here.

How Santander can help

All of the issues covered in this week’s update have the potential to impact our clients’ international supply chains. Please get in contact if you’re facing any supply chain difficulties because we work with a number of logistics companies with specialisms in particular markets or sectors who would be happy to provide advice on a range of potential solutions that might help you overcome such challenges.

To discuss how Santander can help your business please contact: ccbsectorinsights@santander.co.uk
 

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