14 September 2018

Government publishes 'no deal' technical notices

The UK government has published 25 technical notices for various sectors setting out plans in the eventuality of a 'no deal' Brexit.

What's the issue?

On 29 March 2019, the UK will exit the European Union. While a transition period has been provisionally agreed, it is dependent on the UK and the EU reaching agreement on withdrawal. While much does appear to have been agreed, there are a number of significant outstanding issues, perhaps the most intractable of which is the question of the Irish border.

If we crash out of the EU on 29 March without a deal on either exit or our future trading relationship, many UK businesses will be in uncharted and turbulent waters. Opinions differ as to how serious the ramifications may be, but there are very few who think this is a desirable outcome.

What's the development?

In an attempt to help prepare for the eventuality of a 'no deal' Brexit, the government has published the first 25 in a planned batch of 50 technical notices, together with an overarching framework notice. The notices set out the government's views of what will happen in specific areas and provide some advice.

In the commercial technology sector, the most relevant of the notices are those relating to banking, insurance and financial services (for which, see our article), and those relevant to the import and export of goods.

There are several notices in this batch covering trade remedies, trading with the EU, classifying goods in the UK Trade Tariff and exporting controlled goods.

Businesses trading with the EU will need to deal with the EU in the same way they currently deal with trade in goods between non-EU countries with no trade deal. The EU's Common Customs Tariff (CCT) will cease to apply and free circulation of goods will end. UK exports to the EU will be subject to duty at the rates specified in the EU's CCT and UK imports from the EU will be subject to duty at rates to be set by the government. Trade with the EU will be on non-preferential WTO terms. MFN tariffs and non-preferential rules of origin will apply to goods traded between the UK and EU. The UK's rates will be determined by the government and may be different from those of the EU.

Exporters and importers are advised to take the following actions before 29 March 2019:

  • Obtain a UK Economic Operator Registration and Identification (EORI) number if without one.
  • Ensure relevant contracts and Incoterms reflect that they are an importer and/or exporter.
  • Consider how import or export declarations will be made. If being done in-house, appropriate software and HMRC authorisations will be needed. Alternatively, a customs broker, freight forwarder or customs agent may be used.
  • Importers will need to apply the correct tariff classification for imported goods so should be familiar with these.
  • VAT and import duties may have to be paid if the goods are not entered into duty suspension. VAT may be accounted for in VAT returns rather than at point of entry of the goods to the UK.
  • Consider whether an import or export licence will be required to import into or export from the UK specific type of goods or to meet the conditions of the relevant customs import or export procedure.
  • Consider whether relevant customs procedures (such as warehousing, inward processing, temporary admission and authorised use) would be available and beneficial. These allow businesses to delay or relieve the payment of duty for imported goods until they enter into free circulation.

In addition, customs agents will need to make safety and security declarations for goods moving between the UK and the EU.

In terms of free trade agreements and unilateral preferences, the government has identified 40 from which it benefits as an EU Member State. The government intends to transition these on exit but there is no indication as to how or when this will be done and what progress has been made.

What does this mean for you?

If you import from or export goods to the EU, these notices are of interest but, ultimately, they are unlikely to offer much in the way of new information, particularly if you already move goods between the UK and non-EU countries. The notices are extremely high level and much remains to be determined.

Businesses need to start preparing for a 'no deal' Brexit even while (presumably) hoping there will be no need to implement their plans. Legal advice should be sought and we hope we need hardly say that Taylor Wessing is ideally placed to help.

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