Preparing for Brexit (Part One): possible transport and customs changes affecting the Irish Cultural Sector by John Ward

John Ward, CEO Maurice Ward and Co Ltd

As a transport provider and customs broker to the cultural sector, Maurice Ward & Company Limited deal with customs issues in relation to loans, touring exhibitions, permanent import and export of artwork on a regular basis.

The intention of this document is to outline the possible scenarios to consider post Brexit and provide some guidance on possible changes and how to prepare for them. With so many uncertainties about the shape and form of Brexit, this document is taking a worst-case scenario of a hard Brexit. The UK will become a country, fully outside the European and the Customs Union.

This article will discuss three main areas:

1. Increased responsibility in front of Irish Revenue
2. Cash flow and binding tariff information (BTI) considerations
3. Increased administrative and educational cost

Current Situation for Transporting between the UK and Ireland
Our EU membership and the policy direction of Customs Union over the last 20 years has brought us to a situation where trading with the UK and any other member of the EU is very simple and straight forward. It is as easy to deliver a consignment from Dublin to London as Dublin to Cork. This is the result of a long-term EU policy reducing barriers to EU trade, implemented by the EU Customs Union. Life in a trading and delivery sense, has never been better in our ONE EUROPE.

Things are set to get much more difficult…

Post Brexit: Trading with the UK

I outline some areas of interest for principles engaging in trade with a post Brexit UK.

1. Increased Responsibility in front of Revenue Commissioners
Customs and Excise are an operating unit within the Revenue Commissioners. They are responsible for collecting Duties, VAT and other taxes on consignments originating from third countries. Customs are also responsible for monitoring compliance in accuracy of data submitted by importers and exporters on their imports/exports to/from UK. Customs collect primary data on trade between Ireland and Non-EU countries in the form of Value, Weight, Origin, Destination and commodity etc. In a post Brexit era, most export and import consignment will require a formal import or export customs declaration to be submitted to Customs via their Customs Broker. Principles trading with the UK now are obliged to submit accurate information about commodity, value, weight etc. The declaration is in the form of the SAD (Single Administrative Document), a declaration form common in all EU Countries, submitted electronically to Customs usually by a customs broker.

In effect as Exporter of Record (EOR) or Importer of Record (IOR) a principle trading with the UK has a legal responsibility in front of Revenue on their trade with the UK. The Revenue compliance process is currently effected in a post audit situation with the principle usually examined for a defined period of trading. In cases of consistent miss-declaration, under declaration or inaccurate declaration significant financial penalties including possible criminal prosecution may arise.

To be clear, if you are engaged in Importing or Exporting to or from the UK in a post Brexit era it is your responsibility to give clear and accurate data to the Customs Broker/ Freight Forwarder executing the Customs declaration on your behalf.
Key Point: Be aware of your responsibilities in front of Revenue, IOR and EOR.

2. Cash Flow and BTI (Binding Tariff Information) Considerations
Each commodity must be classified by way of a Customs Tariff Code (HS Code). This is a global system of commonly classifying goods for customs purposes. It primarily established the duty / Excise rate applicable on each product. It is important that importers and exporters have their products properly classified in front of Customs to avoid possible costly penalties and fines.

Customs have a classification unit based in Nenagh solely to assist exporters and importers classify their products.

From an Arts perspective, we are fortunate that Original Works of Art (OWA) are currently classified as Zero % Duty. Irish VAT on Import at 13.5% of the CIF Dublin value. However, prints are not classified at OWA. Prints happen to be subject to 13.5% VAT but this rate could be higher in other jurisdictions.

Most commodities imported from the UK will be subject to 23% VAT on Import and possible Duty payments depending on the HS Code. These are payable to Customs prior to release of cargo by Customs.
The same process applies to UK Importers who will now have to pay VAT and Duty to UK Customs on their imports from Ireland, prior to release of their cargo by UK Customs.

Key Point: Know your product (HS Code) and plan for possible increases in cash flow consideration in the form of duty / vat payments to Customs. If you are exporting to the UK the same criteria will apply to your customer.

3. Increased Administrative and Educational cost
An extra immediate cost for traders with the UK is an additional cost of the provision of Export SAD or Import SAD declaration applicable on each consignment payable to your Transport Company or Custom Broker. This will either be shown separately or built into an increased transport price.

Increased awareness and education of your responsibilities and how things work in the supply chain are advisable. Plan your Brexit by working closely with a qualified transport partner who also has a complete understanding of the Customs Process.