On May 1st 2016 the Union Customs Code comes into force, replacing the Community Customs Code. This European-wide legislation will impact all UK businesses involved in global trade in goods. Businesses need to act now. At Peters & May Group we’re keeping abreast of the changes in order to ensure that our clients have minimal disruptions. Here are just some of the significant changes that you should be aware of.
1. Financial guarantee required
Any UK company operating a customs authorised duty relief or suspension regime (such as customs warehousing or inward processing), will need to provide a financial guarantee to cover the annual amount of potential duty that could be due.
This requirement does not exist in the UK today, so will introduce additional costs for the guarantee provision, as well as any potential restriction on working capital in providing security to the guarantor (typically a bank).
2. Guarantee waivers
Guarantee waivers will be introduced, but only for those businesses that fulfil the criteria for Authorised Economic Operator (AEO). This is a supply chain security accreditation, approved by Customs for companies that demonstrate that their internal processes fully support customs compliance.
It can take six months or more to obtain AEO authorisation, so this should be considered as soon as possible.
3. Customs valuation changes
The basis of customs valuation will also change, with the removal of the current provision that allows an importer to attest to the value of an earlier sale in a chain of sales leading to import. Instead, customs valuation will be based on the final sale before import. This change could increase customs duty costs significantly.
4. Use of an EORI number
An EORI number relates to the Economic Operation Registration and Identification Scheme which provides a reference number which is unique to the operator across the EU.
If you are involved in customs activities and are established in the customs territory of the community, you shall be registered by the customs authority of the member state in which you are established.
However, even if you are not established in the customs territory of the community, you will need an EORI & be registered by the customs authority of the member state where you first:
These are just some of the changes coming into force on 1st May 2016. They are going to happen. You need to be aware of the potential impact on your business.