Thursday 21 April 2016

Did you see our article on the Union Customs Code?



Re-issue of our Union Customs Code article from 15th March 2016.


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For those of you who import or export, the Union Customs Code takes effect on 1st May, less than 6 weeks from now and in the spirit of our motto, "logistics simplified" we decided to distill all of the information we'd gathered into a no- nonsense, practical and concise overview and write to all our customers so they were fully abreast of the changes...we also thought it may be useful to the wider supply chain community hence our post today. 

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You may have heard about the changes taking place on 1st May 2016 with the arrival of the Union Customs Code. You may also have heard the term Authorized Economic Operator being used in the same conversation and naturally, you may then be wondering, what do these terms mean – and how will they affect our business?

As you can imagine, we have been monitoring the developments closely, have attended a dedicated UCC/AEO seminar and have since had written and verbal discussions with one of the leading Customs officers in the UCC team here in the UK.
It’s fair to say that Customs have not been very forthcoming with information on exactly how importers/exporters (referred to as traders by HMRC) will be affected and in fact, the officer we communicated with advised us that they are still to release more detailed guidance on 31st March 2016 (only 1 month prior to the launch date of the UCC!). To be fair to HMRC, the finer points of the UCC were only ratified in late 2015 which prevented them releasing more details.

Firstly, I should explain in more detail what both of the above terms mean.

Union Customs Code

Since the 1990s, within the EU, we have operated under the Community Customs Code, however after almost 10 years of discussion and a failure to agree on the Modernised Customs Code (MCC), the UCC was ratified in 2013 and will bring about the following changes from 1st May 2016:- 
  • More streamlined Customs legislation and procedures
  • Greater legal certainty and uniformity to businesses
  • Increased clarity for customs officials throughout the EU
  • Simplification of Customs rules and procedures to facilitate more efficient customs transactions in line with modern-day needs
  • Complete the move by Customs to a paperless and fully electronic environment
  • Reinforce swifter customs procedures for compliant and trustworthy economic operators (Authorised Economic Operators)
Authorized Economic Operator
AEO is an internationally recognised quality mark which was introduced by the European Commission in 2008 and indicates that a business operates within a secure supply chain and that their internal controls and procedures are efficient and compliant. The Union Customs Code, as you can imagine, is a pretty detailed piece of legislation, and some would say (quite justifiably) that it is quite daunting and confusing, however what most customers really want to know is, should I be concerned about it, and do I need to do anything? Each customer’s situation is different of course but I will try to summarise the situation for the majority of importers below.
Importers
If you are a typical UK importer and you import the goods into Free Circulation – that is, you pay the import duty & VAT when the goods are cleared and either retain the goods within the UK, or you sell them on to UK or EU customers, then you are unlikely to be affected by the UCC unless you operate your own Customs deferment account, where you defer any duties payable at the time of clearance and reimburse Customs once per month.

If you do, the UCC introduces the concept of financial guarantees for most actual and potential Customs debts in the form of the new Customs Comprehensive Guarantee (CCG)- however, as long as you do not make any changes to your deferment account (for example, making changes to the deferment account limit or the bank which guarantees the deferment account, the deferment account won’t be reassessed under the new terms and so you should not be affected.

If you operate any other Customs procedures such as Inward Processing, End Use, Outward Processing, Customs Warehousing, Temporary Admissions or claim 0% Preferential Import Duty, then the new Customs Comprehensive Guarantees will be required.

Let me just put something into context here, as many customers will be feeling a lot of pressure to now become an AEO. With AEO, there are 3 levels of certification, AEOC, AEOS and AEOF however there are presently only 399 AEOs in the UK, as the take up over the past few years has been very poor. Given that almost 50% of these are freight forwarders and there are 220,000 registered UK importers it is clear that the benefits of AEO have not been seen as worthwhile when compared to the time and effort involved in applying and maintaining AEO status. HMRC are also unlikely to be able to even process applications should large numbers of importers/exporters feel they must act however they have seen a rise in applications in the last 3 months.
Exporters

You will notice that I haven’t covered exporters in this summary and this is because, generally speaking, there is much less interest by HMRC generally in exports (as there’s less revenue/duty/VAT attached to exports, and in turn a lesser need for CCGs) and therefore the UCC is likely to have a limited impact on exports. Should you be a user of Inward Processing, then by default, you would be affected as an importer as you would process goods and then re-export and be covered as an importer in this article.
 So to summarise, for the majority of importers.
1. Importing goods to Home Use and do not have their own deferment account
Unless HMRC interfere with clearances for non-AEO companies (which is highly unlikely given that 99.9% of UK importers/exporters are non AEO status), they should see no change to the way their imports are processed however if they use Straightforward Consultancy (SCL) services for Customs compliance, this will be a great asset should they decide to opt for AEO status, as HMRC will want to see evidence of a proper process of Customs compliance, preferably for 3 years
2. Importing goods to Home Use and have their own deferment account
Again, unless HMRC interfere with clearances for non-AEO companies, they should see no change to the way their imports are processed however if they make any changes to their deferment guarantee, they will need to set up a Customs Comprehensive Guarantee (CCG). If they use Straightforward Consultancy (SCL) services for Customs compliance, this will be a great asset should they decide to opt for AEO status, as HMRC will want to see evidence of a proper process of Customs compliance, preferably for 3 years. Customs are also saying that if a customer becomes an AEO, they will benefit from a 70% reduction in the guarantee amount.
nb - If you operate SIVA (Simplified Import VAT Accounting), where you use this system to reduce the amount of the guarantee you have lodged with HMRC (just to cover the duty) then you can continue to use SIVA in its current guise until your term expires.
3. Importing goods to other Customs regimes, such as Inward Processing, End Use, Outward Processing, Customs Warehousing, Temporary Admissions or claim 0% Preferential Import Duty 
The arrival of the UCC will definitely affect you, as the new Customs Comprehensive Guarantees will be required and for example, if you already have an IP Undertaking which is due to expire after 1st May 2016, then this will be valid until expiry unless you make any changes to it.
 I hope that this has been useful and gives you a pretty concise overview on what is happening with the Union Customs Code, and more importantly, how it may affect you. Of course, this is a concise summary and reflects our personal opinion of the changes and far more detail sits within the Customs notices and, we hope, within the update on 31st March. I also attach a link to the last official update from HMRC in October 2015.
Please do contact me if you require any guidance or clarification.
 Please follow me on Twitter @AndyCliffSCL, visit our website www.straightforwardconsultancy.co.uk  and our blog http://straightforwardconsultancy.blogspot.co.uk/
Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles. 
Andy felt that in an increasingly complex and confusing world of logistics, small-medium sized UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day. 



Andy is part of the judging panel for the 2016 Global Freight Awards, his second year in this prestigious role. The awards recognize quality, innovation and performance in the field of international logistics. 

Monday 18 April 2016

The EU referendum - Article 50 Lisbon Treaty - how to make a BREXIT...

Good afternoon All

The two campaigns on the thorny topic of whether the UK should leave or remain in the EU were officially launched last week, although you’d have thought the campaigns had been running for months, based on the amount of media attention and discussion this matter had been getting since the referendum was announced on the 20th of February!

Of course, it’s a massive decision and all of the people I talk to are just looking for some neutral and objective information on which they can base their decision.




Apparently, the legislative trigger we would pull if we did decide to leave the EU in the UK referendum on 23rd June 2016 would be Article 50 of The Lisbon Treaty, and this simply begins with a formal notification (a letter will suffice apparently) from the UK to Brussels advising them that we wish to invoke Article 50. Then the two year process of disengagement begins.


Last weekend I came across a BBC Radio 4 podcast which gives a good
down-to-earth perspective on what would be involved if we did leave – andthe pros and cons of each side of the argument. The link is below.

One thing that you may not know, and something I wasn’t aware of was that there already is a country who decided to leave the EU and today still remains outside the EU - and that country is Denmark!

You may say, that’s not true, they’re a member of the EU. But what happened was that Greenland, an overseas territory of Denmark, who joined by default when Denmark voted to join decided they didn’t want to be a part of Europe and went through the process. Fascinating stuff and the BBC interviews with officials from Greenland and various EU experts are well worth a listen if you have a quieter moment this evening or this weekend.


Please follow me on Twitter @AndyCliffSCL, visit our website www.straightforwardconsultancy.co.uk  and our blog http://straightforwardconsultancy.blogspot.co.uk/

Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles. 


Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day. Andy is part of the judging panel for the 2016 Global Freight Awards, his second year in this prestigious role. The awards recognize quality, innovation and performance in the field of international logistics. 





Friday 15 April 2016

Global Freight Awards 2016 - Straightforward Consultancy invited to judge again!

Good afternoon All


We were invited onto the judging panel for the first time in 2015 to judge at the Global Freight Awards run by Lloyds Loading List / Informa and thoroughly enjoyed the day, and spending time with other prominent logistics professionals reviewing the many submissions from companies in the logistics sector.


I think there were around 120 entries for us to review so it was a big task but it was interesting to see how companies were trying to innovate or invest in young people in an industry which has been generally lacking in formal training or investment in people.



We've just been invited to judge again for the 2016 Global Freight Awards so very pleased that they want us to participate again this year!


Please follow me on Twitter @AndyCliffSCL, visit our website www.straightforwardconsultancy.co.uk  and our blog http://straightforwardconsultancy.blogspot.co.uk/

Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles. 
Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day. Andy was part of the  judging panel for the 2015 Global Freight Awards, which recognize quality, innovation and performance in the field of international logistics. 




Sunday 3 April 2016

Donald Trump, his global trade proposals and Tata Steel in Port Talbot

Good afternoon All

I came across this article today, and although here in the UK, we've been seeing some media coverage of Donald Trump's campaign, until now I hadn't really seen anything on his stance in relation to global trade with the USA.

http://theloadstar.co.uk/trumps-war-on-the-american-supply-chain/?utm_source=The+Loadstar+daily+email&utm_campaign=d87c200f28-Top_Stories_3_April4_1_2016&utm_medium=email&utm_term=0_c4570e43d4-d87c200f28-125883633

It's certainly sparked some strong reaction from companies with global supply chains such as Ford. It's also quite topical as here in the UK, we're facing the shutdown of our last major steel plant (Tata) in Port Talbot and it's been said that the Chinese have been "dumping" their excess capacity into foreign markets such as the UK and making it impossible for the UK to compete. 

So Donald Trump's talk of 45% duty on Chinese imports is quite ironic as we (and the EU) are currently considering imposing what are known as "anti-dumping duties" on steel from China. However I heard yesterday that the Chinese have just imposed a +40% import duty on UK steel so they're clearly getting in there first!

Global trade - one things for sure, it's never boring...!



Please follow me on Twitter @AndyCliffSCL, visit our website www.straightforwardconsultancy.co.uk  and our blog http://straightforwardconsultancy.blogspot.co.uk/
Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles.
 
Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day. Andy was part of the  judging panel for the 2015 Global Freight Awards, which recognize quality, innovation and performance in the field of international logistics.