Industry body representatives are united in raising concerns on the lack of clarity for the UK’s post-transition border operating models.
And this week a Parliamentary scrutiny body forcefully added its own voice. The influential Treasury Committee has formally written to the minister responsible for HMRC – Chancellor, Rishi Sunak – ensuring that “a series of concerns” are a matter of record. Key issues are set out, below – and there is a link to the letter.
Whether there is a trade deal or no-deal, British companies are confronted with new and complex requirements applying to goods, to the vehicles on which they travel – and to every HGV driver crossing the border.
There is a significant risk to smooth flow of goods with chaos at the border – and an inescapable increase in costs from the increased bureaucracy when moving goods between the UK and Europe.
Whilst a member of the EU – and during the ‘transition period’ ending at 23:00 GMT on 31 December 2020 – the UK enjoyed free flows of goods, vehicles and drivers. HMRC has just published a 270 page guide that comes into effect from 1 January 2021 – with multiple processes set out, depending on the nature of the goods – plus a raft of new paperwork including customs and safety declarations – and multiple IT systems to register for and navigate before goods can be shipped.
UK firms transport nearly $1 trillion (768 billion pounds) in annual trade.
Tony Shally, Managing Director of freight specialist Espace Europe is reported as saying that: “It’s going to be carnage…we’ll be fire-fighting from the 1st of January.” [Reuters]
The UK is the world’s sixth-largest economy – importing goods worth 253 billion pounds and exporting 138 billion pounds-worth from and to the EU.
HMRC advice is that, if a company wishes to outsource notifications and paperwork, they should employ a ‘customs broker’. However, this is a new requirement and there are not the numbers of trained operators available – even if the Government had made known what information is required and how the rules will be enforced.
With just weeks to go, companies used to borderless trading across 28 nations have yet to see the new IT systems.
For instance, the HMRC guide refers to a ‘Movement Reference Number’ generated alongside a ‘Transit Accompanying Document’ and an ‘Exit Summary Declaration’ – which is to be lodged with the ‘Goods Vehicle Movement Service.
This then generates a ‘Goods Movement Reference’ which is given to the driver – allowing a ‘Kent Access Permit’ to be obtained in order to enter the county of Kent. It has been suggested by Government that the Kent Access Permit be printed and posted in the windscreen of the lorry so that border checks on are not needed on the country border. Even if the goods get through Kent and cross the Channel, the guide states bluntly that anyone arriving in France without the correct documents could be sent back.
The transition period – chosen by the UK Government to end on in 68 days from now – was to allow time for preparations. The logistics industry estimates that – starting on 1 January 2021 – an additional 215 million customs declarations will need to be filled in annually. Customs brokers estimate that the cost of completing paperwork will exceed the cost of goods when moving small consignments – with a ‘typical’ export declaration requiring up to 50 pieces of information on transport, commodity codes, value and tariffs.
Richard Burnett, head of Britain’s Road Haulage Association (RHA), said industry faced a colossal challenge – with even some large companies in Britain and Europe not yet prepared. Drivers who find themselves in charge of a truck that is not fully compliant, face charges and on-the-spot fines of £300 – with advice from HMRC to carry sufficient cash or letters of credit to cover in such circumstances. Burnett warned that man European drivers would simply stop coming to Britain – and presently, European-registered trucks making the vast majority of EU-UK crossings. [Reuters]
If trucks do fail to cross the border it will most immediately be felt in Kent, home to the ports of Dover and Folkestone, which funnel around 10,000 trucks a day between Britain and Europe.
The Government contingency plan is to designate 10 holding areas near channel-crossing ports. This includes Sevington in Kent. In September, diggers and dumper trucks arrived to begin work on a 93-hectare site that will hold around 1,700 trucks – nestled between an ancient church and the village’s red brick cottages. The Government expects to use it for five years, according to a letter sent to residents. Neighbour Mandy Rossi “You look at it and think, how can that possibly be ready for the January 1st?” [Rueters]
Extract – letter from Treasury Committee to Chancellor, Rishi Sunak – 22 October 2020
“It appears that the Government has left it very late to develop all the IT needed in time, with testing and changes still being made now, years after the Government had chosen to leave the EU Customs Union. For these IT projects to facilitate a smooth transition to the new customs regime in January, companies – both traders and customs agents – need to be able to use them well in advance of the go live date, so that staff can familiarise themselves with the processes.
The Committee is concerned that the IT will not be ready in time to allow companies to prepare sufficiently. Can you set out to the Committee the hard deadline by which all companies will have access to GVMS, Smart Freight (now known as Check an HGV is Ready to Cross the Border Service) and any other system needed to trade with the EU, not limited to HMRC owned systems?
From 1 January, GVMS will be used for goods in Northern Ireland and for goods in transit under the Common Transit Convention. From 1 July, it will be used for full customs procedures. Can you set out what contingency plans have been prepared should it not be ready in time for either deadline?”
Regarding the border between Ireland and Northern Ireland: “We share the Minister’s concerns that the Northern Ireland Border Operating Model is yet to be published. Without it, it is impossible for Northern Irish firms to know how to prepare for the changes that will come on 1 January. The impact of this delay has been compounded by prevarications over whether to provide funding for customs training for Northern Irish firms.”
On staffing and training for the additional 7000 posts identified by HMRC as required from 1 January 2021: “Will you agree to provide us with fortnightly updates on how many of the final 1,000 vacancies have been filled, and will be fully trained and ready to work by 1 January?”
Photo: “Kent – the ‘Garden of England’ – soon to be the ‘Lorry Park of England'”