Brexit has changed the trading landscape for many businesses. Importing and exporting to and from the EU is now more complex. Dave Howell explores the critical components of moving goods in a post-Brexit trading environment.
The importing and exporting landscape has radically altered for many businesses since Brexit came into effect. There are some basic steps and critical information that all trading businesses must pay attention to.
All businesses that move goods between the UK and the EU must have an EORI (Economic Operators Registration and Identification) number used by customs authorities to identify their business. Businesses can check their number or obtain one here.
It is also essential that businesses have the correct commodity code for all the goods they are importing or exporting. The commodity codes also indicate the level of VAT that applies to those goods. Business owners in doubt should email the Tariff Classification Service at email@example.com which will help them to identify the correct code. This is critical to ensure companies pay the correct VAT and import costs. Also, note that some goods have a zero-tariff agreement if they meet specific rules of origin requirements. These are the basic set-up and operational requirements when importing and exporting to and from the EU.
Those doing business with countries outside of the EU will still need to have the correct commodity codes to ensure they are using the correct tariffs, if any apply, to the goods their business handles.
A comprehensive guide explaining in detail the process of importing and exporting between the UK and the EU is also available. Businesses should direct any doubts or queries to the customs authorities that will be able to help.
We spoke with leading industry experts, to gain a detailed insight into how the importing and exporting environment has changed.
We began by asking what the key challenges have been facing small businesses with importing and exporting to the EU.
“Recent legislative changes and disruption to the supply chain have left some small UK businesses facing challenges in exporting and importing goods,” Gary responded.
“Indeed, almost 50% of the UK businesses reporting initial challenges with exporting goods at the start of the year cited the end of the EU transition period as the leading cause, with companies striving to adapt to extra border checks and paperwork and the costs associated with these.
“Ensuring full compliance with new paperwork requirements is now essential — the customs honeymoon period has definitely closed. Exporters and importers lacking the full suite of appropriate paperwork at the point of shipping will certainly experience transport delays.”
Is the small business sector adjusting well to the post-Brexit trading landscape?
“Industry data shows the sector is experiencing disruption. However, UK businesses remain optimistic about future export opportunities, with 42% of firms expecting their exports to grow over the next year. This follows news of the Government’s trade deal closures with Australia and New Zealand while we wait for agreements with India and Canada to follow suit.
“It should be remembered that other significant factors, such as the current cost-of-living crisis, the pandemic, driver shortages and the container shipping shortage, have also significantly impacted business trading levels. Therefore, Brexit should not be viewed in isolation as a single contributing factor when analysing post-Brexit trade levels.”
Can automated systems help and support smaller importers/exporters in particular?
“Small businesses often think automation is for bigger businesses, but, in reality, it has benefits for all. At the end of the day, greater automation means companies stay smaller and more agile.
“Big Data has the potential to impact smaller businesses too positively. The definition of Big Data in a logistical sense is the use of large-scale data to help with forecasting and decision-making. Many companies awed by its sheer volume and complexity find the concept of Big Data overwhelming, but more and more industries are investing in this area.
“it is important that your provider use fuel management systems to track product flows, for example. With this wealth of knowledge at our fingertips, reviewing this data helps us to plan ahead for seasonal spikes. We used data from the past three years to help understand annual trends and mitigate potential issues.”
What practical steps can small businesses take to alleviate their challenges with their imports/exports?
“In light of HMRC’s Customs Declaration platform upgrade, replacing the existing Customs Handling of Import and Export Freight (CHIEF) system with the Customs Declaration System (CDS), one vital step we urge exporters to take is to ensure they have registered onto the CDS system by the deadline, 31 March 2023. Importers should have already moved over to the new CDS system but if they haven’t, this is an easy, immediate win to simplify the import process for your business.”
Are some industries and sectors (eg food) having to make radical changes to their logistical processes to meet Brexit requirements?
“Disruption has particularly affected Food Business Operators (FBOs). Data issued when the changes were implemented — early 2022 — showed that UK food and drink exports were down £2.7 billion, almost 16%, in the first three quarters of 2021 compared with pre-pandemic levels. This was mostly a consequence of drops in sales to the EU of £2.4 billion as a result of new legislative changes.”
Do we know the economic impact of Brexit on the smaller businesses community?
“Research shows that UK exports to the EU are down by 16% on the levels they would have expected to achieve had Brexit never occurred. Meanwhile, trade from the EU to the UK is down by 20% relative to this scenario. Over 40% of Institute of Directors (IoD) members have also experienced post-Brexit loss of trade.”
What is your one piece of critical and practical advice to small business owners as they continue to evolve their import/export systems?
“Appointing a single point of contact to manage all your customs requirements, including export, S&S, border and import formalities, ensures your transport needs will be simplified, giving you that all-important peace of mind when planning for the future.”
The future of trade
As businesses are all different, generalising how to handle importing and exporting is impossible. However, all small businesses need to pay close attention to the types of goods they are importing or exporting. They need to understand the potential additional costs and any legal requirements that may now impact importing for some classes of goods.
Help and services are available that even the smallest enterprises can access. Brexit has been massively disruptive, and smaller enterprises have been disproportionately affected. The key to minimising the impact on costs and logistics is clearly understanding each aspect of the importing or exporting process. To minimise costs, taking the time to design new processes to ensure imports or exports can continue profitably is critical.