‘If there are mistakes in customs forms, our recommendation is always to ‘fess up to Revenue’

Although the EU-UK trade deal eliminated tariffs and quotas on most goods, it brought with it a raft of new declarations, health certification and licensing requirements, particularly on food, animals, plants and even goods such as face masks or power tools.

To get goods through customs quickly, some companies might be tempted to enter a lower value or a different commodity code in their declarations, for instance – one which avoids extra health certification or physical checks, or which attracts lower duties.

A decade ago, vegetable farmer Paul Begley was jailed for mislabelling Chinese garlic as apples to avoid an estimated €1.6m in duties.

While there is no hard evidence of post-Brexit fraud, tax experts have warned that companies are making poor decisions based on a lack of information, and face a ticking time bomb of import duties and penalties further down the line.

“There are definitely mistakes or incorrect declarations that have gone on, and our recommendation is always to ‘fess up to Revenue as soon as you see that,” said Mr Nolan.

“People might say the commodity code isn’t what it actually is. They might say it originates from a country it doesn’t originate from. Or they might change the value.

“Whether that’s innocent mistakes or not, I probably shouldn’t comment on.”

When the auditors come in – and that is likely to be much sooner than anticipated, according to Mr Nolan – businesses might get a nasty shock.

Declaron, a customs clearance service established in 2020 by customs and tech experts from UK-based accountants BDO and Irish financial services firm Fexco, promises to help companies avoid this ticking time bomb.

“What we’re trying to do is put the power back into the hands of the businesses,” said Mr Nolan. “Traditionally, with customs clearance, you’ve gone along to an agent and the agent goes off and does something magic in the background and your goods get through. But the business is always the entity that’s liable to Irish customs.”

In the past, companies might not have had a record of the declarations made on their behalf. Or they could have gone through multiple hauliers for each delivery, meaning their paperwork was scattered all over the place.

Declaron offers a cloud-based system, which is operated by the importing or exporting business, with support from Declaron’s trained agents over web chat, phone or email.

“What we find is, after we set a company up to do their first declaration, maybe their second declaration, then they’re pretty much independent and they can do it themselves. They’re in control then of what they should be in control of,” said Mr Nolan.

 

Challenges

One of the biggest post-Brexit challenges has been getting to grips with double import duties on goods that are warehoused or distributed to Ireland via the UK.

“You will have, say, tomatoes coming from Spain and leeks coming from France, and they all come into the UK and then they’re sent on to Ireland,” said Mr Nolan.

“When those goods are coming from France into the UK, they’ll benefit from the free trade agreement. Once they’re going from the UK back to the EU, they no longer benefit.

“And UK companies were being advised by UK authorities that that kind of ‘double hop’ didn’t attract duties.”

The UK distribution model is now “uneconomical” for many producers. A 10pc duty on cucumbers, where margins are usually razor thin, eliminates your profit entirely.

The Port of Dunkirk in northern France, near the Belgian border, is positioning itself as a potential distribution and warehousing hub for Ireland.

A second challenge has been getting to grips with special licenses for sensitive goods such as personal protective equipment, oil and petrol (which attract excise duties), steel (which is limited by a quota) or goods for “military use”.

“There are some power tools that require licensing. [Face] masks now come with a requirement on licensing. Just pieces that people wouldn’t have ever had to experience before are now coming to light,” said Mr Nolan.

 

Delays

All of these extra requirements will mean a permanent delay in turnaround times for importers, which makes importing directly from Europe, via the longer direct ferry routes to France, more viable.

“The permanent requirements for paperwork, the permanent requirements for health certificates – a lot of those pieces have time delays built into them, and companies’ supply chains will change because of this,” explained Mr Nolan.

“If they’re going to be delayed by 24-36 hours getting goods from the UK to Ireland, suddenly the differential between getting them from mainland Europe direct to Ireland isn’t so big.”

Because of these delays, trade patterns on the island of Ireland are shifting.

According to the Central Statistics Office, exports from Great Britain to Ireland dropped by 65pc in January, while the Department of Transport says volumes were still down about 50pc in February and into March.

On the other hand, Stena Line says freight levels are up by about the same amount on most routes between Northern Ireland and Britain.

Hauliers have confirmed that goods are coming into the Republic via Northern Ireland, where customs rules on certain foods, parcels and other goods have been temporarily suspended. 

Those grace periods were unilaterally extended by the UK until next year, a move which the EU says breaches international law.

The longer the grace periods last, the less control the EU – and the Revenue Commissioners – have over what kinds of goods are coming in to the country.

“Goods could bypass Irish Revenue requirements by coming in through Northern ports,” explained Mr Nolan. “This is why the EU have had to be so strict in inspecting goods coming in at Larne etc. And that’s what’s causing the frustrations that it’s causing in the North.”

There is also a grace period on the other side, which Irish exporters need to watch.

Although it has also been pushed out from April to October, the UK does intend to phase in its full customs code later this year.

“You’re going to have that first week in January all over again come October,” warned Mr Nolan. “They can start planning for that now, rather than when they have a truck waiting outside the door.”

To clear UK customs, companies need to be established there, which means either hiring an importer on the other side or registering with the UK authorities - which can be costly and impractical for smaller producers.

So in the long term, how will Brexit impact Irish producers?

“There will be a continuous shift in our supply chain. The UK will become a smaller trade partner to Ireland.

Historic ways of doing things, whereby things were centralised in the UK and then sent to Ireland, I think they’re going to shift.

“There will be delays added in to supply chains. Not massive, in the overall scheme of things, but you know, an extra 24 hours is most likely to be the situation. So whether it’s people being able to expect something for next-day delivery, I think it’s things like that that we’ll start to see drop off.”

Online Editors