• Current students
      • Student centre
        Enrol on a course/exam
        My enrolments
        Exam results
        Mock exams
      • Course information
        Students FAQs
        Student induction
        Course enrolment information
        Key dates
        Book distribution
        Timetables
        FAE Elective Information
      • Exams
        Exam Info: CAP1
        E-assessment information
        Exam info: CAP2
        Exam info: FAE
        Reasonable accommodation and extenuating circumstances
        Timetables for exams & interim assessments
        Interim assessments past papers & E-Assessment mock solutions
        Main examination past papers
        Information and appeals scheme
        JIEB: NI Insolvency Qualification
      • CA Diary resources
        Mentors: Getting started on the CA Diary
        CA Diary for Flexible Route FAQs
      • Admission to membership
        Joining as a reciprocal member
        Conferring dates
        Admissions FAQs
      • Support & services
        Recruitment to and transferring of training contracts
        CASSI
        Student supports and wellbeing
        Learning Hub data privacy policy
        Online Payment FAQs
        Audit qualification
    • Students

      View all the services available for students of the Institute

      Read More
  • Becoming a student
      • About Chartered Accountancy
        The Chartered difference
        What do Chartered Accountants do?
        5 Reasons to become a Chartered Accountant
        Student benefits
        School Bootcamp
        Third Level Hub
        Study in Northern Ireland
        Events
        Blogs
        Member testimonials 2021
        Become a Chartered Accountant podcast series
      • Entry routes
        College
        Working
        Accounting Technicians
        School leavers
        Member of another body
        International student
        Flexible Route
        Training Contract
      • Course description
        CAP1
        CAP2
        FAE
        Our education offering
      • Apply
        How to apply
        Exemptions guide
        Fees & payment options
        External students
      • Training vacancies
        Training vacancies search
        Training firms list
        Large training firms
        Milkround
        Training firms update details
        Recruitment to and transferring of training contract
        Interview preparation and advice
        The rewards on qualification
        Tailoring your CV for each application
        Securing a trainee Chartered Accountant role
      • Support & services
        Becoming a student FAQs
        Who to contact for employers
        Register for a school visit
    • Becoming a
      student

      Study with us

      Read More
  • Members
      • Members Hub
        My account
        Member subscriptions
        Annual returns
        Application forms
        CPD/events
        Member services A-Z
        District societies
        Professional Standards
        Young Professionals
        Careers development
      • Members in practice
        Going into practice
        Managing your practice FAQs
        Practice compliance FAQs
        Toolkits and resources
        Audit FAQs
        Other client services
        Practice Consulting services
        What's new
      • Overseas members
        Working abroad
        Working in Australia
        Overseas members news
        Tax for returning Irish members
      • In business
        Networking and special interest groups
        Articles
      • Public sector
        Public sector news
        Public sector presentations
      • Support & services
        Letters of good standing form
        Member FAQs
        AML confidential disclosure form
        CHARIOT/Institute Technical content
        TaxSource Total
        Audit Qualification requirements
        Pocket diaries
        Thrive Hub
    • Members

      View member services

      Read More
  • Employers
      • Training organisations
        Authorise to train
        Training in business
        Manage my students
        Incentive Scheme
        Recruitment to and transferring of training contracts
        Securing and retaining the best talent
        Tips on writing a job specification
      • Training
        In-house training
        Training tickets
      • Recruitment services
        Hire a qualified Chartered Accountant
        Hire a trainee student
      • Non executive directors recruitment service
      • Support & services
        Hire members: log a job vacancy
        Firm/employers FAQs
        Training ticket FAQs
        Authorisations
        Hire a room
        Who to contact for employers
    • Employers

      Services to support your business

      Read More
☰
  • Find a firm
  • Jobs
  • Login
☰
  • Home
  • Knowledge centre
  • Professional development
  • About us
  • Shop
  • News
Search
View Cart 0 Item

News

  • Home/
  • News
☰
  • News
  • News archive
    • 2020
    • 2019
  • Press releases
    • 2022
    • 2021
    • 2020
  • Newsletters
  • Press contacts
  • Media downloads
  • Podcasts Chartered Accountants Ireland
  • Budget day news

Dos and Don’ts of customs administration - Feb 2021

Feb 03, 2021

Carol Lynch, Partner in BDO and expert in customs administration takes us through the critical areas companies should be considering, and pitfalls to be avoided when it comes to completing customs declarations.

Since 1 January 2021 there has been a complete change in how companies trade with the UK.

Companies need to review this from both a compliance, supply chain and strategic point of view. Effective planning can leave you in a strong competitive position, enable ongoing access to the UK market, ensure you have implemented potential cost reductions against competitors who have not planned effectively and ensure you do not face a post-clearance liability in the next three years.

Critical in this is:

  • determining how to complete Customs Declarations;
  • applying a cost-benefit and risk analysis to whether to bring this in-house or outsource; and
  • ensuring, either way, that you have complete control over the accuracy of those declarations when lodged with Revenue.

Some of the most critical areas in this regard are listed below:

  • Completion of Customs Declarations

With effect from 1 January 2021, Import and Export Declarations are required on goods entering Ireland from the GB and on goods departing Ireland for GB (similarly the same will happen on the GB side, albeit with a potential simplification for the first six months of the year).

These customs declarations are tax declarations and, as with all tax declarations, need to be 100 percent accurate.

In terms of Import and Export Declarations the company is the Importer or Exporter of Record and liable for the accuracy of the declarations completed. Therefore, you will need to ensure that whoever is completing these declarations on your behalf, either internally in your company or on an outsourced basis, is experienced and knowledgeable about Customs Clearance rules.

Along with the tax compliance requirements, accurate completion of customs declarations will also lead to speed of customs clearance. As a corollary, inaccurate completion of declarations will lead to delays, error routings, and customs interventions; thus, delaying the clearance of your goods.

Inaccurate completion of declarations can also lead to an underpayment or overpayment of Customs Duties (if applicable).

In this regard we recommend that you engage your clearance agents using the same rules as you would apply to your tax advisors or auditors.

In addition, once declarations are completed, we recommend an internal audit take place to review all these declarations completed on your behalf. A statement can be obtained weekly and monthly from ROS to enable this to take place. Customs will carry out a post-clearance audit within the next three years and they will look for evidence of your internal controls.

  • Tariff Classification

    Accurate assignment of tariff classifications on the customs declaration is one of the most critical aspects of Import and Export Compliance. The correct tariff classification will determine the duty payable (where there is a positive duty rate applicable). However, it also determines the rules applicable to qualify for a Free Trade Agreement zero percent duty rate (see Rules of Origin commentary below). Lastly, it also determines the security criteria applicable to the goods, license requirements, sanctions impositions, etc.  There are serious penalties for the inaccurate or negligent assignment of tariff classifications and therefore this tends to be a high priority area for all companies importing and exporting. If you have not worked through your customs tariff classifications, then this is one of the most important steps you now need to take.
     

  • Customs Valuation

    All goods imported and exported need to be assigned a value for customs purposes. The value for customs purposes relates to the inherent value of the goods on crossing the EU border. Therefore, even if the goods are supplied free of charge, an accurate customs value needs to be assigned.

    This can be relatively straightforward in the case of third-party sales where there is a sale between unrelated parties. However, it becomes a lot more complex to determine the value where the sale is between related parties, or where there is no sale on import or export, e.g. with consignment stock.

  • Proof of Origin

     

    Along with the above, you will also need to ensure you have evidence of the origin of your goods to ensure you can take advantage of this agreement. In order to qualify you will need to ensure:

    • You understand the rule of origin applicable to your product. This is produced in an Annex to the Trade and Cooperation Agreement and will be based on the tariff code of your finished product.
    • You undertake more than simple assembly operations, packing or unpacking, testing, etc.
    • You have evidence of the origin status of any raw materials or parts that you purchase from EU or UK suppliers. This is often an area where companies find, in an origin audit, that they do not have the necessary evidence in place.
    • You can manage dual sourced items and allocate correct origin.
    • You can manage percentage rules, e.g. if the rule of origin for your product requires no more than 40 percent non-EU material costs, then what happens if your BOM is always hovering on the 39-41 percent margins?

 

These latter two require strong ERP and IT controls along with, again, internal audit and risk management.

The above are just some of the new rules that companies will need to apply.

As mentioned, there are two points of audit:

1) On entry of the customs declaration

2) As part of the post-clearance audit

Most of the customs audits in Ireland take place on a post-clearance basis; therefore, putting in place compliance procedures and internal audit checks are critical to ensure there is no un-expected build-up of liability.

Impact on Customs Clearance Requirements

Many companies are now looking at whether to employ a clearance agent or to bring this in house. We recommend that all Financial Controllers put in place strong controls and checks when considering this. In deciding, we recommend applying the following cost-benefit and risk approach:

  • Cost of staff: Customs will be operating 24/7 from 1 January 2021 and your staff will need to also operate on this basis in interacting with Customs. What will the cost of this be when compared with the cost of out-sourcing to an agent?
  • Experience: It is difficult to get experienced staff and equally difficult to get experienced customs clearance agents. However, the quality and accuracy of declarations will have both a short- and long-term impact on your business. Therefore, you need to ensure staff/agents are experienced and, at minimum, have undertaken appropriate training.
  • Scalability: In engaging a clearance agent you need to ensure that the company is capable of scaling to meet your needs. How many agents do they have? What software is being used? How many declarations can they input for how many customers?
  • Compliance: You want to ensure that robust Standard Operating Procedures (SOPs) are in place and strong internal audit controls and checks. You do not want to be in a position where a post-clearance audit unveils hidden errors, and the company has left itself open to post-clearance duty collections, penalties and fines. We see this many times in the application of customs classification and in qualifying for “origin” benefits.
  • Document retention and filing: All customs documentation must be retained for a minimum of three years, plus the year of filing. In addition, these documents may be required for VAT compliance for seven years. It is important to ask how your documents are being filed, where will they be retained, and what is the ease of access when the post-clearance audit takes place. We find this can be one of the most time-consuming issues when preparing a customs audit, i.e. where documents are unavailable, archived or simply impossible to access after a year.
  • Control: What control will you have over your declarations? What visibility will you have into the customs processing system? Most companies would like to retain control while having expert support and intervention with Customs on Customs-specific issues. How will this work?

Customs agents are, as we know, in short supply. However, BDO and Fexco have addressed this issue by establishing Declaron – www.declaron.ie. Declaron is a new company focusing on providing customs clearance agents to meet your Brexit requirements. It has unequalled software for simplifying the submission of declarations. It is supported by experienced Customs Clearance Agents who interact with Customs on your behalf. It is also supported by the Customs and Tax expertise of BDO, together with the Fintech capabilities of Fexco. Declaron meets all the requirements in the checklist above and is established to support financial directors and controllers in ensuring that this area of compliance is fully managed.

By Carol Lynch, BDO

The latest news to your inbox

Useful links

  • Current students
  • Becoming a student
  • Knowledge centre
  • Shop
  • District societies

Get in touch

Dublin HQ

Chartered Accountants
House, 47-49 Pearse St,
Dublin 2, D02 YN40, Ireland

TEL: +353 1 637 7200
Belfast HQ

The Linenhall
32-38 Linenhall Street, Belfast,
Antrim, BT2 8BG, United Kingdom

TEL: +44 28 9043 5840

Connect with us

Something wrong?

Is the website not looking right/working right for you?
Browser support
CAW Footer Logo-min
GAA Footer Logo-min
CCAB-I Footer Logo-min
ABN_Logo-min

© Copyright Chartered Accountants Ireland 2020. All Rights Reserved.

☰
  • Terms & conditions
  • Privacy statement
  • Event privacy notice
  • Sitemap
LOADING...

Please wait while the page loads.