Time is running out for UK importers of European goods who deferred their customs declarations as part of a six-month moratorium to soften the impact of Brexit.
But many importers are woefully unprepared to meet the rolling deadline for lodging supplementary declarations for goods imported from 1 January. The situation has been compounded by a shortage of experienced customs brokers.
Canny freight forwarders that offer customs brokerage services, as well as handling their customers’ transport needs, will be well placed to capitalise on this post-Brexit chaos.
So, should you set up your own brokerage service, and what sort of investment is required?
You don’t need a special licence to be a UK customs broker, which means anybody can become one, in theory, but you do need to know what you’re doing.
It might look like simple form-filling but a sound understanding of customs processes and procedures is essential. That means being able to complete and lodge customs declarations correctly, compliantly and speedily.
If documents are missing or mistakes are made, it can lead to costly delays for importers and exporters. As well as ensuring that every box is filled in correctly and the right commodity codes are used, a customs broker can support clients with the payment of import duties and VAT as well, where required.
And that’s not all – customs brokers can also provide specialist guidance on a range of complex subjects, from phytosanitary and veterinary requirements to dual-use goods and rules of origin.
It’s not an easy job and it requires specialist skills and training, as well as lots of practice.
You also need to have the necessary customs software to do your job. All documentation is currently submitted to HMRC through its CHIEF system but you may also need access to the individual inventory systems serving the different ports where goods are shipped to.There are many potential benefits for transport companies that have their own in-house team of customs geeks.
It can help you win new business from importers and exporters struggling to navigate ever-changing customs regulations. You’ll be seen as a miracle worker if you can make borders disappear and deliver your clients’ goods, especially without them incurring excess duties and delays.
As well as the welcome extra income you’ll generate with each customs declaration you file, having sole responsibility for your customers’ freight and customs clearances also gives you more flexibility to plan your routes.
But you should also consider the potential downsides and liabilities before setting up your own customs brokerage, not least of which is the financial investment that would be required in IT and staff training.
Then there’s the thorny issue of who should carry the can when things go wrong. Although you usually wouldn’t be legally responsible in the eyes of HMRC, if you do get things wrong and there are unpaid duties involved, disgruntled clients may make a civil claim against you.
It’s always a good idea in such situations to keep detailed records to show that you have done things by the book. Brokers also need the much sought-after Customs Freight Simplified Procedure (CFSP) certification, basically an electronic customs declaration for speeding up the importation of goods.
You will have to prove you’re financially solvent and have the necessary knowledge, capacity and systems in place to operate as a customs broker. So there are some quite big hurdles to jump first, and gaining this type of certification can take months.
If setting up your own customs brokerage isn’t a viable option, you could consider outsourcing services to an experienced customs broker on behalf of your clients. This may be a better solution for smaller freight forwarders that don’t want the hassle and cost of setting up their own customs infrastructure.
Demand for customs brokerage services is expected to increase further over the coming months. The ability to submit supplementary declarations months after goods have been imported will end on 1 January 2022, and the backlog is likely to be huge. Freight companies that can meet importers’ customs needs will be able to take full advantage of this increased demand.
This is a guest post by Arne Mielken, a leading global trade expert in the UK and the EU and founder of customs and training consultancy Customs Manager. Arne supports businesses to reach their international customers faster, by cutting costs, red tape and paperwork. The company also offers a specialist customs declaration filing and verification service.
For more information visit https://www.customsmanager.org