HMRC has given UK importers a grace period which allows them to simply enter the import data into their commercial records until 31 December 2021 and defer the submission of a supplementary declaration for up to six months. This is called the ‘transitional Entry in Declarant’s Records (EIDR) simplified customs declaration process.’ Companies that have not integrated their processes with new UK formalities may use this as a fallback. (Note that this option is not available for controlled goods, goods placed under a special procedure, or goods that will be subsequently re-exported.)
In practice, this would mean when standard goods that are to be released for free circulation enter GB on 30 December 2021, for example, the importer would simply record the EIDR and then have until 30 June 2022 to submit the supplementary declaration. Consequently, since UK import duties are calculated in CHIEF based on the supplementary declaration, import duties would also not be due for up to six months.
No specific upfront authorisation is needed for the EIDR but traders will be required to obtain a Customs Freight Simplified Procedure (CFSP) authorisation prior the lodging of the first supplementary declaration. This can take up to 120 days to process, so getting your application in as soon as possible is advised.
Per the UK government, this “measure is a temporary, optional facilitation and some businesses that have the capability may prefer to move immediately to the declaration processes and timescales that will be in place for all goods... For businesses that are not ready to meet their customs obligations this will allow them to continue to trade while they make preparations to be fully compliant.”
The process of EIDR followed by a supplementary declaration will still be available after 1 January 2022 (renamed CFSP/EIDR), however supplementary declarations must be filed within a month from that date onwards.
What are the Pros and Cons of Transitional EIDR?
There are advantages and disadvantages to adopting the new declaration processes vs. taking the fallback option of transitional EIDR.
Advantages
Since customs duty is calculated when the supplementary declaration is submitted, by taking the delay provided by transitional EIDR, companies have six months to pay duty, which could offer cashflow benefits. Transitional EIDR is supported by C4T’s automated compliance solution, CAS. CAS is also integrated with all new systems and processes in the UK and we can help you make the transition.
Disadvantages
Transitional EIDR is a temporary arrangement and is simply postponing the inevitable. It also can introduce risk. First, only companies that are established in the UK and have a good compliance record are eligible for CFSP authorisation, and the additional administrative work necessary under transitional EIDR increases the potential for error, putting your authorisation in jeopardy. Second, it is beneficial to have the option of filing your supplementary declarations when you are ready instead of letting them all pile up until the last minute—which could again put your good standing at risk if you miss your deadlines. Therefore, we advise applying for your CFSP authorisation immediately.
While the delay of duty payments may seem appealing, our experts can propose better alternatives, including pre-lodgement of full declarations or transit, that are more sustainable and allow for special procedures to be used.
Would you like to discuss the most favorable approach to Brexit preparation for your company?