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Goods: how to deal with a border

The purpose of this joint ICAEW–Chartered Accountants Ireland guide is to help chartered accountants support businesses in the UK and Ireland to deal with the trading landscape after Brexit.

The guide has a particular focus on trading between the UK and Ireland, which will be an acute issue for many businesses, but the principles in the guide also apply to trade between the UK and the rest of the EU. It is aimed particularly at businesses with no previous experience of customs formalities, but we hope it will be useful for all businesses.

Brexit will mean a very different landscape for trade between the UK and the other EU Member States. First and foremost, the UK will become a third country for the purposes of customs duties and this will have implications for all EU Member States and the UK. In the absence of any further agreements, customs controls will be operated on trade between the UK and the EU following the UK’s exit from the EU Customs Union. This means there could be customs declarations, border checks, tariffs, quotas and different VAT arrangements. Although the UK Government has published a white paper setting out its preferred approach to trade, it remains to be seen whether these proposals will form the basis for future trading arrangements. The only certainty we haveat this stage is what the these are likely to look like if no agreement is reached. 

Taking the lead: chartered accountants and Brexit

Find out how Brexit could affect the trading landscape for businesses in the UK and Ireland.

Download the complete report

Brexit could necessitate new trade arrangements for businesses across the UK and Ireland, as well as creating new requirements to pay customs duties. Businesses will need to look at their supply chains and establish exactly how Brexit will affect them and what actions they need to take to prepare. 

Key information from the following sections of the guide are covered below. You can also download the complete report.

The trading landscape after Brexit

What happens to trade between the UK and the EU after Brexit if the UK is outside the Single Market and the EU Customs Union and a free trade agreement is not in place between the UK and the EU?

The Single Market

Member states of the Single market act as a single domestic market, which is based on four freedoms: free movement of goods, services, money and people within the EU

Custom Union

A customs union is a group of countries that have agreed to allow free trade (no customs duties or tariffs) between them. The countries in a customs union also agree to all charge the same import duties (the common external tariff) on imports from non-member countries. Customs unions reduce administrative requirements. For example, once goods have cleared customs in one country, they can be shipped to other countries in the same customs union without further tariffs being imposed. Members of a customs union cannot sign individual trade agreements with other countries.

World Trade Organisation Rules

For countries trading outside of the EU Customs Union and Single Market, and where a free trade agreement is not in place, trade will operate under World Trade Organisation (WTO) rules. This means that tariffs could apply to some imported goods.

What level of tariffs could apply on trade under WTO rules?

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Under WTO rules, each member must generally grant the same "most favoured nation" (MFN) market access, including charging the same tariffs, to all other WTO members. There can be no discrimination among members. The MFN principle applies to trade in goods, services and some intellectual property.


One of the biggest barriers to trade, aside from tariffs, are quotas. Quotas put a restriction on the amount of goods imported by a WTO member. Quotas are in place to regulate the volume of trade between countries and must be imposed on a non-discriminatory basis. In other words, the WTO country imposing the quotas is not allowed to favour any country over another.

EU customs and VAT frameworks

EU customs regime vs EU Customs Union:

  • Regime applies to those outside the EU Customs Union
  • These countries are called "third countries"

Duty is paid when the goods from third countries first enter the EU.

If the UK leaves the EU Customs Union, there will be customs checks between the EU and the UK as a third country.

Goods leaving the EU to a third country are required to be placed under the export procedure.

  • An electronic declaration must be filed.
  • This declaration can be made on a Single Administrative Document (SAD).
  • The aim of the SAD is to encourage openness and standardisation.

Authorised Economic Operator (AEO) status is a certified authorisation issued by customs administrations in the EU for traders involved in customs declarations.

Customs Duty is normally calculated as a % of the value or per unit of quantity or weight of the goods being imported.

Currently for traders registered for VAT in the UK or Ireland, goods brought into the UK or Ireland from the EU are known as acquisitions.

For imports from outside the EU into the EU, importers must pay VAT to the relevant tax authorities at the time when the customs duties are paid rather than declare it at the time of filing their VAT returns.

A customs warehouse allows traders to store goods with customs duty or import VAT payments suspended.

Supply-chain challenges facing UK and Irish businesses

Many businesses manufacture products that are made up of various components which are sourced from both the UK and the EU.

  • Most businesses will be faced with delays and costs.
  • Companies should examine in detail their entire supply chain operation.

Additional customs checks or different transit routes may result in longer product lead times.

New compliance requirements may also increase product lead times.

The capacity of a business to deal with product lead time disruption needs to be examined and a cost analysis carried out.

While there haven’t been solid proposals on how technology could be used to manage future customs borders, technologies such as automatic number plate recognition, barcode scanning, enhanced driver’s licenses and the use of smartphone applications have been suggested.

The addition of customs duties means that products will become more expensive for importers and they may look to source cheaper products from other suppliers.

Trading in the Republic of Ireland

The supply chain issues discussed above will be particularly evident for trade between the UK and Ireland. Traders need to be particularly aware of their effects.

The EU already has many land frontiers with third countries and the affected Member States have established customs procedures already in place. On the island of Ireland, there is a lack of actual physical border markings and signs to indicate that you are entering a different jurisdiction and the border stretches some 499km (310 miles).

A significant proportion of Ireland’s road freight to the EU is transported through mainland UK.

If the UK leaves the EU Customs Union and the Single Market all goods that transit to the EU via the UK will be subject to border control and customs checks.

Transit procedures would need to be put in place in order to avoid disruption in relation to delays and upset in supply chain.

The Transit Procedure facilitates the movement of goods through the EU or a third country, by temporarily suspending duties and other charges on imported goods until they reach their final destination.

Three types of transit:

  1. Union Transit, where the transit operation only covers the movement of goods within Union (EU) territory (and Andorra and San Marino).
  2. Common Transit includes the movement of goods between the Union and one or more of the common transit countries and between the common transit countries themselves.
  3. TIR (Transports Internationaux Routiers) where the movement includes movement over Union territory and one or more third countries which are party to the TIR Convention 1975.

The UK would need to become a common transit country for this procedure to continue. It is important to note that while the discussion above was specific to Ireland, the UK will also be affected by the above measures on its trade with the EU.

Other barriers affecting trade

Complying with customs regulations will help save businesses money by minimising risks and reducing costs. Many companies throughout the UK and Ireland may not have experience of exporting or importing from outside of the EU and may have a requirement to understand and apply customs knowledge for the first time.

The tax authorities should provide clear information to traders on their websites and other information channels. Customs agents also need to be skilled in the appropriate procedures in order to help businesses.

In order to protect the consumer, legislation is required to ensure quality control of many items including food safety and standards.

This may mirror EU law, which will mean that there should be no change to current trading practices, but the UK may also choose to diverge from EU law.

The effects of Brexit from a business perspective

The report includes a number of case studies highlighting the practical concerns of actual businesses trading cross border, and what they might have to do in the face of new trading arrangements.

Case studies – what concerns businesses trading cross border

Trading with the EU and transiting through the UK – the consumer foods manufacturer

This business is in the ready meals, cooked foods sector based in Northern Ireland. It transports its products to the Republic of Ireland and on to the EU via the UK. Border delays of even three to four hours would be detrimental to this business as customers only accept the freshest of foods. While benefiting from current sterling fluctuation, potential tariffs would destroy this benefit very quickly. Their single largest worry is with regard to situations where ready-made meals are routed through the UK, both from and to the EU.

This business also uses ferries to the UK and onwards to various EU destinations. They are now concerned about customs delays unless there can be a sealed container agreement put in place to allow transit without a double customs and compliance cost for goods in transit. Alternatively many businesses will look to road transport to bring goods to the Irish port of Rosslare and ship directly to mainland Europe. They acknowledge that this will increase transport costs, possibly to a degree in excess of customs savings and the costs associated with freight delays. Furthermore this direct manner of shipping will in many instances be slower than using the UK as a transit destination. They have experience in customs controls as they do import and export outside of EU, and most avail of the services of customs agents already.

The cross border trader – a large food producer

This business has a turnover of between €1 billion and €2 billion, with plants in Northern Ireland, the UK and on mainland Europe. It imports and exports cross border between Ireland and the UK. In its view, the UK government will need to ensure that the UK continues to be a food exporter and importer. For example, there is a risk that US suppliers may offer cheaper food produce for UK consumers. If that is the case the UK could lose sight of the importance of the food industry to Northern Ireland and UK producers. For the business itself, the biggest concern is the increased bureaucracy that would be associated with their imports and exports.

The businesses acknowledge that this will not be derived from customs obligations alone but also from a requirement to comply with potentially conflicting food standards. They identify not just a gap in customs knowledge, but also a lack of what they term “intelligence” with regard to the technology required to administer tariffs/customs. The existence of a customs border on the island of Ireland will slow down their trade - trucks will take longer to move goods. As a significant food producer, they acknowledge the critical importance of food safety and describe it as an understated issue in the Brexit debate and not sufficiently highlighted (at least in the public domain) in Brexit preparations. They consider that the UK as an exporter of foodstuffs to the EU could be at risk when it moves outside of the EU bloc. They cite previous experiences with BSE and Avian flu as critical precedents. If there is an outbreak of avian flu for example in a UK location where the business has no operations, could the EU impose a ban on all potentially affected meats sourced from within the UK?