End of the Brexit Customs Grace Period - What Will Happen on 1st April 2021?
Anyone who has been keeping up to date with the news since Brexit on 1st January 2021 will be aware that the free flow of goods between the two sides has become more complex and, for some businesses, almost impossible. A ‘grace period’ was, however, agreed between the EU and UK to reduce the initial burden on businesses at the start of the new year. In this article, we will look at the ending of the Brexit customs ‘grace period’ and what this means for businesses on 1st April 2021.
Despite The Grace Period, Businesses In The UK And EU Have Struggled To Trade With Each Other
Almost as soon as the new year kicked off, businesses trading between the EU and the UK put a halt to deliveries. Marks and Spencers were unable to export items to its stores on the continent, Fortnum and Mason ceased deliveries to the EU, and Tesco struggled to get products into Northern Ireland. At the same time, many smaller businesses made the difficult decision to stop exporting to the EU as a result of the sheer volume of paperwork, complexity, additional costs, and taxes, none of which applied when in the EU. The advice from government departments to businesses struggling with the new rules was to set up shop on the continent. One UK cheese business that exported £180,000 of cheese to the EU last year was told it needed to pay for a veterinary-approved health certificate at a cost of £180 for each gift box sold. Given the gift boxes are only sold for £25, this clearly does not stack up financially. Indeed, there are potentially thousands of similar examples of businesses struggling to make sense of the new customs rules. Many EU businesses have also stopped trading with the UK, including Rose bikes in Germany. Their site now says, “Because of Brexit, we are immediately ceasing shipment of orders to the UK. We are very sorry that we will not be able to deliver to you, our valued customer, as we did before. If we are able to find an alternative solution through the free-trade agreement, we will inform you here. Thank you for your understanding, your loyalty, and your support”. As a result of all of this, exports from the UK to the EU fell by 40% in January 2021.
What Grace Periods Were Agreed Between The EU And The UK?
Brexit meant a new customs border was implemented between the UK and the EU. If no grace periods had been put in place, both sides would have had to comply with full customs checks on all products arriving at the border from the other side. This is somewhat complicated by the fact that because Northern Ireland remains in the EU single market because of its proximity to Ireland, customs checks have to be carried out for goods entering from Great Britain. There are a number of separate grace periods in place:
Rules Of Origin
UK companies exporting into the EU will not have to complete paperwork certifying that their goods are locally made until 2022, reducing the burden of red tape facing many industries.
Irish Sea Border Checks
- Food products – the grace period on food products means that the UK does not need to conform with the EU’s food safety procedures, including Export Health Certificates (EHCs) for items with an animal origin, including eggs, cheese, dairy, meat, and fish. This grace period was due to expire on 1st April 2021, but the UK has extended this to 1st October 2021. This has been criticised by senior officials in the EU as a breach of the Northern Ireland Protocol. As a result, the EU is taking legal action against the UK government (referred to as ‘infringement proceedings).
- Parcels and online shopping – the UK has also extended the grace period for parcels entering NI from GB until 1st October 2021. Without this grace period, EU customs checks would apply to any parcel arriving in NI from GB. While parcels valued at £135 or less will not require a customs declaration, those with a greater value will. This will increase both the cost, administrative overheads, and paperwork simply to send a parcel to NI. For this reason, Amazon is setting up a new fulfilment centre in Dublin (it's first in Ireland).
So If The UK Has Extended The Grace Periods, Which Are Due To End In March, What Will Change In April 2021?
While the UK has extended some grace periods, which were imminently due to expire for goods from GB to the EU, from 1st April, some new checks will come in to force for goods moving from the EU to GB. Goods with an animal origin will need to be ‘pre-notified to the UK authorities via an online system. An EHC will also be required for food products entering the EU. Both pre-notification and EHCs will be needed for any items which originate in Ireland and are transiting through the UK to get to another country in the EU. In addition, certain products such as sausages and mince will not be permitted to enter Great Britain from the EU.
Fishing boats registered in the EU, which will be landing their catch in the UK, will also need to use certain ports and provide pre-notification of no more than four hours.
The UK is no longer Ireland’s largest export market, but nevertheless, these customs changes will impact 34% of the country’s food and drinks exports and 50% of its beef exports. There are other grace periods that will end in the coming months, including the requirement for products with an animal origin to undergo physical inspections at border control posts from 1st
July 2021. All businesses on either side of the customs border need to work together to ensure that any new checks proceed as smoothly as possible. Of course, there will be inevitable delays and complications, but these can hopefully be kept to a minimum; only time will tell.