Union Custom Code

3. 2015 Grant Thornton UK LLP. All rights reserved. Union Customs Code What is which UK business is affected? Businesses involved in global trade in goods will be affected by UCC changes. Manufacturers, exporters, freight forwarders, warehouse-keepers, clearance agents, carriers and importers should all assess how the UCC will impact them. This impacts UK businesses trading internationally and: Paying customs duty Importing and/or exporting Storing goods in warehouses 'under bond' Processing raw materials into something else without paying customs duty. The UCC (Regulation 952/2013) entered into force on 30 October 2013 but will only be applied as of 1 May 2016.

4. 2015 Grant Thornton UK LLP. All rights reserved. What are the key changes? Mandatory financial guarantees for special (customs) procedures and temporary storage. Focus on Authorised Economic Operator (AEO) certification. Impact on customs authorisations. The removal of the earlier sale provisions relating to customs valuation.

5. 2015 Grant Thornton UK LLP. All rights reserved. Financial guarantees This will apply to an estimated 20,000 existing customs authorisations in the UK, where a guarantee is not currently required Transitional arrangements for guarantees and customs authorisations Existing guarantees for potential debts will be reassessed by Customs until 1 May 2019 Current authorisations will need to be reviewed (expiry date vs reassessment) All customs duties which are potentially due through the operation of a customs duty relief scheme or suspension regime, must now be secured by a guarantee.

6. 2015 Grant Thornton UK LLP. All rights reserved. Authorised Economic Operator (AEO) Becoming accredited with HMRC as 'AEO' before 1 May 2016 means: A full financial guarantee waiver (for potential duty) Partial guarantee waiver (actual duty) Your authorisations to use customs warehouse under bond and processing relief will be renewed post 1 May 2016 Enhances the business's reputation as a 'trusted partner' Recognised status internationally, can speed up international supply chain and logistic processes

7. 2015 Grant Thornton UK LLP. All rights reserved. Earlier sales, customs warehousing Loss of first sale/ earlier sale Earlier sale facility will be withdrawn and replaced by a last sale only rule. This means that the customs value must be declared on the price payable immediately before entry into free circulation. Impact on customs warehousing Loss of first sale facility also means that customs value must be based on the last selling price before removal of goods. A transitional period until 31 December 2017 is currently proposed to businesses A business contract with your supplier, linked to the import and requiring use of earlier sale value must be in place as early as Spring/Summer 2015. Any mark-up and profit would need to be included, inflating the customs value, where goods are sold before removal from a customs warehouse.

8. 2015 Grant Thornton UK LLP. All rights reserved. How to prepare for upcoming changes? May 2016 is not a long way ahead However, any business contemplating AEO as a strategy to prepare for the UCC changes should place this high on the agenda for 2015 Strategic customs planning and collaboration are vital General recommendations Identify the key areas that are affected (such as customs warehouse, royalty agreements) Determine the risk level in order to prioritise and build your strategy Review and amend those areas in order to minimise any potential risks of non- compliance Monitor any upcoming changes How Grant Thornton can help Cost-benefit analysis of UCC changes Risk reviews Remediation of gaps encountered Assistance with writing or updating processes and procedures Completion and submission of your AEO application pack Liaison with HMRC Designing and implementing a monitoring programme Providing a regular update service on UCC

9. 2015 Grant Thornton UK LLP. All rights reserved. Contact details For further details please contact one of our team members below, or your usual Grant Thornton contact. Ian Worth Customs Associate Director T +44 (0)20 7728 2174 E [email protected] Ilektra Sarri Associate T +44 (0)20 7728 3437 E [email protected]

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Union Custom Code

Economy & Finance

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