The UK Government’s Brexit papers on ‘no deal’ planning: the impact on cross-border trade

Posted in WTO and international trade

As we have set out previously, the UK Government has issued over 20 sector specific guidance notices on how businesses and individuals should prepare for a ‘no deal’ Brexit, plus an overview paper summarising the measures dealing with a ‘no deal’ scenario. It also states that the guidance notices “set out information to allow businesses and citizens to understand what they would need to do in a ‘no deal’ scenario, so that they can make informed plans and preparations”. 

Several of the papers deal with the issue of trade and seek to provide guidance for businesses as to what they would need to do in a ‘no deal’ scenario.  The key considerations are summarised in the paper: Trading with the EU if there's no Brexit deal.

The note cautions that businesses “should consider how a ‘no deal’ scenario could affect them, and may want to begin taking steps to mitigate against such a risk, however unlikely”.

The note sets out immediate changes that would apply should the UK leave with no deal on 29 March 2019. These include:

  • businesses having to apply the same customs and excise rules to goods moving between the UK and the EU as currently apply in cases where goods move between the UK and a country outside of the EU. This means customs declarations  would be needed when goods enter the UK (an import declaration), or when they leave the UK (an export declaration). Separate safety and security declarations would also need to be made by the carrier of the goods (this is usually the haulier, airline or shipping line, depending on the mode of transport used to import or export goods). More detail is provided below
  • the EU applying customs and excise rules to goods it receives from the UK, in the same way it does for goods it receives from outside of the EU. This means that the EU would require customs declarations on goods coming from, or going to, the UK, as well as requiring safety and security declarations
  • for movements of excise goods, the Excise Movement Control System (EMCS) would no longer be used to control suspended movements between the EU and the UK. However, EMCS would continue to be used to control the movement of duty suspended excise goods within the UK, including movements to and from UK ports, airports and the Channel tunnel. This will mean that immediately on Importation to the UK, businesses moving excise goods within the EU, including in duty suspension, will have to place those goods into UK excise duty suspension, otherwise duty will become payable

Accordingly, actions which businesses should take now to prepare for a ‘no-deal’ Brexit include the following:

  • understanding what the likely changes to customs and excise procedures will be to their businesses;
  • taking account of the volume of their trade with the EU and any potential supply chain impacts;
  • considering the impact on their role in supply chains with EU partners. As the paper notes, in the event that the UK and the EU does not have a Free Trade Agreement (FTA) in place in a ‘no deal’ scenario, trade with the EU will be on non-preferential, World Trade Organisation terms. This means that Most Favoured Nation (MFN) tariffs and non-preferential rules of origin would apply to consignments between the UK and EU;
  • if necessary, put steps in place to renegotiate commercial terms to reflect any changes in customs and excise procedures, and any new tariffs that may apply to UK-EU trade;
  • consider how the business will submit customs declarations for EU trade in a ‘no deal’ scenario, including whether to engage the services of a customs broker, freight forwarder or logistics provider to help, or alternatively secure the appropriate software and authorisations
  • register for the HMRC’s EU Exit update service.

With regard to customs and excise duties in particular, the paper suggests the following actions to help mitigate the effects of a ‘no-deal’ Brexit:

  • customs warehousing: this allows businesses to store goods with duty or import VAT payments suspended. Once goods leave the warehouse, duty must be paid unless the business is re-exporting, or moving goods to another customs procedure. The warehouse must be authorised by HMRC
  • inward processing: this allows businesses to import goods from non-EU countries for work or modification in the EU. Once this has been completed, any customs duty and VAT due must be paid, unless goods are re-exported or moved to another customs procedure, or released to free circulation
  • temporary admission: this allows business to temporarily import and or/export goods such as samples, professional equipment or items for auction, exhibition or demonstration into the UK or EU. As long as the goods are not modified or altered while they are within the EU, the business will not have to pay duty or import VAT
  • authorised use: this allows a reduced or zero rate of customs duty on some goods when used for specific purposes and within a set time period


Although the Government continues to insist that it is committed to reaching a deal with the EU, the paper is striking insofar as it is an explicit acknowledgement that a ‘no-deal’ Brexit will indeed have an adverse impact on trade between the UK and EU.

The paper provides an important reminder for all businesses to undertake contingency planning and the fact that they will need to rely open their own initiatives, rather than looking to the Government for help if a deal with the EU does prove to be elusive.

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