Target Operating Model and Spring Budget customs measures make compliance 'more important than ever'

Wed 3 May 2023
Posted by: William Barns-Graham
Features

European continent with trade routes represented by blue lines

UK businesses have been advised that they need to demonstrate a history of compliance to benefit from the opportunities that could result from the government’s modernisation of customs processes.

The government has recently announced multiple initiatives to streamline customs requirements for UK businesses trading internationally.

This includes the series of measures to modernise customs authorisations that were announced as part of the Chancellor’s Spring Budget in March, the publication of a draft of the new Border Target Operating Model and the government’s plans to introduce a Single Trade Window.

Compliance matters

Speaking on a webinar hosted by the Institute of Export & International Trade (IOE&IT) yesterday (3 May) about the importance of customs compliance, IOE&IT customs and trade consultant Matt Vick said:

“Why does customs compliance matter? You don’t want to get in trouble, that goes without saying, but with the customs measures that were announced in the Spring Budget and in the draft of the Border Target Operating Model earlier this year, your compliance history is going to become important than ever.”

As part of this year’s Spring Budget, the Chancellor announced a series of measures designed to streamline the process for applying for customs authorisations such as Authorised Economic Operator (AEO) status and simplified customs declaration procedures.

These authorisations streamline the requirements around submitting customs declarations and can help firms to manage cashflow around duties.

Streamlined

At the moment, there are 42 available authorisations which companies are required to apply for separately.

However, under the proposals in the Spring Budget, the government is considering instead having five groupings of authorisations, with traders able to benefit from all the authorisations in a particular category through a single application to that group.

“They want to really strip this down and make it easier for businesses to access these procedures,” said Vick.

Trusted trader schemes

The government also announced a new model for import controls on goods entering Britain earlier this year when publishing the draft of its Border Target Operating Model.

With this, the government announced that it is hoping to move towards a “data-driven approach to managing the border, utilising technology to reduce huge quantities of paperwork”. It said that this would result in a targeted, risk-based system for checks and said that trusted trader schemes will be introduced to support this.

On yesterday’s webinar, Vick said that traders would need to be able to demonstrate a history of compliance to benefit from these new initiatives but the result would be easier trade.

“In the past, it was important to have good compliance history for audits and if you wanted to apply for customs authorisations in their current guise.

“As we move forwards we’re going to see the introduction of multiple trusted trader schemes and the government’s whole aim is to make legitimate trade easier. If you really want to improve administrative efficiency of your business, you will really want to benefit from these trusted trader schemes.

“If you’re a trusted trader you will be able to dramatically reduce the amount of data entries you need to submit for your consignments, and in some cases you might not need to do an entry at all, if it’s from the same supplier and country as some of your previous consignments.”

Robust processes

During the webinar, the majority of delegates said they were either ‘very confident’ (32%) or ‘quite confident’ in their customs compliance procedures.

Vick said that businesses will need to prove their compliance history by showing they have “robust customs processes”.

“They will be looking at your previous compliance history, your current written procedures and the resilience of your organisation.

“What you don’t want to have is one person in the company who knows your customs processes who could fall ill one day. You need to have robust customs processes.”

He said that newer businesses without a track record of customs compliance should be able to apply for authorisations from government on the back of their “business plans and financial health”.

World class

Yesterday’s webinar was run in partnership with cross-border payments platform Payoneer and was titled ‘How to get a competitive advantage through compliant and legitimate trade’.

Payoneer’s UK and EU country manager Tosin Oke, said that companies could gain an advantage in international markets by demonstrating their compliance with post-Brexit rule changes.

Referring to another poll in which most businesses reported Brexit having either a ‘quite negative’ (54%) or ‘very negative’ (3%) impact on their competitiveness in international markets, Oke said:

“Businesses have adjusted to a lot of friction in recent years, but ultimately, there are positives at the other side and those that can show that they are world class at doing anything will have a greater opportunity.”

Oke and Vick were joined on the panel by Piero Perera, a strategy and growth account manager at the accountancy firm AVASK.