Chartered Accountants Ireland wrote to the Revenue in December about matters relating to trade and customs that our members are very concerned about in the event of a no deal Brexit. Issues such as IT capacity, sufficient customs personnel, the application process for Authorised economic operator status as well as the VAT cost of imports were highlighted. You can read a copy of the letter below.

“I am writing to you at a time when the threat of a no-deal Brexit is growing and that will mean significant changes to the customs obligations for many traders in Ireland. Even with a deal, there will be administrative hurdles to overcome. Over the past two years, Chartered Accountants Ireland has been educating our members both north and south of the border on the changes Brexit will bring to the trading landscape.

We note the communications about the planning Revenue have been putting in place to deal with the UK’s departure from the EU from a customs perspective. In light of the EU and Irish government messages this week to stakeholders to increase “no-deal” planning anticipating that the provisions of the Union Customs Code for the UK as a third country could come into effect from 29 March 2019, we thought it timely to write to you on some matters relating to trade and customs; matters our members are very concerned about.

Import checks and controls

Implementing the Union Customs Code in the event of a no-deal Brexit will require additional personnel to patrol our border. We acknowledge the recruitment campaign that is under way to employ additional customs officers and note the reports at a meeting of Main TALC last week that 270 additional officers will be fully trained by 29 March. We note the Revenue Chairman’s comments before the Dáil Public Accounts Committee on 15 November last that extra resource has been made available to Revenue to allow for the recruitment of 600 additional staff by January 2021, after the transition period ends.

In the event of a no-deal Brexit and the UK leaves the EU on 29 March 2019, will this recruitment process be accelerated to cope with the increased number of customs checks that will be required?

We also note the reports of plans to have many import checks and controls carried out by Revenue on goods coming into Ireland from the UK moved away from ports and airports to allow them move as freely as possible. Can you provide an update on how this might be carried out and whether checks will take place at warehouses and traders premises?

IT systems

At a recent TALC meeting, it was noted by Revenue that currently the Revenue IT system handles 1.4 million customs declaration per year. This number is expected to increase to 20 million after Brexit. We acknowledge the additional funding that has been allocated in recent Budgets to develop Revenue’s IT capability to deal with Brexit and hope that the system is ready to be cope with the increased demand. However, we note the issues in the UK where the HMRC has said that despite many months of preparation the Customs Declarations System is unlikely to be ready for Brexit occurring on 29 March 2019. In the UK, the number of customs declarations is expected to only increase five-fold after Brexit. Furthermore the HMRC engaged with users and traders to test the system later than planned which has also caused difficulties.

Based on the UK’s experience and given that many Irish traders will have to fully use the customs system for the first time, we recommend that Revenue engage with users and traders at the earliest date possible in terms of information seminars and online guidance. Our experience from engaging with our members is that it is the administration of customs that is going to cause the most difficulty rather than the tariffs. Furthermore, many of our members report delays in response times to queries with Revenue on behalf of clients. Therefore appropriate staffing levels must be dedicated to enabling traders to use the customs system.

Authorised Economic Operator status

Authorised economic operator (AEO) status is one method of expediting cross-Border trade post-Brexit. This status does not benefit agri-food producers and suppliers as border inspections are still required to check the standards of agricultural products.

We understand that there are currently just over 140 live AEO operators in Ireland and expect that this figure will increase greatly if the UK becomes a third country for trading purposes as traders seek potential solutions to barriers to trade. We understand that the application for AEO status is rigorous and would like to know if Revenue plan to increase the number of officials dedicated to processing these applications to cope with the increased demand?

VAT

For imports from outside the EU, importers must pay the VAT at the time when the customs duties are paid rather than declare it at the time of filing their VAT returns. Imports from the UK will be treated in this manner once the UK leaves the EU regardless of whether there is a Brexit agreement and this will place a significant cash flow burden on Irish business at a time of already great uncertainty and upheaval.

A postponed method of accounting for VAT, whereby importers declare the import VAT in the next VAT return should be introduced so that Irish businesses importing goods from the UK will not incur a potentially crippling upfront VAT cost. The postponed method of accounting for VAT is an established procedure in other EU member states and the introduction of this procedure in Ireland would send a clear and positive signal to SMEs that the Government is serious in its initiatives to support the sector through the upheavals of Brexit.

Getting Brexit ready seminars

The information seminars that have taken place in Dublin and Cork this month to inform traders of their customs obligations post Brexit were very useful and informative. In addition to the events planned for Galway, Dundalk, Wexford and Dublin in January, further seminars around the country in each province in early 2019 are needed.

We will continue to do our utmost to communicate developments to our members and help our members manage the change that Brexit will no doubt bring. We look forward to hearing from you and we would welcome the opportunity to meet with you to discuss these issues in further detail.

May I wish you the compliments of the Season.

Yours sincerely.

Dr Brian Keegan

Director of Public Policy & Taxation, Chartered Accountants Ireland”