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Tudor International Freight: UK oil and gas industry needs to prepare for no-deal Brexit

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Oilfield Technology,

Adam Johnson, director of Leeds-based Tudor International Freight and an oil and gas sector logistics expert, has outlined six practical steps the industry’s businesses trading with the EU should be taking now to prepare for a no-deal Brexit.

Johnson said this so-called cliff-edge departure from the bloc, which some commentators regarded as more likely, following last week’s European Parliament election and confirmation of Prime Minister Theresa May’s resignation, was the legal default option. A no-deal Brexit would therefore take effect at the end of October, if a withdrawal agreement had not been approved by the EU and UK and no extension of the Article 50 deadline had been agreed by then. In these circumstances, UK companies’ relationships with EU businesses would become subject to arrangements much like those applying to their dealings with firms in other countries.

Johnson said it was therefore imperative oil and gas sector enterprises trading with the EU familiarised themselves now with three programmes being or set to be administered by HM Revenue & Customs (HMRC), if they had not already done so.

He said affected businesses should also ensure their documentation was appropriate for a no-deal departure, consider enlisting specialist support for relevant tasks and ensure companies in their supply chains were preparing adequately too.

Johnson said: “If a business is currently trading with countries outside the EU, as well as those inside it, the likelihood is it will already have an Economic Operator Registration and Identification (EORI) number. But if not, it should apply for one now, as this is mandatory for each company outside the EU buying from or selling to it. Applications can be filed on the website and registrants will need to quote their VAT numbers, taxpayer references, company start dates and Standard Industrial Classification codes.

“Another key task for oil and gas sector businesses trading with the EU is familiarising themselves with the changes being made to the UK’s Customs Handling of Import and Export Freight (CHIEF) system. This allows import and export declarations to be processed and calculates duties and taxes payable on goods entering the country. The system is currently transitioning to a successor, the Customs Declaration Service (CDS), which will include existing and additional features. This will require all UK importers and exporters to have a Government Gateway account, so now’s the time for EU traders to apply for one of these, if they haven’t done so already.

“HMRC is also set to administer the Simplified Import and Export Procedures (SIEP), intended to keep goods flowing if we leave the EU without a deal. These will enable companies to move items through customs without filing import declarations or paying any duty due. They’ll instead be able to declare goods imported monthly, with duty payments being made a month later.”

Johnson added it was important to note, however, the SIEP procedures would be different for so-called controlled and standard goods. For example, controlled items - such as hazardous products or dangerous cargo - would require a Simplified Frontier Declaration and, if they were being exported, commodity and customs procedure codes. He added more information about relevant matters, such as transactions, duties and VAT, was on the website.

Regarding documentation, Johnson said it was important paperwork such as commercial invoices followed the same standard rules as those used for shipments going outside the EU. The UK company VAT number should be shown, commodity codes provided for each line item and the value of goods clearly marked.

He added that affected oil and gas sector enterprises should be checking companies in their supply chains were preparing, in ways such as these, for a “no deal” outcome too.

Johnson added: “We’d also advise the industry’s EU traders to start considering whether they’ll require specialist support from outside organisations for tasks such as the submission of customs declarations or assisting with documentation checks.

“They should remember the few hundred freight forwarders in the UK who are Authorised Economic Operators can offer them advantages unavailable elsewhere, including a faster customs clearance process and a reduced level of financial guarantees.”

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