The Union Customs Code (UCC) was adopted by the European Parliament and Council on 9 October 2013 as Regulation (EU) No 952/2013. Its provisions will start coming into effect on 1 May 2016. There will be a phased implementation period lasting until 31 December 2020, to allow the necessary time to develop the complex IT infrastructure to support EU wide simplifications.

Are you ready for the implementation of the pending Union Customs Code? Major changes are afoot for businesses operating to and within the European Union. It should be noted, however, that until 1 May 2016 the

Community Customs Code and its implementing provisions

continues to apply.

The aims of the UCC are essentially to standardise and simplify customs rules and processes, with a view to facilitating increased compliance and the creation of a level playing field. However, at their heart is an aspiration to increase the competitiveness of companies doing business in Europe.

Increased computerisation is envisaged, as are new simplifications such as centralised clearance and self-assessment. A greater emphasis will also be placed on Authorised Economic Operator (AEO) certification; those companies who have or do achieve this status are set to benefit in several areas.

The UCC is part of the modernisation of customs and will serve as the new framework regulation on the rules and procedures for customs throughout the European Union. According to the EU website, the implementation of the UCC will:

• streamline customs legislation and procedures

• offer greater legal certainty and uniformity to businesses

• increase clarity for customs officials throughout the EU

• simplify customs rules and procedures and facilitate more efficient customs transactions in line with modern-day needs

• complete the shift by Customs to a paperless and fully electronic environment

• reinforce swifter customs procedures for compliant and trustworthy economic operators (Authorised Economic Operators)

Key Changes

The following points should be noted as the key elements that will be changed, although those involved will need to undertake further analysis.

a.

Customs Guarantees

Transaction based guarantees will be required for each 'special procedure' (transit, storage, specific use and processing), potentially to the 100% value of the applicable duties. This is a fundamental change to the current procedures where guarantees are not required. It should be noted that companies holding AEO status (for further detail, see the related TT Talk article 'Authorised Economic Operator status') will be eligible for certain waivers or reductions on the guarantee reference amounts.

b.

Temporary storage

The UCC will contain additional benefits for authorised companies allowing them to be able theoretically to move goods from one temporary storage location to another within the temporary storage procedure, instead of having to be authorised for National Transit. For holders of Customs Simplifications status (AEOC) it will be possible to move goods in temporary storage between Member states, subject to customs approval in the relevant states.

c.

Customs warehousing

Pending meeting certain criteria, from 1 May 2016 traders authorised under the new storage procedure will be permitted to make retail sales from the premises of a customs warehouse, potentially having significant benefit to the trader. Essentially retail sales can be made and finalised before duties are due; this could greatly improve the cash flow and competitiveness of certain traders.

d.

Centralised Clearance

A Single Authorisation for a simplified procedure allows an economic operator to use the local clearance procedure or the simplified declaration procedure in the Member State where he is established in order to perform the customs formalities relating to imports/exports wherever they occur.

It is envisaged that a greater use of Single Authorisations for simplified procedures will provide the foundations for the implementation of centralised clearance as a standard procedure under the UCC. Centralised clearance will allow economic operators to centralise and integrate accounting, logistics and distribution functions with consequent savings in administrative and transaction costs. There are again a number of qualifying criteria which must be met, amongst which is achieving and maintaining AEOC certification. It is generally considered that Centralised Clearance will not be truly realised for a number of years due to the level of IT infrastructure required to support it.

The increased use of electronic systems will support the introduction of the UCC. For many operators in today's environment this will likely provide an immediate challenge; those who are using paper based non inventory linked systems will face changes in the coming years as the deployment of the new electronic systems are rolled out more widely. The complete deployment of all of the electronic systems required by the UCC will be carried out by 31 December 2020. Therefore, the period between 1 May 2016 and 31 December 2020 will in effect be one of transition.

Once the IT infrastructure is in place, the long term vision is that other organisations such as Border Force and Defra will also be able to link into the electronic systems and facilitating access for each to the data they individually require, with the ultimate goal of bringing about more efficient processes. Such integrated communications between governmental authorities has been a long-held dream for champions of trade facilitation.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club