Industry Observers Cry Foul Over UK's Grant Scheme for Customs Intermediaries

The United Kingdom is likely to face a major logistical nightmare when it goes into the Brexit regulation transition expiry on 31 December 2020. The estimates of the government regarding the requirements of personnel and equipment at borders for customs screenings seems, by all means, to fall short of what is required to check the required amount of traffic that is expected to be generated after that date. The dilemma of the government, however, for not taking timely action on this matter was two-pronged, first, it had been holding negotiations with EU officials for a post-Brexit trade deal which would ensure that the tariff-free movement of goods between the blocs continued unabated, but as time passes by both sides are afraid an agreement may not materialise. Secondly, the outbreak of coronavirus pandemic has delayed a lot of critical processes, rendering the country grossly unprepared to deal with the transition.

Meanwhile, the government had asked the business to take the advantage £50 million customs broker grant scheme to prepare for the coming trade border with the EU. The cabinet office minister Michael Gove has urged the businesses and intermediary sector to utilise the scheme to boost the training and recruitment of 50,000 new customs brokers, emphasising that along with them freight forwarders and express parcel operators will play a crucial role for businesses after the end of the transition period.

Customs Grant Scheme and the likely workload burden on custom officials

The HMRC (Her Majesty's Revenue and Customs) announced Customs Grant Scheme, is for the organisations to apply for funding to reimburse a number of costs like recruitment, employee training and IT, which are associated with increasing their capacity and enhancing their ability to complete customs declarations, ahead of the new rules, effective January 2021. HMRC has stated that traders and customs intermediaries who make or plan to make customs declarations for their own goods or on behalf of others would be eligible for the scheme.

The industry estimates that there would be a requirement of around 50,000 custom agents despite the liability of the declarations remaining with the importers and exporters, meaning that each of the businesses will have to invest in their own qualified expertise to deal with the customs filing regulations.

The industry observers in the truck haulage industry estimate that as many as 215 million customs declarations could be made per year after the Brexit transition period comes to an end. They alleged the government of being too complacent in their approach to the problem.

The industry is also concerned about the length of training the custom agents will likely receive. It has been stated that an agent needs at least a year of training to perform satisfactorily. But as things stand now, just five months remain from the date of transition.

The COVID- 19 angle

The COVID- 19 pandemics has caused major disruptions across the country. Not only has it delayed several important trade negotiations that the UK was supposed to undertake during the year, but it also delayed many of the Brexit related work that was supposed to complete before 31 December 2020.

The restriction on movement of people and equipment delayed the recruitment and training work of new customs agents greatly. Though the government has set up an online customs training academy, which is turning out people in very small numbers, it is highly unlikely that the adequate number of people will be available by year-end. Given the situation, the other plausible situation will for businesses to employ their own intermediaries, which at this time is also proving to be a daunting task as very fewer people are willing to come out of their houses to receive a new training given the strict social distancing measures in place.

The Brexit transition period and deal negotiation

When the New British government took charge in the month of January, it started a negotiation process to arrive at a deal with the European Union which would restore most of the privileges both sides had when the UK was part of the Union. The deal which was a component in the Tory party's election campaign had major implications for several of the countries’ industries which had deep business dealings with their counterparts across the borders. Though both sides parted ways on 31 January 2020, they had given the deal negotiations time until the year-end of 2020 to complete. In the meantime, however, the COVID- 19 pandemics struck, and everything went haywire, with most countries on both sides going into lockdown and majority of the public offices severely cutting down on their activity levels.

Another important dimension that COVID-19 brought to the negotiation table was that the economic situation on both sides was severely deteriorated by the time the next round of negotiations was held post the lockdown. Now, most of the negotiators who may have given concessions to arrive at a deal were more resolute as the importance of protection of businesses interests on both sides was even more crucial. On the other hand, delays in negotiations and reassessment of business conditions would make the completion of the negotiation within the stipulated time even more difficult, leading to the ultimate situation of a no-deal Brexit.

It is very difficult to determine at this stage how much loss the British side will suffer should the negotiations yield no results by 31 December 2020. However, various industry groups have already pointed out that several thousand businesses will be at risk of going bust along with hundreds of thousands of jobs.

Conclusion

The best option before the government to deal with the problem is to arrive at a deal with the European Union, so that the free movement of goods across borders does not stop after 31 December 2020. There were a number of business communities in the United Kingdom those who trusted in Boris Johnson's draft Brexit agreement to bring an amenable resolution to the country's concerns on the losses they might suffer on the event of a no-deal Brexit. In fact, the mountain of bureaucratic work that country might have to deal with as a result of new customs ports is the least of its problems. Massive business disruptions might take place in the country if a Brexit deal does not go through, ranging from many factories stopping functioning due to non- receipt of raw materials and spare parts in time, to hundreds and thousands of people getting unemployed because of this. The increased demand, which the customs intermediary sector will have to go through from traders, will undoubtedly require more fund and time.