NO DEAL BREXIT – Importing Goods That Are NOT for Sale!
As part of our travel law specific Brexit series, in this article, Nick Parkinson discusses the potential impact of a ‘No Deal’ or ‘WTO Brexit’ on the ability for UK companies to move professional equipment to and from EU Countries that are NOT for sale.
The Political Position as of Today (23/01/19)
As it stands, the government are yet to secure a deal with the EU that is acceptable to Parliament. The UK therefore faces a real prospect of leaving the EU on 29/03/19 without a deal. This is often described as either a ‘Hard Brexit ‘or a ‘WTO Deal’. Whatever you choose to call it, in that situation UK citizens and companies will lose the benefit of the ‘4 freedoms’ that are currently enjoyed under the EU Treaties. In particular:
- The free movement of people to and from EU countries (including employees)
- The free movement of goods to and from EU countries (including equipment and accessories that are NOT for sale)
- The right to offer and provide services in/to other EU countries
- The free movement of capital
Of all the Brexit outcomes, leaving on WTO terms is the one that is recognised as being the most challenging for UK businesses (and EU businesses dealing with the UK).
The Travel, Leisure and Film Industry
Substantial research has already been undertaken as to how each ‘type of Brexit’ may affect the film industry where, of course, it is common for expensive equipment to move in and out of the EU. One assumes, however, that the likes of Hollywood etc will manage any changes with relative ease. This Article will therefore focus on how a WTO Brexit outcome (the most ‘challenging’ type of Brexit) could affect those small to medium sized companies that are also moving equipment in and out of the EU. Travel companies, and indeed any business, will be affected but this is a concern that has been specifically brought to the attention of Travlaw by those involved in the film industry.
TRANSPORT FILMING EQUIPMENT
An integral part of the Brand Video and Corporate Film Industry is the ability to move filming equipment and accessories to and from the UK. Steve Garvey of Moving Image News estimates that 50% of their filming locations currently take place in the UK, 30% in the EU and 20% outside of the EU. With the vast majority of equipment in this industry being transported by air, rather than road, let us take a look at what might change in a post Brexit WTO World.
Border Checks: Papers and Payments
In a post-Brexit WTO World, companies transporting equipment between the UK and the EU documents will need to provide some documentation relating to that equipment. In addition to the time and hassle of obtaining the necessary paperwork, it is likely that fees will also apply. These documents will become necessary because:
- Free movement of goods between the UK and the EU will no longer apply. Any physical goods entering and leaving the UK could (and should) therefore be interrogated by Customs & Excise at Border Control. Likewise, similar checks will be made when entering and leaving the EU.
- The UK will need to create a schedule of tariffs and quotas to set out how we intend to trade under WTO Rules. The UK could, for example, decide to charge a 10% tax or duty on all sound recording equipment entering the UK whereas the EU may already have a tariff of say 25% on all digital cameras entering the EU. Obviously film companies may be transporting expensive equipment. To be hit with a charge of say 10% on equipment worth say £10k both on entering the EU and on returning the UK could amount to a charge of £2k!
When crossing the relevant borders, you will therefore need you to prove that your equipment is not being imported for the purpose of sale, i.e. that you fully intend to return all equipment back to the UK.
What Documents Will Be Needed?
There are already two mechanisms in place that assist:
- The ATA Carnet
- The UK ‘Duplicate List’ system
Let’s have a quick look at both of these systems.
The Duplicate List System
The Duplicate List is a UK only regime. The advantage offered by this scheme is that it will avoid the need to pay any customs duty or tax on moving goods on departure from the UK, and on re-entry back in to the UK. There is no fee for this scheme; however the key limitation of this scheme is that it will NOT assist when entering any countries other than the UK. If you are confident that you will be able to cross the border of your destination company without any significant fees or complications then this scheme may be a more economical option than the ATA Carnet.
For more information on the process for the Duplicate List system refer to the official Government guidance here.
The ATA Carnet System
The ATA Carnet is an internationally recognised system with a long history, currently governed by the ‘Istanbul Convention on Temporary Admission 1990’. Under a ‘WTO only’ relationship with the EU, UK companies operating in the film industry may elect to obtain an ATA Carnet when moving to and from the EU. Some of the key considerations here are:
- There is a fee of £287+VAT to £459+VAT for each Carnet issued by the London Chamber of Commerce depending on whether you use the 24 hr or express 2 hr service (discounts apply to Members). In addition a security deposit is required which is based on the value of goods being exported. If cash flow is an issue, an alternative to paying a hefty deposit would be to use an agent.
- Time and hassle. You will need to put together a detailed list of all the equipment that you intend to take in to the EU and other information (e.g. country of manufacture, serial numbers, length of stay etc). The alternative is to use an agent to assist you with the process.
- Paper not PDF. You can apply for a Carnet online; however you will need an original hard copy of the document issued by the Chamber of Commerce.
- Location of Chambers of Commerce. There are Chambers of Commerce at various locations around the UK; however you may find that certain agents only operate via certain Chambers (e.g. London). This could be a frustrating factor for companies outside of London that prefer to use agents (e.g. to avoid paying a large security deposit) and need a Carnet asap!
- Have you just received a call at 4pm to get to Sweden asap to replace a contractor that has just let someone down? Can you just jump on the next flight at 9pm? Think again. Although ATA-Carnets can be issued ‘within 2 hours’ under the premium service offered by some Chambers of Commerce, that doesn’t work if the Chambers of Commerce close at 5:30pm!
- Visitation Window. You will need to specify the date that you intend to enter the EU, and the date you intend to return to the UK. This is not as simple as buying an “open return” ticket on a train.
- The equipment must be returned back to the UK in the same state as it left the UK. So be careful not to make modifications to your equipment!
- Geographical limitations. Beyond the EU, not all countries recognise the ATA Carnet and some have limitations on its use (e.g. trade fairs). To view a list of which countries do or do not accept an ATA Carnet click here . As far as Brexit is concerned, however, the EU do recognise the ATA-Carnet system so this is not going to be a problem!
The Risk Factor when not using an ATA Carnet
The advantages of using an ATA Carnet as explained by the London Chamber of Commerce are as follows:
- Avoids the need for Customs Declaration at border points
- Avoids the need for a deposit of a guarantee, bond, or cash deposit in the country of importation (but bear in mind a sizeable deposit is also required with the Chamber of Commerce when obtaining the ATA Carnet unless using an agent)
- Avoids the risk of goods being seised on entry pending clearance (causing costly delays)
- Can be used for a trip covering more than one country and include numerous exits and re-entries in the country of origin during the length of the Carnet (maximum 1 year!)
The advantage of obtaining an ATA Carnet when visiting more obscure locations outside of the EU, compounded by language barriers, is reasonably compelling. Without naming any particular ‘high risk locations’ one can be forgiven for exercising caution as to whether they will be processed fairly and promptly on entry. Delays alone could be critical to any business operating to a strict schedule. Moreover, the absence of an ATA Carnet requires a degree of trust to be placed in officials to return a potentially substantial financial deposit on departure (and even the trust of your employees to make sure they retain the paperwork and equipment for inspection on departure).
The issue here, however, is whether such concerns are realistic when entering and leaving the EU post-Brexit. In practice, it may be that when dealing with the EU the UK’s Duplicate System may be perfectly adequate after all! Like many future issues that would need to be resolved with the EU on a WTO outcome, the solution to these issues may be ‘reciprocation’, i.e. the UK may offer favourable terms to EU businesses importing equipment in to the UK provided the EU likewise treat UK companies the same.
Internal EU Borders
Very straight forward this one. There are issues to consider when entering and leaving the EU; however, once you and your goods are in the EU, you can move freely between EU countries without restriction. For example, let’s say you are flying out to Germany and filming at various locations throughout the EU and returning to the UK from France. Your equipment and paperwork may be checked on arrival in Germany and on returning to the UK. However, there will be no such checks when you are crossing the borders between say Germany, Austria, Italy, Spain and France (all of which are in the EU).
The UK will essentially be treated like Norway and Switzerland. Two countries that many people forget are not actually in the EU!
Putting the implications of moving professional equipment to and from the EU (post Brexit) aside, there are various other questions that may be asked such as:
- Flight luggage restrictions. Will there be any changes?
- Permission to Film in EU Countries. Will there be any new restrictions?
- The ability to move staff to and from the EU. Outside the scope of a Tourist VISA what is the process? Are we guaranteed entry to all EU Countries? What is the cost? How long does it take?
Brexit is, of course, a highly complex and fast moving (sometimes) issue. We would be delighted to discuss and engage on any travel law related issue – feel free to reach out to Nick@Travlaw.co.uk or any of the Brexit Team – Matt@Travlaw.co.uk, Stephen@Travlaw.co.uk & Farina@Travlaw.co.uk.