‘Open’ customs border impossible after Brexit, say Irish tax authorities

Open customs border impossible Brexit say Irish tax authorities

A secret report by Ireland’s tax authorities leaked to State broadcaster RTE, says an ‘open’ Customs Border between Northern Ireland and the Republic will be impossible.

Taoiseach Leo Varadkar has been criticised for supposedly suppressing the report and for ‘scrapping’ Revenue Commissioners’ special Brexit department.

Ireland’s Department of Finance said that the report was only ever intended to be an internal discussion document and that it has since been overtaken by events, including Article 50 and meetings between Mr Varadkar and Prime Minister Theresa May.

In a statement it said: “It was never finalised as a Revenue report, and was not a statement of Revenue’s views. In any event, it dates from September 2016, before Article 50 was triggered and it predates the many developments and papers that have issued this year.

Thinking has now moved on very significantly. In May of this year, the Revenue Chairman told a Joint Oireachtas Committee that Revenue is not considering any new customs posts.

Best outcome

“The Government has consistently said that the best outcome would be for the UK to remain in the customs union and the single market.

“The Taoiseach has also said there cannot be a return to any border on this island. Ireland will continue to work closely with the Commission Task Force and our EU partners to seek the best possible outcome to the ongoing EU-UK negotiations.”

But the report predicts extensive delays for everything from postal deliveries to ferry and air travel as well as freight. The Irish Revenue Commissioners’ assessment of the 91,000 companies in Ireland trading with the UK reportedly found that Brexit will mean at least an 800 per cent increase in customs declarations.

It says ports and airports will need extra customs clearance infrastructure, a big increase in staff and companies will face a big increase in costs and administration.

Among the examples it gave of everyday disruption was were the Ploughing Championships which, it said, would be affected as heavy equipment brought over from the UK will need to be declared under Temporary Importation Procedures.

Photo: Sam Boal/Rollingnews.ie

The report says that every day 13,000 commercial vehicles cross Ireland’s Border. It says a completely open customs border is not possible and it is naive to believe a unique arrangement can be found.

The report states: “Once negotiations are completed … the UK will become a third country for customs purposes and the associated formalities will become unavoidable.

“While this will affect all member states, the effect will be more profound on Ireland as the only EU country to have a land border with the UK.”

The report refers to Norway’s and Switzerland’s trading agreement with the EU, and the EU’s free trade agreement with Canada, CETA.

It says that “at some point a similar arrangement between the EU and UK is conceivable” but to accomplish it in the time available is “extremely challenging”.

It repeats that if Britain leaves Brexit negotiations without agreement, trade between the EU and the UK would be conducted under World Trade Organization (WTO) rules.

Tariffs

“All UK goods entering the EU would be subject to a default range of tariffs … It has to be assumed that broadly similar tariffs would apply to EU goods entering the UK”.

“As all of these goods will be subject to the Customs Import Procedure in the post- Brexit era, the administrative and fiscal burden on the traders involved cannot be underestimated,” says the draft.

Traders importing goods from the UK will require an ENS, or a safety and security entry summary declaration which must be lodged for all goods where Ireland is the first port of arrival into the EU.

It predicts a significant increase in Temporary Importation: “Although a relatively uncommon procedure at present, Temporary Importation is likely to see a major growth,” says the report.

“Given our geographical proximity to the UK, the temporary movement of goods between the two states is very significant.”

The report also highlights the frequent movement of construction equipment, “or even just tools”, which currently moves “a few miles over and back across the border with Northern Ireland today”.

“Given that these temporary movements would now be across the border of the EU customs territory, controls would be unavoidable,” says the report.

Additional compliance

“Ships plying their trade between the UK and Ireland will no longer be able to benefit from the arrangements currently in place, leading to additional compliance costs for operators,” the report states.

The actual scale of the increased activity is “unknowable”, it says, but possibly a multiple of between10 and 30 times current levels.

“A far greater number of small consignments, each requiring an individual customs transaction, may be involved in our UK imports than would be the case with current third country supply chains,” the report suggests.

There are currently 1.1 million import declarations. It says that in 2014 there were 8.6 million passenger trips to Ireland: 3.5 million of which, or 41 per cent, were from the UK. Of 7 million outward trips, 3.5 million were to the UK, excluding Northern Ireland. Some 2.8 million passengers travelled from the UK to the Republic by ferry.

Open customs border impossible Brexit say Irish tax authorities
Photo: Eamonn Farrell/RollingNews.ie

“This would mean that the number of passengers (air and sea) arriving from the UK and potentially in possession of prohibited goods or with goods in excess of duty free allowances may exceed our existing customs control capacity,” the report says. Smaller airports such as Kerry and Knock may now have to introduce customs points, it says.

There would also be “a substantial increase in the requirement for customs clearance of passengers at Dublin and Rosslare”, says the report. Irish ports handled 12,000 vessels carrying 46.7 million tonnes of goods in 2013 of which 60 per cent was bulk, 12.1 million was roll-on rolloff, and 6.2 million tonnes was load on, load off (31.4 million inward and 15.3 million outward). There are approximately 30 million vehicle crossings each year on the main routes between Northern Ireland and the Republic each year.

“It is probably somewhat naive to believe that a new and entirely unique arrangement can be negotiated and applied to the EI/UK land frontier,” says the report.

“At some point it may be possible to have an arrangement with the UK similar to that in place between Sweden and Norway, whereby at minor crossings there is only one customs station on one particular side and a bilateral agreement allows the customs officers of one country to carry out clearance checks for both countries.

“It should be noted that there are customs offices at both sides of the border at the main crossing points between Sweden and Norway.

Extensive retraining

“Any such arrangement would require extensive retraining of customs officers from both jurisdictions in order to comply with both EU and UK legislation and is probably not a priority in the initial stages of Brexit as any related efficiencies are more to the benefit of customs than trade.”

The report concurs with suggestions by Brexit Secretary David Davis that an Automatic Number Plate Recognition (ANPR) system could work for cross border flows allowing goods vehicles to move without having to stop in cases where a pre-departure/arrival declaration has been lodged and green-routed.

“For a system of this nature to work with maximum effectiveness it would require an interface between both countries’ electronic systems and it is unclear whether any such system could be commissioned and installed in the time available.”

The Official Opposition party, Fianna Fáil, which keep the minority Fine Gael party in power in a supply and confidence arrangement, criticised Mr Varadkar’s handling of Brexit preparations.

Significant change

The Party’s Finance spokesman Michael McGrath said: “It’s very clear there has been a significant change in the Revenue’s approach to preparing for Brexit.

“There has been a pullback from Revenue and that is very foolish and unwise. Irrespective of how unpalatable a customs border is, it is a dereliction of our duty not to be prepared for all scenarios. You have to [prepare] for the worst outcome but hope for the best outcome.”

Ireland’s Education Minister Richard Bruton, said it was not for Ireland to find a solution to a Border problem created by the British government.

“We are at the start of negotiations; we haven’t reached talks on the customs issues. Of course the Revenue has spelt out the dimensions of this, they have spelt out the potential increase in customs clearance eventualities but I don’t think it’s our job to design a detailed solution to that.

“That would be adverse to our interests,” he told RTÉ.


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