Brexit has caused a considerable upset in the supply chain as UK-based firms navigate new regulations to trade with EU Member States. Now that the UK is no longer part of the EU, many UK companies who ship to EU countries have to complete T1 documents for the first time.
Here we’ll explain what these documents are, the challenges they pose, and how to overcome those challenges.
What is a T1 document?
A T1 transit document is a document that allows goods imported into the EU to move freely between EU states.
Effectively, a T1 document serves as a guarantee, generally backed by a bank, that ensures the payment of customs duties and other charges upon arrival in a destination country. But why does that matter?
Say you’re shipping cargo to Italy. EU customs laws require payment for all fees at the destination port or border, but French authorities may hesitate to release the goods without a guarantee that all expenses will be covered upon arrival.
Goods that aren’t adequately insured can be held at the border until all fees are covered, causing supply chain backups and administrative bottlenecks. When estimated fees don’t match up to the actual amount due, many companies will choose to abandon the shipment rather than pay the balance, leaving customs officials to dispose of the goods (which may be perishable, bulky, or even hazardous).
A T1 document notifies customs officials at the French border that the payment of all appropriate fees and duties is financially supported. Without a proper T1 document, freight is likely to be held at the EU border, leading to costly delays.
What goods require T1 customs documents?
Most goods originating in the United Kingdom have T1 status when shipped to EU member states. Exemptions include T2 goods that have arrived in Great Britain under duty suspension and remained under customs control. The movement of goods starting in Northern Ireland will be treated as T2 goods if they’re in free circulation (or T1 goods if they are not).
The rules and guidelines governing what is and isn’t a T1 product are complex — especially as they relate to the movement of goods through Northern Ireland — and many UK-based companies are now partnering with third-party customs experts to handle the paperwork process.
Challenges of T1 documents
T1 customs documents aren’t simple declaration forms — they require backing from a financial institution to be considered valid. Most small businesses don’t have the funds needed to make the guarantee on their own, and most agents won’t issue T1 documents if it increases their liability in any significant way (even those agents who are willing to issue T1s will limit the number on their books to manage risk).
As a result, many UK-based businesses have stopped shipping to the EU entirely. This dramatic reduction in international sales has led to serious economic losses for some firms and added to the supply chain disruption Great Britain has faced in recent months.
Companies investing in managing T1 documents for EU trade are adding to their paperwork burden and increasing the opportunity for costly errors. Mistakes on T1 documents can lead to delays, cost overages, even the seizing of parcels by customs officials. Obviously, this can have a negative impact on your bottom line.
Simplifying T1 paperwork
While difficulties with T1 document procedures are unavoidable, you can control your paperwork processing to make it more efficient and accurate. Why not partner with an expert rather than handle the administrative hurdles associated with EU documentation practices in-house?
A BPO partner with experience managing T1 documents can verify that your documentation and other paperwork is complete and correct to help you avoid costly overages. Handing customs paperwork management to a third-party team with experience working in EU member states allows you to hold onto your book of business in the EU with fewer hurdles and headaches.
Learn more about our customs brokerage processing services.