PwC weekly media briefing 17 February


This week’s topics: 

  • EU customs declarations: market challenges 50 days in 

  • Levelling up: despite Covid bringing communities together, social divisions have grown

  • PwC becomes a member of the Medicines Manufacturing Innovation Centre

  • EU data ruling - impact on UK and EU business 

EU customs declarations: market challenges 50 days in 

Matthew Clark, Head of Customs & International Trade at PwC UK, said:

  • We’re almost 50 days into our new trading relationship with the EU and making customs declarations is proving painful for some, perhaps especially for the estimated 180,000 traders doing it for the first time. There’s no denying that the requirements bring new cost and complexity, but we don’t want to see companies succumbing to short-term pain and ceasing trade with the EU where that isn’t the best longer-term decision for their businesses.

  • There’s never been so much talk about supply chain resilience and for good reason. Businesses have to be as rigorous as possible with accuracy and completeness of customs data for declarations to keep goods moving, to manage risks and liabilities, and to avoid potential import duty assessment, penalties and higher risk rating due to compliance action by HMRC.  

  • A couple of major sticking points stand out for companies trying to determine what customs duty is payable. First is the ten digit classification code. This determines the duty rate applicable to the goods upon import, whether any preferential rate of customs duty is available under a Free Trade Agreement or whether any additional documents such as an import licence are required. Classifying goods isn’t an easy process and can feel more like an art than a science.

  • The second challenge is the origin of the product - in other words, where was the good grown, manufactured, or caught? This is straightforward enough if you’re selling, for example, fruit from Spain, but far more complex for goods manufactured from many different parts with different origins, such as in the automotive industry. 

  • The final problem is valuation. The most common way of determining this is by using a transaction (sale) value but this isn’t always straightforward - for example, if there’s a complex series of sales prior to import or there is no sale and you are moving your own goods. Royalties, IP charges and Transfer Pricing adjustments can also affect valuation and costs.

  • Some businesses have been caught out by not realising there are usually two declarations required - an export declaration to get goods out of the selling country and an import declaration to bring them into the buying country. Clarity on supply chain roles is crucial - one practical tip to help with this is allocating an incoterm, such as DDP - Delivered Duty Paid or DAP - Delivered at Place, to the sale.

  • The effects are being felt across industries. In fashion, the complexity of supply chains was already known but many businesses are now responding to challenges that some hadn’t anticipated. For example, dealing with customers who are being asked to pay additional duty and VAT costs. They need clarity on who is responsible - the retailer or the customer? With luxury items, we're talking about significant sums.

  • Businesses are understandably looking for ways to ease complexity or help with cash flow. Among the options are using customs duty reliefs such as customs warehousing, which delays the payment of customs duty until the goods are released into the home market or negates payment of customs duty if the goods are re-exported to another market. We may also see organisations centralise their own and third-party suppliers customs brokerage under one provider to simplify declaration submission and potentially access economies of scale.  

Levelling up study: despite Covid bringing communities together, social divisions have grown

PwC’s latest research, Rethinking Levelling-Up, surveyed 4,000 people across the UK and found that, whilst communities have become more important to people during the pandemic, 44% feel that social divisions have increased. 

Key findings include:

  • 52% of people feel there is too much inequality in the UK, and 47% are concerned about the inequalities between London and the rest of the UK. 

  • Nationally, 39% of people say their area has been treated fairly by central government in the pandemic. This falls in the North West where only 29% feel their area has been treated fairly.

  • After a year spent closer to home, the public supports the Government’s aim to level up the UK and wants housing, vibrant high streets, jobs and skills to top the agenda. 

  • Housing is the stand out priority with 70% of the public saying a focus on housing (supply and quality) would be most effective in levelling up the country and reducing inequality. 

  • Jobs and skills for the future are a big focus for the public, as 49% would like to see levelling up focus on creating more better paid jobs and 44% highlight investment in skills for the future.  

  • 43% of people would like to see investment in town centres and high streets as a priority in levelling up inequalities.

  • Over three quarters (76%) of respondents hold the central government responsible for reducing geographical inequality. However, less than one in 10 respondents trust that central government ‘listens to people like me’ or ‘takes my needs into account when making decisions’.

  • Business emerges from the pandemic with an opportunity to play a greater role in improving opportunity, social mobility and equality in the places where they operate. Over half of respondents (55%) feel they have been treated fairly by their employers during the pandemic and 38% see businesses as most responsible for good jobs. Some 43% of respondents trust business to act to deliver a fair recovery, compared to 38% that trust central government and 40% that trust local government. 

Dan Burke, Strategy& partner for Government & Health Industries at PwC, said:

  • The pandemic might have brought neighbours together to support each other and the vulnerable, but this has been at a very local level.

  • We should not underestimate the inequalities it has created socially and geographically. COVID-19 has introduced new divisions, such as those who are able to work from home and those who are not, as well as reinforcing deep rooted ones, that will need to be addressed head on at a local level to deliver a fair recovery across the UK. 

  • COVID-19 has led people to refocus on what really matters to their everyday lives. ‘Levelling up’ has become shorthand for big infrastructure and connectivity investments, but it’s clear that making levelling up a reality for the public will require investment in local places, jobs and homes. 

  • A year of people living closer to home has recalibrated what is important and the levelling up agenda needs to be reset around locally targeted investment and building community resilience within a place.

PwC becomes a member of the Medicines Manufacturing Innovation Centre

  • PwC has announced the signing of an agreement with CPI, making it a partner in the Medicines Manufacturing Innovation Centre (MMIC) collaboration. 

  • The partnership will utilise PwC’s global reach, expertise and experience within the life sciences sector to benefit patients, drive economic growth and help cement the UK as a world leader of advanced medicines manufacturing innovations.

  • By identifying, evaluating and executing innovative technology at a faster pace, PwC will help to provide value to patients faster. This will also help to drive the economy and improve the pharmaceutical supply chain while adding technology to develop a new hub of advanced manufacturing at the MMIC being developed near Glasgow.

  • PwC will join founding partners CPI, the University of Strathclyde, GSK and AstraZeneca to address challenges and maximise technology opportunities within the pharmaceutical supply chain. 

  • This will be achieved through the flagship ‘Grand Challenge’ projects, which are advancing emergent and disruptive technologies. 

  • The programme is part-funded by Innovate UK through the Industrial Strategy Challenge Fund and Scottish Enterprise via the Scottish Government.

Scott Lawson, a Glasgow-based director at PwC, said:

  • The planned new facility in Renfrewshire is befitting of the strength and depth of the pharma and life sciences capabilities in Scotland. 

  • We have a highly skilled team within our pharma and life sciences industry group, and we’re really excited to be working with the Medicines Manufacturing Innovation Centre. 

  • Looking at the cutting-edge advanced manufacturing capabilities that exist here, we see it as a very significant GDP growth area for the UK.

  • PwC will contribute significant value to the consortium, chiefly by increasing opportunities for business development by leveraging its global connectivity. In addition, PwC will evaluate the marketplace for future technologies, acting as a scout for new disruptive innovations, organisations and global opportunities. Finally, PwC will develop market analysis and studies to communicate the value of current and future projects and demonstrate impact while helping to seek funding from private investors, industry and government.

EU data ruling - impact on UK and EU business 

Fedelma Good, director and co-leader of Data Protection Strategy, Law & Compliance Services at PwC UK, said:

  • If reports that the EU is set to grant the UK data adequacy status bear out, then British and European businesses alike which rely on flows of personal data from the EU into the UK should soon be able to breathe a sigh of relief. 

  • This follows an adequacy assessment of the UK data protection regime. A positive outcome - i.e. that the UK regime has been assessed as adequate -  would avoid a cliff edge for these personal data flows and avert lasting negative impact on businesses and individuals alike.  

  • Notwithstanding this decision, businesses should not forget that there are other steps they need to take in relation to data protection compliance. For example:  

·  Update privacy notices, policies, and undertake contractual reviews. For over 40 years, organisations have signed contracts knowing that the UK and EU data protection legal systems were fully integrated. Contracts contain clauses that rely on this established legal framework. Brexit changed this legal framework, giving rise to a need to review existing contract clauses.

·     Update data breach handling processes – UK and EU based organisations that process personal data of individuals in the UK and the EU may need to notify the UK’s Information Commissioner’s Office and at least one EU regulator in the event of a data breach.

·       Appoint an EEA representative and/or a UK representative, if required.

·       Identify a new EU lead supervisory authority, in place of the ICO, if necessary.

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