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10 tips for goods import and export

Author: ICAEW Insights

Published: 21 Mar 2023

Since the UK left the EU on 31 December 2020, more businesses are required to classify movements of goods as imports and exports. Ruth Corkin and Ed Saltmarsh set out advice for businesses.

Previously, when British businesses traded exclusively with the EU, movements of goods were classified as acquisitions and dispatches. Now they are classified as imports and exports. Here are 10 tips to keep cross-border goods movements efficient, low cost and low risk.

1) Be clear with agents

Many businesses will choose to use an agent to handle their import and export process. This could be a freight forwarder, customs agent or broker, or a fast parcel operator.

An agent cannot act on a business’s behalf without written instructions showing whether they are acting ‘directly’ or ‘indirectly’. Most agents act directly, meaning they are not liable for keeping records, accuracy, or any customs duty or import VAT due. It is therefore vital that the business gives the agent clear instructions.

As a minimum, the business will need to give the agent:

  • its EORI number;
  • evidence of any goods it intends to import or export (for example, invoices or contracts);
  • a description of the goods to be imported or exported; and
  • any required licences or certifications.

2) Regularly review tariff classifications

Commodity codes classify goods for import and export declarations. The commodity code determines the amount of customs duty – and sometimes import VAT – that the importer will be required to pay.

Review commodity codes on a regular basis, as they can change. A small change to the product itself can shift it to a different commodity code and make a big difference to the duty amount payable. Businesses can check the commodity code for a product by using the trade tariff tool.

Some products can be quite difficult to classify. In that case, businesses can contact HMRC’s Tariff Classification Service to get non-binding classification advice.

If a business is still unsure or requires more certainty, it is possible to obtain a legally binding ruling from HMRC.

3) Allow at least 24 hours for paperwork

Customs paperwork will not be processed in real time, so businesses should ensure applicable documents are filed at the appropriate time.

4) Ensure proof of origin

Some products can be imported duty-free if they are imported from a country (or trading bloc) with which the UK has a free trade agreement.

For example, the EU-UK Trade and Cooperation Agreement allows duty-free trade between the UK and the EU, provided certain conditions are met, such as: the goods originate in the UK if exported to the EU, or in the EU if imported into the UK.

Unless the trade agreement says otherwise, a business will need to prove to HMRC that it can claim preference (a lower duty rate) based on the origin of goods being imported. The type of proof required depends on the category of goods being imported.

It is also possible to reduce or remove rates of duty on imports from developing countries into the UK, provided they are included in the UK Generalised Scheme of Preferences. Again, it will be necessary to obtain and retain proof of origin of the goods.

5) Use postponed VAT accounting if possible

Since 1 January 2021, it has been possible for businesses importing into the UK to use postponed VAT accounting (PVA) to account for the import VAT payable through their UK VAT return, rather than paying the VAT to clear the goods at the border.

This provides a significant cash flow advantage as the import VAT payable can, in most cases, be recovered through the same VAT return. Businesses using duty deferment accounts can get additional advantages; they are only required to provide a guarantee for the duty amount, rather than the VAT and duty amount. There are some occasions where PVA cannot be used so businesses should check this.

6) Request a copy of all import/export documents

In most cases, the requirement to keep relevant importing and exporting records remains with the business. Businesses should not rely on their agent and should ensure that they keep their own records.

This not only becomes crucial in case the agent ceases to trade, it can also speed up response times when dealing with HMRC enquiries.

7) Check VAT registration requirements before shipping

Importing and exporting often has VAT implications and can lead to VAT registration requirements in other territories. Businesses should ensure they are clear on who has legal title to the goods before they are shipped. Although incoterms are often a good indicator of this, they do not always reflect reality.

8) Consider using special procedures

Depending on a business’s activities, it may wish to consider using customs special procedures.

Special procedures include:

  • inward processing (which may allow a delay or reduction in customs duty or import VAT on goods brought into the UK for processing or repair);
  • authorised use (which may reduce customs duty payable if goods are imported for a specific use);
  • customs warehousing (which may delay or reduce customs duty or import VAT on goods brought into the UK for storage); and
  • temporary admission (which may allow the use of goods in the UK for up to two years or more without paying customs duty or import VAT).

9) Treat each transaction as if HMRC will check it

Failure to submit a customs declaration can lead to HMRC issuing a penalty between £250 and £2,500, even if no customs duty is due. Penalties can also be issued for non-compliance where there are errors in customs declarations. As these penalties can be issued for each failure, the cost can quickly add up.

10) If in doubt, shout!

Importing and exporting remains a complex area. Businesses should ensure they take appropriate advice when needed.

Moving goods into and out of Northern Ireland is currently subject to different rules to the rest of Great Britain, and this will change again once the Windsor Framework is approved. Businesses trading with or in Northern Ireland should ensure they take timely advice.

A version of this article originally appeared in TAXline.

  • Ruth Corkin, Principal Indirect Tax, Hillier Hopkins LLP, member, Tax Faculty VAT and Duties Committee
  • Ed Saltmarsh, Technical Manager, VAT and Customs, ICAEW

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