Customs Brokers

Taxes, we all ‘love’ taxes. However, love them or hate them, they are a requirement of importing goods to any country and it is a legal requirement to ensure you meet the regulations and pay the dues that are required. However, it isn’t all about tax. Importing any goods into the UK (or any country) means that you must adhere to a number of regulations to ensure you are importing safe and suitable products. A simple error here can be very costly (£)….believe us we know!

When importing goods into the UK, it can become quite a headache with the various requirements and payments to the government that need to be made, not least understanding the Customs Duty and VAT. In this section we will cover what the requirements are, what you will need to pay and how a customs broker can support you in the process. Of course, as it is Logisto, we also provide you with a directory of companies that can support you in the process, so you aren’t having to face it alone.

Customs – what to consider?

There are many things for you to consider when importing, but a few of the key considerations are:

Requirements – what registration and business changes do you need to make to ensure you are complaint for imports?

Process – what actually happens when goods are imported and what do you need to do?

Support – who can support with importing to the UK to ensure full compliance and to help smooth the process?

In order to explore it further, we will take an example ‘product’ and run through the process.

For the purposes of this example, we are going to ‘import’ goods from China to the UK. China is the world’s largest exporter and the UK’s third largest import partner. China exports most goods, from electrical items to toys, kitchenware to clothing, garden furniture to vehicles and pretty much anything else you can think of!

In reality, the process is the same for importing from any country, just the tariffs will change, depended on any trade agreements that are in place between the two countries.

Importing from China to the UK

As mentioned, China is a colossal exporter, with Shanghai alone (the world’s busiest container port) moving over 40million TEU (twenty-foot equivalent containers) per year.  With all this freight moving around the world (and lots coming to the UK), there are the following things to be aware of, prior to your goods reaching the country:

What are you importing?

The first thing to consider is what are you importing and what are the requirements? There are a number of goods that have restrictions placed on them and will either be subject to:

• Licence – you can only import these goods with a specific licence
• Quotas – the volume of goods is limited by the government
• Banned – this product is not allowed to be imported into the country

Some items that are subject to the above include:

• Animal skins / Furs
• Antiques
• Asbestos
• Biological substances Category B, UN3373
• Dangerous goods, hazardous or combustible materials
• Firearms, or parts of
• Items that could be used as weapons
• Ivory
• Jewellery
• Military equipment
• Perishables
• Precious metals & stones

For the latest list and for more support, the UK government provides up to date information here: UK Trade - Product Restriction Updates

So, you have confirmed what you want to import into the country is legally allowed, what is the next step?

Requirements

To sell goods in the UK, they must be compliant in terms of labels and the information that is provided to the customer on the packaging. For example, if you are importing toys, you must display the following on the packaging, as a minimum:

All new toys that you supply in the course of a business must be marked with: the name and address of the manufacturer, or if the manufacturer is outside of the UK, the name and address of the manufacturer and the importer into the UK. type, batch, serial or model number. the UKCA mark.

Case study - Watch out: This is very, very important. At Logisto, our team have been involved in importing goods into the UK for FTSE 100 companies as well as independent e-commerce businesses. There are numerous examples where, what might be perceived as a small detail missing on a label can result in a big additional cost and operational headache! We once imported some children’s play tepees and our container was pulled for inspection at the Felixstowe Port. We had missed some information off the labels and we were charged £1000’s in demurrage fees whilst our product was confirmed safe and the labelling updated!

In the best case, your products continue their journey without search, but in the worst case they can be searched by Trading Standards. If this happens (as in the above case study),

it can result in (very) expensive demurrage costs whilst the products are checked and tested and you may then be required to pay additional fees to relabel the products via a 3^rd Party. Worst case, the goods could be disposed of and you will be liable for the charges.

Top Tip: Always check and re check the labelling requirements the first time you send goods to the country. Thankfully, your local Trading Standards office will be helpful for advice and guidance. We have always found them very willing to help business and they can help prevent any issues, prior to your product arriving in the country.

Search for your local office here:

https://www.gov.uk/find-local-trading-standards-office

Invoices

Further to product label requirements, one of the key elements that you need to pay attention to and ensure is compliant, is your invoices. This needs to including the following information:

Full details of the sender and receiver

The quantity of the goods

The value of the goods (per unit)

A complete description of the goods

The commodity code (see next section to confirm which one you require)

Commodity codes

When importing and exporting products, you will (or you Customs Broker/Freight Forwarder) need to know about commodity codes. These codes are used to classify the type of goods which ensures they are moved safely and that you are compliant with customs, duty and tax regulations.

Every product that enters the country has a commodity code attributed to it. This is determined by the type of product, the material, whether it is hand or machine made or even the component of a bigger product. Though it can look daunting, they are very effective. Below is an example to show the workings:

Product example: Leather shoe upper

Below is an example for a shoe upper, made of leather:

Code	Meaning	Classification type
64	Footwear	HS Chapter
64 06	Part of footwear	HS Heading
6406 10	Shoe uppers	HS Subheading
6406 10 10	Leather	CN Code
6406 10 10 10	Hand-made	Tarif Code
6406 10 10 10 90	Other	Tarif Code

The above string allows anyone that is involved in the product to understand exactly what it is and what are the component parts.

Why is it important to use the right commodity code?

If you use the wrong commodity code you might end up paying the wrong VAT tax or customs duty. This can result in goods being delayed at the point of entry, or worse, see your products be destroyed. At the other end of the scale, if you imported a restricted good into the country using the wrong commodity code then you could land yourself in really serious trouble!

Whilst commodity codes can seem a little daunting, at Logisto, we have a couple of useful tools to help support you through the process.

• Using the trade tariff lookup tool
• Emailing HMRC for advice (classification.enquiries@hmrc.gsi.gov.uk)
• Getting a BTI ruling – more on that later
• Using the appropriate product classification guide.

The trade tariff lookup tool available from the UK government allows you to find the right code by narrowing your search using information such as what your product is, what it’s made from, how it works, and how it’s packaged.

If you’re not sure of the correct commodity code, one good place to start is by looking it up using the trade tariff tool provided by the UK Government.

• Hit ‘Start Now’
• Enter the search term you want to use – the dialogue box will automatically populate with common searches to help you
• Suggested commodity codes will appear, starting with the HS chapter and headings to help you narrow it down to the correct category of products
• You can continue to search the suggestions using other information, such as what the item is made of or how it is packaged
• Once you find the correct item type you’ll be shown the import and export codes, and any important information connected to this code – such as whether or not you need a license to import or export items under this code.

Emailing HMRC

If you need more support with commodity codes then another option is to email HMRC to ask for advice. You can reach HMRC at the following email address to discuss the classification of your products:

classification.enquiries@hmrc.gsi.gov.uk

You’ll need to include information about the product you’re planning to import or export, to get advice on the commodity code. We recommend that you include the following information in your email as a minimum, your message should include:

• A description of the product
• A photo(s) of your product
• The materials it’s made from
• What it’s used for
• How it’s presented or packaged

Note: HMRC would prefer that you send a separate email for each product that you need assistance with.

Economic Operator Registration Identification (EORI number)

For any business that imports or exports into the UK, you will need an EORI number. An EORI number allows UK Customs to easily track what products are entering and leaving the country and by which company. It is required on your commercial invoice at the point of declaration.

This is a legal requirement and an EORI number will be required whether you handle importing yourself or whether you employ the services of a Customs Broker or Freight Forwarder.

The good news it is very easy (and free!) to apply for an EORI number and you should receive it in a couple of days.

To do so, head to https://www.gov.uk/eori/apply-for-eori.

Register for the Customs Handling of Import and Export Freight system (CHIEF)

This CHIEF system allows importers, exporters and freight forwarders to input their customs information electronically. Using the CHIEF system will allow you to accurately input your payable duties and taxes. This will reduce errors and will allow for Customs to determine which goods or documents require further examination. This should also mean that those that are deemed to be of less risk by Customs will receive quicker importation to the country.

Note: Whilst this is important to know, a Customs expert (or Freight Forwarder) in the Logisto directory will be able to handle this on your behalf.

Paying VAT and Customs Duty

Once the above has been completed and the products are at the border, it is time to pay the VAT and Customs Duty. In most cases, this will require payment at the point of entry.

Note: In some circumstances, businesses can defer payment by up to 30 days. In order to take advantage of this you will need to be a registered importer business, some that represents importers or be releasing goods from an excise warehouse. For more information on this, please visit the government website here.

If you are going to pay your taxes on entry, you can do this via the Flexible Accounting System (FAS), through a terminal linked to CHIEF. Don’t worry, it is not difficult to pay your taxes, the government ensures this bit is simple!

Note: If you’re using a freight company such as UPS or FEDEX or a freight forwarder, they will often send you the charges and you will pay them for the VAT and duty costs. They will ensure the charges are provides to the required authority on your behalf.

Finally, once the above has happened, your products are good to go and are able to legally enter the country! Good news – once these steps are in place, it becomes a lot easier for each importation and you won’t be required to repeat all these steps every time you import your products.

Next, you will require onward transportation for your goods. Please see our other sections in the Knowledge Base for support and the directory for suppliers that can support your products journey.

For support with all things customs related, we have compiled a detailed list of Customs Brokers in the Logisto Directory, who will be able to assist with your import/export requirements. Of course, if you have any questions, please pop a question in the LOGISTO Forum, for customs experts to help with your query! Alternatively, reach out to the LOGISTO Team who will be more than willing to help.

Thank you

LOGISTO Team