When importing goods from outside the EU you will have to pay duties and taxes to UK Customs in order to have your goods released into the country, it’s the cost of doing business. If you decide to become an importer there are a number of things you will have to consider, this may range from managing long-distance relationships to organizing international transport and customs clearance. It’s a good idea to be clear about what you are trying to achieve with your overall business strategy when it comes to the importation of goods.
Duties and Taxes
Under normal circumstances you will have to pay duty on all goods imported from non-EU countries when they’re first brought into the EU.the amount of duty you pay is dependent on how the goods are classified under the UK Trade Tariff and what they will be used for. As an importer you may be able to apply for reduced or zero rate duty for goods imported from certain countries as long as you are able to prove their origin. This is known as ‘preference’ in the importing business. It is important to note that your goods will not be released by customs until you’ve paid all duty and UK VAT.
Declarations to Customs
Most businesses use a courier or freight forwarder to make customs declarations for them as this can be a rather complicated process. It’s possible to make your own customs declarations, but this is something best left to experienced professionals. The VAT is charged on goods imported from outside the EU at the same rate as if the goods were bought in the UK. It is possible that you might have to pay import duty depending on the classification of the goods and where they originate from, it is important to find out the commodity code to classify your goods for tax and regulations and importation.
Under regular circumstances imported goods aren’t normally released by customs until you’ve paid duty and VAT, if your business goal is to import regularly you can set up a deferment account with HMRC which allows you to back date monthly payments. To apply for a deferment account you will have to provide a Customs Guarantee from a bank, insurance company or building society. There is a difference for goods imported from outside the EU as opposed to within; import VAT is paid directly to HMRC, while domestic VAT is normally paid to a supplier of goods.
After an import VAT payment is made by a UK VAT-registered trader, an HMRC form C79 showing the VAT paid will be electronically produced and sent to the address of the business. It is a good idea to save this as evidence of the VAT paid on your VAT return, not to mention that authorised traders may also be able to use this as part of their the deferred account created to pay VAT.
It’s possible to import goods from non-EU countries without paying duty or VAT as long as they are stored in a customs warehouse upon arrival, duty is suspended for these warehouses until you wish to bring the goods into circulation. Another option is that you might be able to claim duty charges and VAT back or delay payments for some goods imported from outside the EU, a good example is if you are temporarily importing goods with the intention of moving them to another EU country.
International Invoice Payments
When purchasing goods from abroad you will receive an international invoice, this invoice must comply with British law. It is imperative that the invoice states specifically that it is indeed an invoice, includes the date of issue, a reference, and the details of both the supplier and purchaser. Conducting international business means encountering different invoicing schemes, for ease of importation make sure your invoices meet the UK requirements. One of the most problematic issues with paying an international invoice is that it is more than likely to be billed in a currency other than sterling. This means that you have to convert your funds at the point of paying said invoice, which can come with hidden additional costs.
It’s not easy to plan ahead in terms of the exact profit margin of the products you’re importing – currency exchange and many guidelines can add uncertainty, because you can’t be exactly sure of the cost of your goods until you receive and process an invoice. It’s best to conduct as much research as possible before venturing into the world of importing as this is a highly regulated area; there are many rules to adhere to.
Importers need to ensure that goods are classified carefully, that the correct paperwork is provided & that the necessary import & vat is paid to HMRC to secure the release of cargo.
It helps to have a freight forwarder who can complete the customs entry on your behalf and make sure the process is as smooth as possible from UK port or airport to your chosen place of delivery.