The following points may appear elementary, but for traders new to exporting or for those needing to acquaint themselves with the export procedures required by HMRC as from 1 January 2022, it is very important that these steps are taken to ensure the smooth movement and Customs clearance of consignments for export, as full Customs Import and Export controls apply as from 1 January 2022.
1. Obtain an EORI number
If you move goods between the UK and other countries, you must have an Economic Operator Registration and Identification (EORI) number, which is your VAT Number plus the suffix digits 000. For England, Wales and Scotland, your EORI number must begin with GB. For Northern Ireland, your EORI number must begin with XI. More information on trading with Northern Ireland and the Irish Republic can be obtained from the UK government’s Trader Support Service (TSS).
You can apply for an EORI number on the gov.uk website.
2. If another party, i.e. a Customs agent, is going to act on your behalf, provide written authorisation
In order to enable another party to act as your Customs Agent, you will need to provide them with written authorisation (in the form of a Power of Attorney Letter or a Letter of Empowerment) before they are able to assist in moving and clearing your goods.
3. Understand the rules and licences that apply to your goods.
There are several different types of goods that require additional licensing or certification. These include, but are by no means limited to, items such as:
· Animals and animal products.
· Drugs and medicines.
· Medical devices.
· Food products.
· Items subject to Prohibitions and restrictions regulations (Dual Use).
· Waste.
Duties, rules and restrictions for your goods can differ from country to country, so you need to ensure that you know what documentation and procedures are required at your consignment’s destination, including, where necessary, details of the customer’s import procedures and possibly the import commodity codes and duty rates that your customer will be subject to.
The gov.uk website has a helpful tool you can use to carry out your checks.
4. Classify your goods with a commodity code.
Customs declarations require a commodity code which is internationally recognised, to identify your goods. This code will determine the duties and taxes applied by HM Revenue & Customs. There is the Harmonised System (HS) 6-digit commodity code which is recognised worldwide, and the national tariff 8-digit commodity code, accessible through www.gov.uk/trade-tariff. The HS Code is used on all commercial invoices, while the national tariff 8-digit commodity code is used for all export declarations.
Determine which commodity code you need for export by visiting the gov.uk website and using their Trade tariff tool.
5. Establish the origin of your goods.
Under a tariff preference scheme subject to a Free Trade Agreement, your goods may qualify for lower Customs (i.e., Import) duty at destination. If this is the case, you will need to supply proof of origin of your goods. You may then make a written origin declaration on your documentation, especially your commercial invoice, or, if required by your customer, provide a Certificate of Origin.
6. Agree on Incoterms.
Incoterms 2020 is published by the International Chambers of Commerce. Internationally recognised, the Incoterms detail the responsibilities of the buyer and seller under each of 11 possible terms of shipment. These also define at which point risk passes from the Seller to the Buyer.
Ensure your Incoterms are agreed with your customer in advance of the sales contract and the shipment so that shipping and delivery responsibilities are understood and agreed by everyone concerned.
If appropriate under the Incoterms, ensure that your customer is aware and prepared to clear the cargo, especially at import. Generally, Customs require the exporter to be the declarant of the goods at the export stage for compliance purposes.
7. Pack your products.
Make sure you properly pack and secure the products for transportation. Any wood used in packing, including pallets, must comply with the requirements of ISPM15 regulations.
8. Prepare your invoice and other documentation.
The export documents required are:
Commercial Invoice.
Packing List.
Transport Document.
Proof of Despatch.
Customs Export Declaration.
In some cases, your customer may also require you to arrange a Certificate of Origin. This should be raised if required local regulations or by the customer.
Your completed commercial invoice, along with any necessary licences or certification, must travel with your goods. Where possible you should list any freight or export insurance separately to the value of your goods.
The invoice must cover the full price of the goods, and any deposits, staged payments, discounts, commissions etc. should be detailed separately. Failure to declare the true sales values may result in criminal proceedings either in the UK or in the seller’s country on the basis of fraud. The invoice must be a full commercial invoice, as pro-forma invoices are not acceptable to HMRC or any other Customs authority.
The invoice should include details of your EORI, the Incoterms, a clear description of the goods and a clear indication of the currency of the invoice. Packing details can be supplied on the invoice or a separate packing list as appropriate. Adding the first 6 digits of the tariff/commodity code is good practice.
If sending goods to the EU, you must also include your Customer’s EORI Number with their name and address.
Remember that if your goods are going directly for export outside the UK, you do not need to charge VAT, but you must obtain evidence of exportation, namely the Transport Document and the Export Customs Declaration for VAT zero-rating purposes.
For goods shipped to Northern Ireland, cargo pre-clearance is required along with a declaration submitted through the TSS (Trader Support System) declaration system. Shippers should be registered with the TSS as well as the UKTS (UK Trader System) to facilitate this, although their clearing agents or carriers can be authorised to carry out the TSS declarations on behalf of the exporter.
If another party is acting as your Customs clearance broker, they will require this documentation to raise and submit your export declaration. It will also form the basis of the import declaration completed by your customer.
Cargo Pre-Clearance (Exports to the EU)
For goods exported to the EU or shipped to Northern Ireland, a Goods Movement Reference (GMR) Number is required. This results from the cargo pre-clearance procedure required by the carrier for all goods shipped to the EU and Northern Ireland. This number is issued by the Brussels Import Clearance System (ICS) on submission of the goods/cargo manifest and is issued to the carrier for onward transmission to the exporter.
9. Make and submit your export declaration.
When goods arrive at Customs control, you or your clearing agent must submit the Arrival message to the Customs computer. HMRC will then assess whether your goods can progress or need further examination or documentation before arriving in the destination country. This is achieved through the following Route Codes:
Route 1 – Documentary check;
Route 2 – Full consignment examination;
Route 6 – Clearance without examination.
Assuming the use of Routes 1 and 2, once the goods or their documents have been examined and cleared, a Route 3 – Clearance Post Examination message will be issued. The goods can now be loaded aboard vessel or aircraft, or the trailer containing the goods cleared to board the ferry.
10. Get written confirmation your goods have left the UK.
It is important that you have proof of export, as this is a requirement set out by Customs for export compliance and VAT zero-rating purposes. You should therefore keep copies of the export commercial invoice, dispatch receipt, CMR Consignment Note and Customs Export declaration (TSS declaration in the case of Northern Ireland).
11. Retain all your export documentation.
Commercial invoices and customs paperwork proof of export should be kept for at least 4 years. Your record keeping should be able to identify and collate all the commercial and supporting documents including proof of origin should HMRC request it.
You should also maintain an electronic export transaction spreadsheet, showing details of each export transaction, its value, its commodity code, the country of destination and the appropriate export declaration reference where appropriate.
12. Ensure that you have evidence of origin where goods are being exported to the EU or other countries that have Free Trade Agreements with the UK
It is essential to keep documentary evidence of the origin of the goods that you send to the EU and other countries with which the UK has Free Trade Agreements, as these must be available to support statements of origin on your commercial invoices or the use of Certificates of Origin. Failure to provide this may mean that your customer has to pay import duty on the imported consignment.
The Export Support Service
Apart from export services offered by your local Chamber of Commerce or specific trade advisory and consulting organisations, the Export Support Service is a new helpline for UK businesses to get answers to practical questions about exporting to Europe. The service is a 'one-stop shop' and brings together UK government information, making it easier for exporters to access advice and support.
If you are a UK business selling goods or services to Europe, you can contact the UK government export support team by phone or online.
You can ask any question for your business, including questions about:
· exporting to new markets
· documentation you need to sell your goods abroad
· rules for a specific country where you want to sell services.
You can refer to the GOV.UK website to find out more general information.
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