These points may appear elementary, but for traders new to importing or the import 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 other countries and the UK, you must have an Economic Operator Registration and Identification (EORI) number, as well as a VAT Registration Number. The EORI Number is your VAT Registration Number followed by three zeros. For England, Wales and Scotland, your EORI number must begin with GB, e.g. GB123456789000. For Northern Ireland, your EORI number must begin with XI.
You can apply for an EORI number on the gov.uk website.
More information on trading with Northern Ireland and the Irish Republic can be obtained from the UK government’s Trader Support Service (TSS).
2. If another party is going to act on your behalf as Customs clearing agent, you need to provide them with written authorisation
In order to enable another party to act as your Customs Agent, you will need to provide written authorisation (in the form of a Letter of Empowerment/Authorisation) before they are able to assist in moving any goods.
3. Classify your goods with a commodity code.
Customs declarations require a commodity code (HS classification), which is internationally recognised, to identify your goods. This code will determine the duties and taxes applied by Customs.
Determine which commodity code you need by visiting the gov.uk website and using their Trade tariff tool (www.gov.uk/trade-tariff). The commodity codes which you use should be entered in your internal records for future use.
It is the importer’s legal responsibility to ensure that the goods to be imported are correctly classified.
4. Calculate the value of your goods.
Import declarations must include the value of your goods, as this determines how much import duty and VAT you will be liable for. To calculate the value, you must use one of 6 valuation methods, which are explained on the gov.uk website. In general, this involves the use of the value stated on the commercial invoice issued by your supplier, although in some cases, depending on the circumstances, it may be necessary to use other valuation methods as determined by HMRC in their Notice on Valuation, which can be found on the HMRC GOV.UK website.
5. Establish the origin of your goods.
If a free trade agreement is in place with the country you are importing from, it could be possible to pay less import duty or no duty. Likewise, duty may be delayed or reduced depending on where the goods are from and what you plan to do with them, e.g. processing for re-export. By clarifying the origin of your goods, you can determine if you qualify for a ‘preferential rate’ (reduced or zero import duty). You must be sure the goods qualify for preferential import duty and have documented evidence before the goods are entered and cleared.
It should also be noted that the country of despatch is not necessarily the same as the country of origin, e.g. the goods are despatched from the EU but originate in China, and this information must be inserted on the Import Customs Declaration at the time of import, as it is likely that such goods will be subject to import duty owing to their origin.
6. Understand the rules and licences that apply to your goods.
Some goods may be subject to import restrictions or need additional requirements or import licenses. You should check locally before importing. 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 import licensing regulations;
· Waste.
7. 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 Delivery. These also define at which point the risk passes from the Seller to the Buyer.
You need to ensure that your Incoterms are agreed with your supplier, so that shipping and delivery responsibilities are understood by all concerned.
If appropriate under the Incoterms, you need to ensure that your supplier is aware and prepared to clear the cargo.
8. Make and submit your import declaration.
In order for your goods to pass smoothly through the UK border, you will need to submit an import declaration. If you use a Customs clearance broker, they will handle this for you.
It is the importer’s legal responsibility to ensure that the goods are correctly classified and valued and that the correct rates of duty are paid as well as other taxes such as VAT, even if you are using a broker/clearing agent.
9. Manage your Duty and VAT.
Some goods require you to pay import duty, while some benefit from duty suspension or zero-rating. If you pay the wrong amount of duty, i.e. a higher rate of duty than required, or reject the goods, you can claim a refund. You can access Form C285 from HMRC on the website GOV.UK for this purpose. You must check your copies of import declarations to ensure that all the information contained on these declarations is correct.
If you are VAT-registered and the Importer of Record (i,e. the owner of the goods at the time of import), you can claim back any VAT paid on your imported goods as long as you can provide your Import VAT Certificate (C79), supported by the appropriate Import C88 equivalent declaration.
If you are VAT-registered, you may wish to postpone your import VAT payments and account for them in your regular VAT return. You will need to register for and download your monthly Postponed VAT Statement from the HMRC website.
10. Keep all your documentation.
Commercial invoices, transport documents and Customs documentation, i.e. Customs Import Declarations, should be kept, including your Import VAT Certificate (C79) and or Postponed VAT Statements for at least 4 years, or as required by financial legislation.
You must also maintain electronic import transaction spreadsheets showing all import transactions by date, and these must reconcile with your import documentation, including Customs Import Declarations.
Postponed VAT Accounting - The benefits and where can you find out more
From 1 January 2022 you can continue to use Postponed VAT Accounting (PVA) on all Customs Import declarations that require you to account for Import VAT, including supplementary declarations, except when HMRC have told you otherwise.
PVA has already provided significant cash flow benefits for thousands of importers, and it is expected that most businesses will choose to use it. This is because PVA allows UK VAT-registered importers to account for and recover import VAT on their VAT return, instead of paying the Import VAT when the goods are imported.
You can use PVA for goods which you are importing from the EU or other countries. PVA is a permanent, not a temporary process, so you will be able to continue to use it following the end of staged Customs controls.
There is no application or authorisation process required, but you do need to confirm on your Customs Import declaration that you are using PVA, and you will need to make sure that the person or clearing agent making your VAT declarations is also prepared.
Please note that Import PVA is only available to fully UK VAT-registered companies, and that HMRC can and do prohibit PVA for businesses which they have problems with, i.e. business with a poor compliance record or deemed to be high-risk, or even with a poor financial or tax record.
If you use the Customs Handling of Import and Export Freight (CHIEF) system
On your declaration, enter:
· Your EORI number starting with 'GB' which includes your VAT registration number into box 8 (Header Consignee),
·
· 'G' (Postponed accounting for VAT approved) as the method of payment in Box 47e.
If you use the Customs Declaration Service (CDS)
On your declaration, enter:
· Your VAT registration number at header level in data element 3/40.
Please note that Import VAT will be recorded against your EORI Number and will be at declaration level only.
If you use someone else to do your declarations for you, it is your responsibility to tell them if you want to use PVA.
If someone else is completing and submitting your Customs declarations for you such as a freight forwarder, customs agent, broker or fast parcel operator you need to tell them that you want to use PVA to account for import VAT on the imported goods. They can then complete the Customs Import declaration correctly on your behalf, and you should keep a written record of what is agreed, including hard copies of all Import Declarations. These must be kept for compliance and record-keeping purposes.
New Support and Services
HMRC has launched two new digital upload services to provide a quicker and more simplified process when you send your documents to them
When you access the services, you will be able to benefit from:
· a more straightforward way to send your documents
· improved security when sending your documents to HMRC
· efficient two-way communication if we have any questions for you.
National Clearance Hub digital upload service for Customs checks and clearance of goods
The new service provides a quicker and more simplified process when you send documents to the National Clearance Hub (NCH) for a customs check, and to clear your goods when you move them into, out of, or through the UK.
You can use the service on GOV.UK to upload:
· your documents for route 1, route 2, route 3 and route 6 checks
· your completed C1601, C1602 and C1603 forms.
National Duty Repayment Centre digital upload service for the repayment of import duty and import VAT applications
This new service will replace the current process of sending your completed C285 and supporting documents by post or email to the National Duty Repayment Centre (NDRC).
You can use the service on GOV.UK to upload the documents that you will need to support your claims.
You can refer to GOV.UK to find out more general information.
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