Whether or not a last minute trade deal is agreed between now and Christmas, it’s likely that the way you conduct business with your partners in the EU will change after 31st December 2020. Customs paperwork and import duties will become a routine part of importing and exporting goods between Europe and the UK – at least until a trade agreement is reached. This doesn’t mean that delays and significantly increased costs are inevitable – but the more prepared you are for potential changes today, the less impact there will be on your supply chain as the UK completes its exit from the EU.
Here’s our guide to what to expect when shipping goods in the New Year. We’re here to help and provide all the support you need to minimise costs and delivery times – so please get in touch if you have any questions.
All goods moved between the UK and the EU (including Norway for these purposes) will be assigned a ten-digit commodity code, beginning with HS (Harmonised Standard). This will determine the level of duty and VAT payable, and will identify goods that are entitled to preferential duty rates, or where duty has been suspended or waived. The commodity code will also indicate if a specific import or export licence is required, if tariff quotas apply, or if goods are covered by existing EU measures – such as the Common Agricultural Policy.
Your commodity code must be featured on all import and export paperwork, and it’s important to get it right, as failure to do so can result in your goods being seized or delayed. To find the commodity code for your produce, use the government’s Trade Tariff finder. There are over 5,300 commodity codes, grouped into 21 categories, so please get in touch if you are unsure!
Import Duty Calculations
Goods moved into the UK from the EU will be subject to import duty and VAT. Import duty is based on the value of your goods as determined by their commodity code. VAT, at 20%, is then applied to the value of the goods, shipping costs and the duty value. Some goods may be liable for additional anti-dumping duties, or excise duties.
How To Pay Your Duties
Duties must be paid in full before your goods can clear customs, unless you’re using a Deferment Account (or a shipping agent), while VAT is payable as part of your quarterly return. You can pay your import duties to HMRC directly through bank transfer, which is fine if you only occasionally import goods, or an import agent – such as NTEX – may pay duties for you using their account. If you import regularly, it is worth setting up a Deferment Account for duties, which is accounted as a business liability. Payments from your Deferment Account become due in the calendar month following the import date.
For all imports and exports, you will need to provide three main documents: a commercial invoice, a manifest/packing list, and a Certificate of Conformity (CoC).
1) Commercial Invoice: A clear supply invoice should be provided, related to the purchase of the goods in the consignment. This can be used by customs authorities to verify the amount of duty payable. A commercial invoice should include the details of the seller and buyer, a description of the goods, the value of the goods (in the appropriate currency), payment terms, the commodity code, and country of origin, as well as any customs declarations.
2) Manifest: The Manifest or Packing List specifies which goods are included in each consignment. Including a detailed manifest reduces the risk of delay at port, and makes it quicker for HMRC to verify your contents should they decide to check the cargo. There is no specific format for trade manifests, but they should be straightforward and easy to read, including the number of items and a brief description of each. Manifests should include all shipping marks and the total weight of the consignment. Attach the manifest to all crates, pallets and cartons in the consignment, and email it to your customer in advance.
3) Certificate Of Conformity: The CoC indicates that the shipment has been inspected and confirmed to comply with any international standards relevant to the contents, such as BSI or ISO standards. Certificates of Conformity can be provided by manufacturers or regulatory authorities, or issued by a shipping agent.
What Steps Can You Take?
For our customers shipping goods between the UK and the Scandinavian countries, the end of the Brexit Transition will mark a definite change. It does not, however, signify the end of your business relationship with Scandinavian partners, or any particular changes in your supply chain. At worst, trading under WTO rules, EU-UK trade will face no more barriers than supply chains that include the USA, China, or India. As experienced international logistics brokers, we can help you fulfil any customs documentation and charges, in order for you to continue enjoying seamless trade with the EU.
In the meantime, there are a few straightforward steps you can take that will save time on your shipments – something we’re happy to help with if you’re unsure:
First, get yourself an EORI (Economic Operators Registration & Identification) number from HMRC, by applying online here. You’ll need this to move any goods between the UK and EU from 01/01/21. Secondly, get your trade portfolio in order by establishing the Incoterms (International Commercial Terms – a series of legal definitions used to determine shipping obligations and responsibilities) value, weight, and origin – and any commodity codes – for all products shipped to the EU. These are used to calculate customs duties and VAT, and must be included in your commercial invoices. Thirdly, apply for a VAT and customs deferment account, which will save time and allow you to manage your customs liabilities as part of your cash flow.
NTEX can act as a customs broker on your behalf whenever you ship with us. For more information, or to request a quote, please call 01469 571440 today.
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