Lodging import and export declarations must not be complicated. We answer businesses' top questions on customs clearance.
Traders often shrug their shoulders in despair: "We need to do what now? Lodge a customs declaration?" . Indeed, where commercial goods move across customs borders various export and import documents, including customs declarations, need to be dealt with. On import, there is also the payment of duties, VAT and any additional costs such as storage to be considered - as well as the charges of hiring a by customs agents.
No matter if you outsource the work to a customs clearance agent or self-file, here are the top ten questions that you have asked us when considering customs clearance.
Watch: Filing a Customs Declaration: Shall we do it ourselves or hire a customs agent?
Question 1: How long does customs clearance take?
Your EU or UK Customs Broker can complete customs declarations in minutes or hours, but it can extend to days or weeks if there is missing documentation or the goods needs to be inspected.
In such cases, the goods will be held until the necessary documentation has been provided or the customs clearance agent has completed their check.
Question 2: How are customs charges calculated?
Customs charges are determined by the following:
Duty – This is a tax levied by a country on all imported goods. It is charged as a percentage of a product’s value, as determined by its commodity code and associated duty rating. UK commodity codes can be found on the customs authorities' websites. In the EU, this can be, for example, the EU TARIC. In the UK, it is the UK Trade Tariff.
Import VAT – This is generally charged on the amount paid for the goods, the shipping costs and the duty. The rate of VAT differs by country.
Additional costs – Customs charges also include any costs accrued as a result of goods being held by customs. Importers can be charged for any tests or X-Rays conducted to check whether a product is safe to enter the country and/or complies with trading or quality standards. They may also need to pay for storage should goods be held for longer than the allotted free-time period.
Anti-dumping duty – Certain products may be subject to anti-dumping duty. This duty is imposed by countries when they wish to protect the domestic manufacture of the product and in turn, deter the import of it at a lower cost than the supplier’s native market rate. Importers can find out if their goods carry anti-dumping duty (and how much) through the customs tariff.
QUESTION 3. How can a business pay customs charges?
Most importers and exporters will have a freight forwarder or customs broker that pays customs charges on their behalf, saving them the trouble of paying it themselves. If the importer manages their own shipments, they’ll typically be sent an invoice detailing the charges once the goods arrive in the country. These will need to be paid before the goods are released for onward transport.
In certain circumstances, the importer won’t be liable for the payment of import charges. It will depend on which incoterm has been agreed between the importer and supplier (exporter).
EU or UK importers can also apply for a duty deferment account through the authorities allowing them to delay payment of most customs charges. Depending on the required customs procedures, a freight forwarder or logistics partner can help manage the application process, or simply provide guidance on whether it’s worth applying for.
QUESTION 4. Can customs duties be claimed back?
Import duty can’t be claimed back, but VAT-registered businesses are able to claim VAT back on all of their imports. With VAT accounting for 20% of the entire process cost for UK importers, it makes for a considerable saving. HMRC provides further guidance on how to claim back VAT payments for imports.
QUESTION 5: Is it possible to avoid customs charges?
It is illegal to declare goods under lower commodity codes or falsely declare their worth in order to lower duties and taxes. However, there are various duty relief schemes available that allow importers to legally pay lower or in some cases no customs duty. Viability for a duty relief scheme depends on a number of variables including the type of product, intent for product’s use and the country of origin.
The first strategy is to leverage Free Trade Agreements, for example, GSP (Generalised Scheme of Preferences) The GSP allows goods purchased from suppliers in certain countries to be lower-rated or exempt from customs duty. It is designed to help businesses in developing countries trade globally.
The easiest way to find out whether you can claim an exemption is to check your commodity code through the tariff website. The relevant product page will detail any import measures and restrictions, including duty exemptions for certain countries.
There are a number of other duty relief schemes that provide exemptions based on how a product will be used and the length of time it will be in the destination country. These include:
Temporary admission – for goods brought into a country like the EU or the UK for designated, short-term use (e.g. an exhibition)
Inward processing – for goods imported from outside the EU or UK to be processed and then exported (either to outside or inside the EU)
Outward processing – allows the export of goods to another country for processing and repairs, with full or partial duty relief when they return to original country
Customs warehousing – a bonded warehouse allows goods to be stored duty and VAT free until they are ready for onward transport.
Duty suspensions and tariff quotas – relief is available on products that are imported to finish or use as raw materials in one country (if the goods or materials can’t be bought in sufficient quantities from within it).
QUESTION 6: What documentation is required for customs clearance?
The amount of documentation required for customs clearance will vary by country, but the following documents are required in the majority of countries:
Purchase order from the buyer
Bill of lading or air waybill
Certificate of origin
Any other documentation as required by the buyer, or as outlined in a letter of credit from a financial institution
Sales invoice from the supplier
Bill of lading or air waybill
Certificate of origin
All other documentation as required by the buyer or the terms of a letter of credit
Certain items will also require an import or export licence, which places limits on the number of goods that can leave or enter a country over a certain period of time (typically a year). Licences are handed out by different government departments, depending on the nature of the goods.
QUESTION 7: Which items require a licence?
The majority of items don’t require an import or export licence. Those that do are often dangerous or require heavier regulation. They include but are not limited to:
Firearms and ammunition
Steel and iron (from certain countries)
Poultry, meat, milk and other foodstuffs