Customs at Import
Imports are generated when a pre-advice is received from an overseas forwarder or carrier. This will normally be produced at the time they complete the export formalities in their country, and will normally be sent to the consignee via the forwarder''s representative at destination, so that the import process can commence.
Importing Instructions Needed
The importing forwarder will need to have clear instructions as to:
- Who is to make the clearance and be the declarant:
- Where and when the goods are to be delivered;
- If the forwarder to arrange insurance;
- Details of any special handling procedures/delivery instructions;
- Are there any quantitative restrictions are in place for this product?
- If the import is under any special customs procedures (i.e. IPR); and
- How any duty payments are to be funded (will the forwarders duty deferment be required?)
- Whether any reference or tariff quota applies etc
Documents Required at Import.
The most commonly required documents are:
- A clear commercial invoice (translated if necessary if in a foreign language) to specify terms of sale such as FOB, CIF, etc.
- A packing list or some other recognisable statement of the individual quantities of each case where more than one package is involved. If a customs officer needs to check the goods physically he then has the option of checking a proportion of cases.
- A declaration of the terms of purchase on form C105A/B (if ad-valorem duty is payable and the value exceeds £6,500) (see customs notice 251). NOTE: This are only required if called for by customs.
- Original bill of lading or other transport document. Certificate of origin (necessary in support of claim for preferential duty rates)
- In the case of return goods a copy of the export invoice and proof of export if needed.
The Import Process
Having carried out the pre-import work, finding out the relevant tariffs and codes and details of any special reliefs, the forwarder can provide the customer with the relevant advice on the best means of transiting the import procedures such as full clearance at the port or removal to an inland point under special customs authorisation.
It may well be the case that forwarders with specialist import departments will have organised the imports from the overseas factory to delivery at the importer''s premises and attending to the import formalities is but one more link in the service of the overall supply chain by the forwarder.
Next the shipping line or airline bringing the goods in submits details of all the cargo arriving by electronically inputting the manifest details to the customs computer system. The same data is also fed to the relevant cargo community inventory system at the port or airport.
When the forwarder has received carrier confirmation of arrival, the clearance process can spring into action.
Electronic clearance requests and documents must be presented without delay otherwise goods could be delayed and could incur rent and demurrage costs. In any case, goods should be presented at the earliest possible moment. After this ''presentation'' which allows any anti- smuggling checks to be undertaken, the customs entry declaration process may begin by making an electronic declaration. In order to do this you will need to join one of the Community Service Provider (CSP) schemes as this is the only means of access to CHIEF for imports.
Rates of import duty and clearance procedures/requirements are subject to change at short notice and forwarders need to be alert to these. This is especially true around the time of a budget announcement.
Once entered, the CHIEF (Customs Handling of Import & Export Freight) system will calculate or agree the duty payable and advise of release, hold or inspection status on the goods.
Various regimes are in force for expediting the movement of goods from the gateway ports and airports to another approved site, with the intricacies of the paperwork attended to at a later stage. Enhanced Remote Transit Sheds (ERTS - see Customs Warehousing section) is one example; another is Customs Freight Simplified Procedures (CFSP) which is explained at the end of this section.
Goods can also be cleared at an inland ''port'' or ICD - Inland Clearance Depot.
Import will take place under various Customs Procedure Codes; some of the most widely used being home use basic declaration, Inwards Processing Relief (IPR) drawback or suspension and returned goods relief.
Understandably, the level of duty paid is governed to a great degree on the origin of the goods, as special preferential agreements may be in place between some trading nations and the EC.
International preferential trade agreements with non-EC countries are negotiated entirely at an EC level, as are quotas and duty tariff suspensions.
Preferences should always be brought to the importers attention as a means to legitimately minimise duty and tax. Where there is no special reduced duty arrangement, a simple statement of origin on the invoice may suffice.
Where special preferential arrangements are in place a separate proof of origin will be required, and there are a number of alternatives:
- The certificate of origin.
- EUR1 widely used by the EC and issued by the exporter and stamped at point of shipment - this is often referred to as a movement certificate; for low value goods a clause on the invoice may be acceptable in lieu of the EUR1. A similar version for imports from Turkey known as an ATR1 is also available. In the case of low value goods (below £2500) a declaration on the invoice may be sufficient in lieu of the official form.
- Other preference certificates such as the Generalised System of Preference origin certificate (GSP) and various statements on documents.
However, there is no a carte blanche right of entry at preferential rates. Some goods still have to comply with ceilings and tariff quotas. Further details are available from the Official Journal of the European Communities, The BIS Government Department, and HMRC.
If it is subsequently found that the origin of goods imported at preferential rates was false, HMRC can retrospectively demand full duty payment. It should be clearly shown on any customs declaration therefore that the importer is the declarant and that the forwarder is carrying out such duty only on the importer''s behalf.
Payments to HM Customs & Revenue
Payment may be made via direct bank transfer or more commonly via a system known as deferment.
The deferment system requires a bank to guarantee any payments which a trader may make to customs and against this guarantee customs release cargo. A direct debit mandate charge against the trader''s bank account then collects the tax on a monthly basis on the 15th day of the month following import.
On release by HM Customs, goods may be collected, and they enter what is known as ''free circulation''.
Inward Processing Relief (IPR)
One of the more common import ''regimes'' after straight forward importing, Inward Processing Relief (IPR) is a highly advantageous cost-saving opportunity for forwarders'' customers if the goods are to be re-exported.
Goods can be imported into the EC from third countries to undergo processing and then be re-exported without the need to pay import duty. This facility is only available on prior application to HM Customs, and can apply to ad-hoc or regular shipments. Similarly, HM Customs needs to be advised in advance of re-export.
Either duty, VAT, or other charges may be payable. This is a complex issue and it is advisable to obtain authoritative advice. The rate of duty can be found in the customs tariff.
Any duty payable is based on the combined sum of the invoice value, freight charges to the point of importation into the EC frontier, any insurance premium and specific uplifts of value required by HM Customs in reaching what is termed as a ''fair market value''.
There may also need to be an adjustment to reflect any special preferences, quotas or other duty rates. Special rules apply when royalty fees or tools, and dye fees etc are provided or payable by the importer.
Some goods will additionally attract extra tax such as Anti Dumping Duty, Common Agricultural Policy charges etc.
The ad valorem (percentage of value) duty is subject first to what is known as the ''transactional value'' method of calculation. This is HMRC Method 1 - the most common.
If the goods cannot satisfy the transactional value method, there are five alternative methods (for full details see the customs notice 252 or consult the customs National Advice Service) and in such cases a form C105B should be used to declare the value.
Other goods, such as excise goods incur specific duty based on liquid or quantity values.
Calculating VAT is fundamentally different. VAT is payable on any actual money handed over in the transaction. All the factors in customs duty calculation apply except any ''uplift'' amounts. Additionally all expenses incurred by the consignment up to its first destination inside the EC AND the duty itself. This is one of the few situations where a tax (VAT) is payable on another tax (duty).
It should be noted that rates of duty are the same in all EC Member States while rates of VAT and Excise duty will vary depending on the Member State of importation.
Customs Freight Simplified Procedures (CFSP)
Customs Freight Simplified Procedures (CFSP) facilitates retrospective reporting electronically, backed-up by systems audit for recognised traders. Essentially it allows the goods to be cleared inland.
When the goods arrive only very basic information need be provided to obtain release of goods (simplified frontier declaration - SFD) electronically, along with supporting documents such as invoices and licences with final details filed later, electronically as the supplementary declaration.
After 20 days the goods must move into another procedure, either by payment of the duty and VAT or to a regime such as customs warehousing, where they can enjoy further suspension of duty/VAT.
If duty and VAT are paid at this point, declaration is made electronically via a supplementary declaration using the trader''s deferment account to make payment.
A freight forwarder can become authorised for CFSP in their own right if required however they may become responsible for any future potential customs debts on the cargo.