Home / Workshops aim to raise awareness of customs procedures
Project part-financed by the European Union
Each year thousands of exporters and importers either over or under-pay their customs charges. This is largely due to non-compliance caused by genuine error or a lack of knowledge about customs requirements.
HM Revenue & Customs (HMRC) holds regular free workshops aimed at helping businesses understand the basics of international trade with the intention of improving compliance by helping firms to pay the right taxes at the right time. The workshops even include advice on how businesses can try to reduce their costs.
The introductory workshops – called ‘An Introduction to International Trade’ – highlight the importance to exporters and importers of understanding their responsibilities. One of the main focuses is on the fact that if any mistakes are made which result in under-payment of tax is usually the company itself rather than the freight forwarder which will receive some form of contact from HMRC. Therefore it is vital that the person in charge of exports/ imports within a company is aware of relevant customs issues and requirements.
One of the basic requirements is that all imports of commercial goods into the European Union and exports of goods from the European Union must be declared to HMRC. This is known as an ‘entry’. Entries are usually made electronically using the C88/ Single Administrative Document (SAD). This is normally completed by Freight forwarders acting as direct representatives on behalf of the importer /exporter. This is discussed in more detail in the workshops.
The workshops also explain that one of the most important things for exporters or importers to be aware of is commodity codes (also known as‘harmonised’ codes). These classify the type of goods that are being sold/ bought and dictate the customs charges that must be paid at the time the goods are imported. Therefore if a company fails to ‘classify’ their goods correctly they may end up paying the wrong fees and be hit with a large bill once the incorrect coding is discovered. It is particularly important that the person in charge of exporting/ importing is aware that even if they employ an agent to handle customs entries on their behalf, legally it is still their own responsibility to ensure goods are classified correctly.
Commodity codes:
The Tariff Classification Service (Tel: 01702 366077) provides verbal advice on classifications, but this is limited to three enquiries per telephone call. This verbal advice is not legally binding – however HMRC offers Binding Tariff Information (BTI) decisions. This is a decision which is legally binding throughout the countries which make up the European Community. It is given in writing and is valid for up to six years following the date it was issued. Application forms for BTI rulings can be obtained from the Tariff Classification Service by calling the number above.
The best option for companies is to have access to the Integrated Tariff of the United Kingdom (known as the ‘Tariff’). This is an annual publication, updated monthly, containing information about HMRC import and export requirements as well as commodity codes.
The Tariff is available for reference at main libraries, as well as at some HMRCoffices and freight forwarding agents. It is also available for purchase with an annual subscription rate (due to it being updated monthly).
As well as being aware of commodity codes, the person in charge of exporting/ importing needs to be aware of Customs Procedure Codes. These are six digit codes which tell HMRC what is happening to the goods (for example being temporarily exported for repair, or being imported into the EU and staying there).
The workshops also highlight the different ways in which companies may be able to save time and money. One of the main ways is through Customs Warehousing, which can help with cash-flow by delaying the time at which goods are deemed to be present within the EU.
Some factors relating to Customs Warehousing are:
There are also a number of other ways in which companies may save money including Inward Processing Relief, Outward Processing Relief, Returned Goods Relief and Export Preference. The requirements for each of these vary, and will only be relevant to some exporters and importers.
For example, in brief, Export Preference is a procedure in which a company is able to declare that their goods originate in the EU, enabling their customer abroad to pay a lower, or nil, rate of duty. However, this is subject to the goods meeting strict origin criteria. Additionally, not all countries give preference.
This, together with everything else discussed above is explained in more detail at the HM Revenue & Customs workshops. For more information on upcoming workshops contact Wendy Allerton, HM Revenue & Customs on Tel: 0113 3894303 or email: wendy.allerton@hmrc.gsi.gov.uk.
For more information on any of the issues highlighted above, visit the HM Revenue & Customs website at www.hmrc.gov.uk or telephone the HM Revenue & Customs Contact Centre on 0845 010 9000.
