Customs Compliance

If you import from outside the European Union, you’ll probably use a freight forwarder to transport air freight and ocean freight consignments from your suppliers, and also to Customs clear the goods.

There is however, a common misunderstanding. As importers pay a freight forwarder to take care of the whole transport process, which includes Customs clearance, they assume that the freight forwarder is also responsible for the accuracy of the Customs declaration they submitted, but this isn’t the case.

In 95% of cases, the Customs entry is completed by the freight forwarder on your behalf as a “Direct Representative”, which means although they signed the entry (electronically), you're legally liable for the accuracy of their declaration, any commodity codes used, and the amount of duty and VAT paid.

If errors are made, HMRC will hold you, the importer responsible, often levying fines and demanding underpaid duty covering a 7-year time period. As most importers aren’t aware of this and also lack Customs expertise, they don’t check their import entries for accuracy or provide correct commodity codes from the Customs Tariff to their freight forwarder.

It's quite ironic as many customers also overpay duty because the incorrect classifications/duty rates have been used or they fail to take advantage of duty reliefs which are available from certain countries.

As an example, we reclaimed £26,000 of overpaid duty for a customer who had been paying 2.2% instead of 1.7% duty for several years. Another client relied on their freight forwarder to declare their goods and were paying 4.5% on all products when 50% were liable at 2.2% - which saved them £ 15,000 per annum.

At SCL, suffice to say that we are very experienced in this area and carry out import entry compliance checks for the majority of our customers, archiving all related documents and producing a rolling monthly compliance report. We are often asked to assist with Customs tariff classification for our customers, translating confusing Customs jargon into everyday business language.

From January 2021, we should also mention that imports from the EU will also require Customs declarations and this will require a similar process to an import from the US or China so please contact us if you need guidance or assistance in preparation for BREXIT. It is estimated that there are 130,000 companies in the UK who solely trade with the EU. I should add that we are receiving many calls asking for advice on preparation for BREXIT and my general feeling is that many companies are not prepared, be they an importer or an exporter, so if you’re concerned, please do contact us for advice.

If this sounds like you, please contact us, we’re happy to explain how we can help and whether you decide to use us or not, you’re guaranteed to learn something!

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