Classification, Valuation and Origin

Classification, Valuation and Origin – Knowing Your Product

From the 1st January 2021, all goods moving between the UK and the EU require customs declarations.

All declarations must detail accurate classification, valuation and origin information, as has always been the case for 3rd country movements.

 

Classification

The classification of products details information such as duties payable and any supporting documentation required.  It may be worth stipulating that your supplier provides you with the accurate classification within your contractual terms and conditions.

However, irrespective of the provision of a commodity code from the supplier, the responsibility and the liability lie with the importer or exporter.  Therefore, we would always recommend that you check the tariff to confirm its validity.

 

Valuation

There are 6 methods of valuation to consider when declaring goods at import.  Businesses should ensure that they are fully aware of the method that is relevant to their business, as well as to the individual transactions.

The key thing to bear in mind when calculating the potential duty of a consignment, is that the customs value must include the cost of the goods, insurance and freight.

 

Origin

The rules of origin, as laid out in the ‘Trade and Co-operation Agreement’ form a vital piece of the import puzzle.

Where goods are of EU origin and the origin statement is detailed on the commercial document from your EU supplier, you may be able to claim the preferential duty rate on goods being imported.

However, bear in mind that the statement itself, without proof of origin – is not sufficient. A business may be asked to substantiate the origin declaration, and should be able to provide the necessary evidence if requested.

As well as this, it is important to check the product specific rules against the classification of your product to ensure that it meets the origin rules.

 

We are running an online bite-size training course on this topic on Wednesday 24th February, from 1-2pm. For more information, or to book your place on the course, please drop us a line at info@bethancc.com.

As ever, we are here to help. If you’d like to discuss these changes, and how they may affect your business, please get in touch with us at info@bethancc.com.

 

Photos by: Grant Anderson – www.grantanderson.me / @grantandersondotme

Customs consultancy advise ‘back to basics’ approach to tackle Brexit concerns

 

See below recent press coverage for Bethan Customs Consultancy:

 

A leading North-east customs consultancy has highlighted the need for businesses to understand basic customs documentation as they adjust to our new trading relationship with the EU.

 

Founder and Director of Oldmeldrum-based Bethan Customs Consultancy, Nicola Alexander, said that a high proportion of businesses who deal solely with the EU have never previously needed to complete customs declarations to move their goods. As a result, there appears to be a collective gap in awareness on how to complete the documentation required needed to import and export goods in our post-Brexit economy.

 

She explained: “New rules covering imports, exports, tariffs and data came into force on 1st January this year, and in some cases businesses may now need a licence or certificate to continue trading with EU countries. The exact requirements for each business will vary depending on what is being exported, its value, where the product originates from and to which country it is being sent.

 

“For some time now, we have been working closely with our clients to support their knowledge and understanding of the operational changes necessary for a seamless transition into these new trading conditions. However, judging by the volume of requests for support that we have received from companies who are not current clients, there is a degree of apprehension across the wider business community about how to navigate this new customs landscape. These queries indicate a lack of awareness about the process that will allow businesses to continue moving goods without incurring costs or delays.

 

“There are several simple steps that can help. For example, implementing import and export procedures within your business will provide a clear ‘go to’ guide for staff.  Creating template documents such as commercial invoices and import clearance instructions within your business will ensure the information being supplied to the agent remains consistent, and streamlines the clearance process.”

 

In a bid to help businesses understand how the new arrangements are operating in practice, the Bethan team plan to release a series of short Q&A videos.

 

The firm will also be running two bite-size training sessions on ‘Imports’ and ‘Exports’ in the coming weeks.

 

Photo: Jonathan Addie Photography – https://www.jonathanaddie.com/

Deferred Customs Entries

Photos by: Grant Anderson – www.grantanderson.me / @grantandersondotme

As of 1st January 2021, HMRC are allowing businesses to defer entry of their Customs declarations on goods imported or exported for up to 6 months. In essence this will maintain the security of the supply chain during what promises to be a period of upheaval for businesses which trade with EU partners.

As a business, the most important consideration is whether the deferring of the declarations works for your commercial business. You will still be required to input all the relevant information from your records into your commercial systems at the time of the transaction, even if you don’t send this to your freight forwarder immediately. However, it does allow you to continue importing business critical goods without incurring potential delays while setting up the new process.

If you are interested in this option, there are a number of factors to bear in mind.

EORI

Any UK company importing goods from the EU should have a GB EORI number.

Know your goods

Make sure you are fully aware of your customs obligations in relation to your goods. For example, what is their tariff code? Do your goods attract customs duty? Do they require any other certification, such as an import licence, health certification or certificates of conformity? Does your import declaration require any additional support documentation?

Controlled goods

The deferred declaration process is not applicable in the case of controlled goods, so businesses which import or export these must follow the normal rules for making import declarations.

Controlled goods include:

• Alcohol products
• Tobacco products
• Fish
• Fertiliser
• Plants
• Animals
• Explosives

VAT requirements

Is your business registered for UK VAT? Do you need to be registered for UK VAT? If you wish to use Postponed VAT Accounting, then a UK VAT registration is a necessity to allow this facilitation. All business should retain within their commercial records the import transaction information to ensure accurate duty and VAT is being paid.

Commercial records

Before importing the goods, it’s important to ensure that your business records are of a sufficient standard to document and maintain all the relevant information. In addition to the standard import transaction information held, companies will be expected to record the date and time of arrival of the goods within their commercial premises.

Timescale

Should you wish to defer making an Import Declaration – you have up to 6 months to submit the Supplementary Declaration to HMRC. Of course, no business would want to be in the position of having to make all their declarations at the same time, so it’s worth putting in place a process for the declarations to be made within a business acceptable timeline.

Monies will be taken from the Deferment Account when the supplementary declaration / deferred declaration has been submitted.

Who will be making the declarations?

Customs Freight Agents can make the declarations to Customs on your behalf. Does your business have a preferred Customs Freight Agent? If you have engaged the services of a Customs Freight Agent, have you checked whether they can or will make Deferred Customs Declarations for your business? Have you asked them if you can utilise their Deferment Account, and is there a cost associated with doing so?

Alternatively, if you intend to make your own Customs Declarations, there are several important considerations. Do you have personnel with the necessary experience and specialist knowledge to carry this out on behalf of the business? Do you have the necessary software to complete these Declarations and communicate with HMRC?

If so, your business will require a Deferment Account, which must be set up and authorised by HMRC prior to your first deferred declaration being presented.

And finally….

The legislative requirements surrounding customs declarations are subject to change at the moment. For the most up-to-date information please visit: https://www.gov.uk/prepare-to-import-to-great-britain-from-january-2021.

As ever, we are here to help. If you’d like to discuss these changes, and how they may affect your business, please get in touch.

Photos by: Grant Anderson – www.grantanderson.me / @grantandersondotme

Why are HMRC Authorisations Important for Business?

The 2nd September is undoubtedly a date for your diary – from tomorrow there are 120 days until – 31 December 2020 – the end of the transitional period for the UK leaving the EU. That figure is important, because it’s the same number of days that it takes for HMRC to process applications for a Customs Comprehensive Guarantee (CCG), something which must be in place before accessing other duty suspension authorisations. This guarantee covers the potential duty liability that a business may have to suspend at the time of importation.

Why is it worth securing these approvals? Put simply, having access to an HMRC Authorisation can secure a more advantageous market position for your business. Given the imminent legislative changes for businesses which import and / or export, having these in place could help your business to avoid potential delays and additional charges as a result of legislative changes.

Holding one of these approvals demonstrates the high standards to which your business adheres in the global market. This is crucial for securing the confidence of your business partners, something that is even more important during these turbulent times.

What’s more, some HMRC Authorisations allow for the suspension of import duties, thus assisting businesses to better manage their cash flow. While certain special procedures can be applied for as a one-off, or for regular use, depending on individual business needs.

These duty suspension Authorisations include:

Authorised Consignee – An Authorised Consignee approval allows for businesses to undertake the customs process away from the border, at an Approved Premises.  This is an efficient way of moving non-Union goods across several customs territories into the UK, while avoiding border delays.

Customs Warehouse – A Customs Warehouse approval allows for businesses to import goods into a customs warehouse with the potential duties suspended.  The goods can be stored for an indefinite period of time within the Customs Warehouse.  Duties only become payable when the goods are released into free circulation.

Inward Processing – An Inward Processing approval allows for businesses to temporarily import goods for the purpose of processing, inclusive of repair, without the payment of duties/ VAT at the point of import.

Outward Processing – An Outward Processing approval allows for the temporary export of goods for processing or repair. Upon re-importation to the UK, you are then able to claim full or partial duty relief.

Authorised Use – Formally recognised as End Use, an Authorised Use approval allows businesses to import certain goods at a reduced or zero rate of duty, provided they are put to a prescribed end use within the approved time frame.

Underpinning all of the above, a business which holds AEO (Authorised Economic Operator) status is internationally recognised for their business compliance standards, in a fashion similar to a ‘kite mark’.

Should you wish to discuss any of the above HMRC Authorisations to ascertain their suitability for your business, please get in touch – we are more than happy to help.

The New UK Global Tariff and Your Business

Brexit may have been pushed out of the headlines, but that doesn’t mean there’s been any let-up in preparations for our exit from the EU.

One of those measures is HMRC’s recently published new UK Global Tariff (UKGT) regime. This Tariff will replace the EU’s Common External Tariff (EU CET) at the end of the Transition Period on 1st January 2021.

The UKGT has been tailored to the needs of the UK economy, making it easier and cheaper for businesses here to import goods from overseas. You will not only benefit from a lower tax regime, but also from reduced red tape and barriers to trade.

The UK Global Tariff will apply for any goods being imported into the UK from any country, with the exception of those that have concluded Free Trade Agreements with the UK already, provided that the products meet the relevant rules of origin and qualify for preferential duty rates.

Certain products will be completely tariff-free under the new regime, whilst others will be subject to a reduced tariff.

So what does this mean for you? What do you need to do next?

We’re almost halfway through the year, and the 1st January 2021 will be here before we know it. There are a number of proactive steps you can take to ensure your business is ready to capitalise on the opportunities presented by the new Tariff:

• Review your current commodity codes
• Prepare for a system update where your ERP system holds classification information
• Check your commodity codes still exist in the new Tariff
• Check which codes are most applicable to your products
• Review the duty rate for the goods
• Consider contractual obligations in relation to price
• Do you need to consider a BTI if your products have gone from a positive rate of duty to a potential nil rate of duty?
• Consider if your CCG is accurately positioned to reflect these changes
• Review any HMRC Authorisations held whereby the classification forms part of the approval (such as Customs Warehouse).

If you’d like to discuss these changes, and how they may affect your business, we’d be happy to have a chat. You can get in touch with us at: info@bethancc.com.

Photos by: Grant Anderson – www.grantanderson.me / @grantandersondotme

Authorised Consignor / Consignee status – the smart way to expedite cross-border transportation

With so many uncertainties still surrounding post-Brexit trading regulations, it’s good to know there are measures available to UK businesses that will streamline the cross-border transport of goods beyond 31st December this year.

One thing we do know is that regardless of the eventual outcome of the EU exit negotiations, the UK will remain a member of the Common Transit Convention (CTC) – a customs procedure that’s available to businesses, enabling them to move goods across borders or territories without paying customs import duties until they arrive at their final destination.

Not only does this deliver cash-flow benefits, it also helps transport goods across the border without delay at the point of importation into the UK, and when exporting from the UK.

Businesses which transport cargo across several borders can expedite this process even further by applying for certain customs simplifications, including authorised consignee and/or consignor status. If you’re regularly moving goods using Transit, you can apply for authorised consignor or consignee status. This will allow you to start (authorised consignor) or end (authorised consignee) transit at your own premises rather than at a customs office, saving a great deal of time and inevitably costs.

If approved, this status effectively puts the business in the place of the customs authorities as either the Office of Destination or Departure. You can apply for both authorised consignor and consignee status. You should bear in mind that in order to be eligible to apply for either or both of these authorisations, you will need to demonstrate a good standard of business practice.

With either or both of these authorisations in place, you’ll be in a position to take advantage of quicker and more efficient import and export transactions, regardless of how the cross-border trading landscape looks after 31st December this year.

If you feel your business could benefit from these authorisations, let’s have a chat. Whether it’s taking a look at your systems to ensure they achieve the required standards, or supporting you through the application process, our team of specialist customs consultants is on hand to help.

Photos by: Grant Anderson – www.grantanderson.me / @grantandersondotme

HMRC has 120 days to approve a CCG – are you ready?

CCG HMRC Bethan Customs Consultancy

Under UCC (Union Customs Code), a CCG (Customs Comprehensive Guarantee) is required to apply for any new HMRC Authorisations allowing the entry of goods under a duty deferred customs procedure such as Customs Warehouse.

 

To get a CCG, you need to:

  • be established in the EU
  • have no serious or repeated infringements of customs or tax rules
  • have no record of serious criminal offences related to your business activities

From acceptance of your CCG application, HMRC has up to 120 days to approve the CCG.  As of 6th November 2018, 120 days for the actual approval to be granted would take us to 6th March 2019, not taking into account the time required to prepare the application and for HMRC to issue the initial acceptance.

Upon receipt of CCG, the new HMRC Application for the duty deferred regime would require to be submitted.  This can then take up to 60 days for HMRC to approve.  Taking the submission date as the 6th March 2019, 60 days for the actual authorisation approval to be granted would take us to 5th May 2019.

As UCC transitional arrangements are expected to expire on 29th April 2019, this would result in companies potentially having to duty pay at import due to authorisations not being in place by the end of the transitional deadline.

Are you ready?

For more information or for support with CCG applications, get in touch with us today.