Movement of Goods
Importing your goods from outside the European Union
Imports make an important contribution to the UK economy. It can be far more cost-effective to import goods than to manufacture them in the UK, giving importers a competitive advantage.
In some cases, overseas suppliers offer goods that aren't available from UK sources. Purchases from overseas are treated differently depending on whether the goods come from countries within the European Union (EU) or from elsewhere. Within the EU, most goods can be imported with minimal customs control.
What is an Import?
Within the European Union (EU) most goods are in free circulation. They can be moved freely within the EU, although VAT and excise within member states should be taken into consideration. Goods in free circulation in the EU can be moved from country to country with minimal customs control. Unless the goods are subject to excise duty, eg alcohol, or licence requirements such as agricultural goods, they generally cross borders without any special taxes or paperwork.
Imports From Outside The EU Are Treated Differently:
You must make an import declaration to customs. You generally have to pay import duty and import VAT, although use of some customs procedures may suspend or relieve you from these taxes. There may also be restrictions on imports such as import quotas from countries outside the EU.
HM Revenue & Customs (HMRC) has introduced a new status for businesses - Authorised Economic Operator (AEO). While the scheme is not compulsory, companies that meet the requirements will be registered as AEOs and can take advantage of simplified customs procedures that relate to the security and safety of their imported goods in transit.
Imports from outside the European Union (EU) into the UK must be declared to HM Revenue & Customs (HMRC). This is usually done using the Single Administrative Document (SAD), also known as form C88. SADs can be submitted either electronically using the Customs Handling of Import and Export Freight (CHIEF) system, or manually (although manual submissions may take longer to process). To make the declaration the correct customs classification is required.
The declaration also includes a customs procedure code explaining what is being done with the goods, eg import to free circulation or use of one of the customs procedures such as temporary import. Together with the commodity code, this helps determine what rate or type of import duty is to be charged and how the goods are to be treated.
You can use an agent, such as a freight forwarder, to make the declaration on your behalf. This can make importing simpler and faster if you are not authorised to make electronic declarations yourself.
Community/Common Transit (CT) Procedures
Community transit (CT) is a customs procedure which allows customs and excise duties and VAT on imported goods to be suspended until the goods either reach their point of destination in the community or are exported out of it. The community transit procedure can also be used for movements to and from the European Free Trade Association (EFTA) countries, and is then known as common transit. The EFTA countries are Switzerland, Liechtenstein, Norway and Iceland.
The New Computerised Transit System (NCTS) must be used for all community/common transit declarations except for private travellers (with goods in excess of their allowances) and for some authorised simplifications. Any potential taxes and duties on the goods must be guaranteed. Use of NCTS does not normally preclude use of other customs procedures such as customs warehousing.
Traders who are approved as Authorised Economic Operators can gain access to certain simplifications in customs procedures such as guarantee waivers and approval to start NCTS movements at their own premises (Authorised Consignors) or end the movements there (Authorised Consignees) without having to produce the goods to Customs.
If the journey begins outside the EU, the Transport Internationaux Routiers (TIR) procedure can be used for movements to and from countries that are contracting parties to the TIR Convention. The goods must travel by road in approved vehicles or containers under customs seal, accompanied by a TIR carnet document. You, or your freight forwarder, must be authorised to use TIR and the potential taxes and duties on the goods must be guaranteed.
All traders moving goods across the EU under TIR are now required to submit a declaration using NCTS when the consignment reaches the frontier of the EU. Find guidance to using TIR and NCTS on the HMRC website
Taxes And Duties On Imports
It's important that traders know whether they have to pay import VAT and duty on their goods before they can be cleared for entry into the UK.
Imports may be liable to import duty, depending on the classification of the goods and where they come from. Your goods might also be liable to additional duties such as anti-dumping duties.
You can pay a reduced or zero rate of import duty on imports of certain goods from some countries, though there may be a limited annual quota. You usually need to provide documentary proof showing where the imports originated from.
Goods are not normally released by HMRC until you have paid all the charges due. However, you can defer payment.
You may also be able to claim a relief allowing you to pay lower charges, or none at all.
VAT is charged on goods imported from outside the European Union at the same rate as if you bought the goods in the UK. VAT-registered businesses can reclaim the VAT as input tax in the same way as VAT is paid on UK purchases.
Instead of paying VAT to the supplier, you pay the VAT directly to HMRC. You will have to fill out HMRC form C79, showing the VAT paid. You can use this as evidence of the VAT paid, as you would on a normal VAT invoice. Authorised traders may also be able to use the deferred accounting scheme to pay VAT.
Goods such as tobacco and alcohol products are subject to excise duty.
Suspending or Delaying Import Charges
There are a number of customs procedures which can benefit traders and can be used to help delay or suspend paying duty.
Imported goods are not normally released by customs until you have paid duty and VAT. Import duty is one of two main duties collected by HM Revenue & Customs (HMRC). Import duty is a tax charged on goods imported into the European Union (EU). The other main duty is excise duty, which is a tax on goods such as alcohol or tobacco.
However, if you import regularly you can set up a deferment account with HMRC, allowing you to pay monthly in arrears. You must provide a financial guarantee from a bank, insurance company or building society to cover the charges you owe.
Depending on your circumstances, you may be able to delay your liability to import duty or VAT.
If you do not need the imported goods immediately, or you intend to re-export them, you can store them in an authorised customs warehouse. You do not have to pay import duty, excise duty or VAT until you remove the goods into free circulation.
Similar rules apply for goods held in one of the UK's designated Free Zones. A Free Zone is a holding area for non-EU goods where import duty and VAT are suspended or delayed until the goods are released into free circulation. Read about Free Zones on the HMRC website
Reliefs On Imports For Export Or Re-export
There are a number of customs procedures that can benefit traders who plan to send their goods out of the UK.
If you are importing goods that you will later export or re-export, you may be able to claim relief from customs charges due on importation.
If goods are to be temporarily imported for use, relief from import duty or VAT may be available provided the goods will remain in the same condition as they are imported, eg goods for demonstration, professional equipment, samples, goods for an exhibition or for humanitarian purposes.
One method of temporary import is the ATA carnet. The carnet is issued in the country of dispatch usually by local chambers of commerce and industry and is used in place of customs documents normally required at import and/or re-export. ATA carnets are only applicable in countries which are signatories to the ATA Carnet or Istanbul Conventions.
You cannot use any of these reliefs for goods that you plan to process before re-exporting. However, minor handling is permitted to preserve the goods and prevent their deterioration.
Processing and Re-exporting
If you are importing goods that you intend to process and then export, you can claim Inward Processing Relief (IPR). There are two methods of duty relief - suspension and drawback. IPR suspension allows you to import and process the goods while suspending duty and VAT payments. With IPR drawback, duty and VAT is paid on importation but can be reclaimed. You must be authorised by HMRC to claim these reliefs.
Onward Supply To The European Union (EU)
If you are importing goods that you plan to supply to another EU member state, you may be able to claim Onward Supply Relief (OSR). This allows you to import the goods without paying import VAT. Instead, VAT is paid when you supply the goods to your customer.
Import Reliefs On Previously Exported Goods
If you export goods to be repaired or processed outside the European Union before being re-imported, you may be able to claim Outward Processing Relief (OPR). You claim relief from import duty on the value of the goods you originally exported or the difference in duty between the exported and re-imported goods. You need to be authorised to claim this relief.
For imports of goods that were previously exported but have not been processed overseas, you may be able to claim Returned Goods Relief (RGR). For example, you might use this if your customer rejects and returns the goods.
Depending on the circumstances, you may be able to claim full or partial relief from import duty, import VAT or both.
Special Import Reliefs
You should be aware that there are further types of relief that can be claimed for certain types of goods or goods that are used in certain ways.
There are several special reliefs that may apply to your particular circumstances. For example:
You can import goods for charities, goods for exhibitions, and low-value samples, free of duty. You may be able to import scientific goods to be used in tests free of duty and VAT. These reliefs are part of the Community System of Duty Reliefs (CSDR). Typically, these reliefs apply to imports that serve a social purpose, such as imports of goods for people with disabilities or museum exhibits. To see if any reliefs apply to you, find reference guidance on CSDR on the HMRC website
If you import goods to process into a product that carries a lower rate of import duty than the imported goods, you can apply for processing under customs control (PCC) and pay duty on the lower rate applicable to the processed goods. However, the duty and import VAT due must be calculated on the higher value of the processed products.
End-use relief provides full or partial relief from import duty for imports to be used in designated industries, such as civil aircraft, shipbuilding and oil platforms. You must be authorised to use this relief.
If your business is a non-UK airline that needs to hold a stock of aircraft spares and consumable items, or which repairs and maintains non-UK civil aircraft, you may be able to operate an aircraft spare parts depot to store those parts free of duty and VAT.
It is possible to claim relief on parts and components for civil aircraft that are imported with a certificate of airworthiness.
Reclaiming Taxes On Rejected Imports
If you have received a faulty delivery, you will probably need to reject the goods you have been sent. You can usually do this if the goods are defective or were damaged before clearing customs. You can also reject goods that are not in accordance with your purchase contract. You may not want to pay import VAT or duty, or you might want to reclaim any VAT or duty you have already paid.
You must notify HM Revenue & Customs (HMRC) in advance, and then dispose of the goods. You can do this by exporting them outside the European Union, for example by returning them to your supplier, or destroying them.
Find practical help and advice for businesses at the Business Link website