With the UK’s imminent departure from Europe, UK companies will need to prepare for the UK becoming a ‘third country’ to the EU. The term ‘third country’ simply means a country that is not a member of the European Union. As a third country UK importers may be required to make UK customs declarations depending on the final trade deal. It has been estimated that approximately 180,000 traders will make customs declarations for the first time when the UK leaves the EU.

So what is required for an import Customs Declaration?

1. Supplier Commercial Invoice

A commercial invoice is the invoice most suited for international trade, as it is the most comprehensive. It should state ‘Commercial Invoice’ and contain all the required information such as…

  • Invoice number and date generated
  • Payment terms e.g. 30 or 60 days etc.
  • Name of seller & company address details
  • Name of buyer & company address details
  • Description of items purchased and part numbers
  • Total cost including any Tax payable
  • Incoterms
  • Country of Origin declaration
  • Harmonised tariff / commodity code information

2. Plain language description of the goods/commodity code

This is referred to as ‘goods classification’ – what are the goods, what are they made of and what are they for? When the goods have been classified with HMRC they will be given a commodity code. Commodity codes are also referred to as tariff codes, tariff number or tariff headings. They are all referring to how your items are classified for customs purposes.

Commodity codes are a number broken down into chapters with paragraphs and sub paragraphs as they become more detailed. You will need to classify your goods accurately – this determines the duty rate and if there are any restrictions or additional duties (such as excise or anti-dumping duty) on the goods entering the country. 

3. Reason for Import / Customs Procedure Code

Probably the most obvious point is: you will need to declare why you are importing the goods. This is extremely important, as it will affect how UK import duty and VAT would apply to the shipment (if at-all). There are many different reasons on why you would import goods such as…

  • A commercial purchase 
  • Samples
  • Goods return for repair 
  • An exhibition or trade show
  • Gift

Each reason has a different and specific customs procedure code (CPC).

4. Company EORI number and VAT number

EORI is an acronym and stands for Economic Operator Registration Identification. The system began in July 2009 and replaced the Traders Unique Reference Number (TURN). An EORI number is assigned to importers and exporters by HMRC, and is used in the process of customs entry declarations and customs clearance for both import and export shipments travelling to or from the EU and countries outside the EU. If you are a VAT registered company you should apply for an EORI number as soon as possible to avoid any delays. You will need the EORI number before the goods arrive in the UK. It generally takes three to five working days for HMRC to process an EORI application and the number becomes active for you to use the day after issue.  

5. Deferment Approval Number (DAN)

A deferment account is used for the payment of import duty and VAT allowing duty to be deferred for up to 1 month.  A deferment account is set up with Customs, subject to an agreed maximum limit. The limit is usually sufficient to cover a full month’s customs duty and import VAT.  If your company does not have a DAN you can normally use your shipping agents but be aware there is normally a percentage charge so if you import regularly you own DAN will avoid this extra cost.  Deferment accounts are available to companies with 3 years VAT records.

Customs Clearance Delays 

A delay in customs clearance can work out costly due to bonded warehouse storage fees. Warehouse storage is normally charged after three working days but check with your shipping agent as this can vary.

Keep in mind you can prepare all the required information for an import customs declaration as soon as you have the copy commercial invoice from your supplier. The more prepared you are the smoother the process will be.  

Andrew Kennedy CMILT ESCM, Logistics Manager, Kitagawa Europe Limited