4 Essential tips for businesses when importing into the UK in 2021
This article will cover the essential tips your business needs to consider when importing goods into the UK. It forms part of a series of future articles that will provide an in depth coverage of the importation process discussed below, with the necessary information to successfully trade with the UK.
Importing can be a very complicated and costly process but it can boost business growth. To profit from importing and to use it as a strategy to boost business growth, you will need to take note of the necessary key steps of the importation process to take into consideration to avoid legal mishaps, delays, and unnecessary costs. This article will cover some essential tips to take into consideration when importing into the UK in 2021.
· EORI Number
· Freight Forwarders and Customs Agents
1. EORI number
To import goods into Great Britain, the first crucial step is to ensure that you have an Economic Operator Registration and Identification (EORI) number that starts with GB. If you do not have an EORI number, you may incur storage costs and delays at the point of entry as HMRC will not clear your goods without an EORI number. If your EORI number does not start with GB, you will need to get a new one. Importers to or from Northern Ireland may have an EORI number starting with XI. You can find additional assistance on EORI numbers and the movement of goods between Great Britain and Northern Ireland following the implementation of the Northern Ireland Protocol by signing up for free support and advice here.
How do I obtain a EORI number?
To apply for an EORI number, you will need a National Insurance Number if you are a sole trader, a Value Added Tax (VAT) number and effective date of registration, your Unique Tax Payer Reference (UTR) which can be found here, your business start date and Standard Industrial Classification (SIC) code which you can find on the Companies House Register and a Government Gateway user ID and password. If you or your business do not already have a Government Gateway user ID, you can create one as you apply for your EORI number.
If you make import declarations quite regularly, you may be able to use simplified declarations procedures to make clearing customs quicker and easier. If your business is actively involved in international trade, you may be eligible for Authorised Economic Operator (AEO) status which will make your customs clearing and declaration process quicker. You will also benefit from Mutual Recognition Agreements (MRA) whose purpose is to ensure faster clearance at the frontier, low-risk scores, and fewer interventions. The UK currently has MRAs with China, Japan, the USA, and the EU. Find out if you are eligible for AEO status.
2. The Supplier
It is important to assess the business environment of your supplier, their creditworthiness and reputation and that they have met all legal obligations before exporting to avoid any unnecessary future costs, delays, and legal complications associated with illegal transactions.
Review your purchase contract to assess the quality, quantity, and price of the goods you seek to purchase. Ensure that the contract terms include an indemnity clause to protect you from any legal action that may arise from any defect in the goods. Consider how contract breaches such as late deliveries or deliveries of unsatisfactory goods will be handled. Aim to negotiate for English law and use international laws such as the Incoterms 2020 which provide specific guidance on international trade including responsibilities of all concerned parties to such contracts.
Transporting your goods to the UK is likely to be your biggest cost. Assess the available options below to decide which of them is suitable for your business.
a) Air Freight
Typically, air freight is used for small, high-value, fragile, and urgent deliveries. It is the fastest means of transport but it tends to be very costly. Goods transported by air are either placed on passenger flights or cargo flights. You have the option to either use a consolidated freight, back to back or direct services or a chartered freight. A consolidated freight contains different small shipments, back to back or direct services entail a single shipment transported on a scheduled plane whereas a chartered freight refers to the hiring of an entire freight plane for the transportation of one delivery.
Air freight prices are primarily based on the weight of the goods. For example, shipping a 50 kg box of low value general merchandise into the UK from Spain may cost $390, $440 from China and $530 from Bangladesh. You may sometimes incur an additional surcharge if you are transporting particularly large and oddly shaped goods by freight.
b) Sea Freight
This is probably the cheapest means of transporting goods across the globe. It is best suited for large consignments being transported over longer distances. You may choose to hire a full container which is usually 20ft or 40ft or share space on a container if you are shipping smaller quantities of goods. The disadvantage of using sea freight over air freight is that it will take several weeks to months for your goods to arrive in the UK.
The cost of a shipment by sea is determined by the volume and value of the goods. Shipping a 40ft container from Spain will cost approximately $1200, $2100 from China, and $2500 from Bangladesh.
Using rail is efficient when transporting goods from certain areas for example from Europe to the UK. Rail services around Europe are frequent and fast but do not offer much flexibility compared to road haulage. They are also more costly than using road transportation.
This is a very flexible option when transporting goods within Europe. It is also good for transporting large volumes of goods at a reasonable cost. Tolls and fuel prices should be considered as these tend to affect the overall transportation cost. There are a few disadvantages of using road transport for example traffic congestion or road disruption which may cause increased delays and often more damages compared to air freight.
Transporting a 40ft container of low-value clothes from Spain will cost about $1200. This is the same as using sea freight but the waiting time is likely to be shorter by road.
Road haulage is popularly used in conjunction with sea freight when moving goods over long distances at good prices.
4. Freight Forwarders and Customs Agents
Clearing goods through customs can be a very complex process and it may therefore be plausible to opt for specialist help. Freight forwarders primarily deal with the transportation of goods around the world. Some also offer customs clearing services as they have the necessary software to communicate with HMRC. Customs agents specifically deal with the clearance of goods through customs. You can choose to use a freight forwarder to offer both the transportation and customs clearing services or instruct an independent party (customs agent) to conduct the latter. We recommend that you acquire several quotations from either party to assess the best option for your business.
You can instruct someone to act for you directly i.e. in your name or indirectly i.e. in their name. It is important to note that the person you choose to handle your customs clearance must be based in the UK and your instructions must be in writing indicating whether your customs agent will be acting directly or indirectly on your behalf.
If you appoint someone to act directly on your behalf, you will be solely liable for the accuracy of all information provided to customs as part of the declaration process, keeping records, and handling customs duty and import VAT taxes. However, if you unequivocally instructed your customs agent to handle these duties, they could be jointly or individually liable for any deliberate or unreasonable errors made. On the other hand, if the customs agent is acting for you indirectly, they will be equally responsible for the accuracy of the information provided to customs and customs duty or import VAT.
Although the importation process may seem lengthy and complex, making an efficient plan of the necessary steps and ensuring these are met will save you time and unnecessary costs. To import goods in the UK, you must have an EORI number. Review your purchase contract and carry out due diligence to establish the creditworthiness and reputation of your supplier to avoid legal uncertainties. As transportation is probably the most expensive process of the importation process, it is important for you to assess all the available options to ensure that you select the best transportation means for your business. Lastly, hiring a freight forwarder and/or a customs agent may help ease the burden of customs clearance on your business.
Have a look at our previous articles on trading with the UK and the government’s new guidance on importing into the UK for additional guidance. Alternatively, please contact a member of our staff to receive a free 15-minute consultation to discuss your requirements by clicking here.