If you’re interested in importing, the UK legal regime is well-established and provides opportunities for businesses small and large. Indeed, UK businesses are prolific importers. For the month of September 2019 alone, UK World Trade Data demonstrated that the UK imported nearly £27bn of goods (and exported over £16.5bn).
Our guide covers off the key factors that you’ll need to consider before you start striking up import relationships and bringing goods in.
Look out for the VAT rules, different ones apply to transactions importing goods and those importing services.
We recommend that you seek tax advice on any import arrangements that you plan to put in place.
Is your business ready to start importing?
If you're importing goods from within the EU, you must...
1. Get a commodity code
This classifies the goods you’re bringing in for tax and regulations. It should appear on the commercial invoices accompanying the imported goods and it will determine what customs duties you’ll need to pay.
2. Pay VAT
You’ll pay VAT on the imported goods at UK rates, and you'll need to add your acquisitions (EU imports), to your VAT return, so that you can (hopefully) reclaim the VAT paid. Any tax still due will also need to be accounted for on this return.
If the goods are for you to make taxable supplies or to use in your business, you may be able to reclaim the VAT.
While importing goods doesn’t automatically mean you need to be VAT registered, it’s sensible to register anyway – as then you can claim back VAT.
3. Declare goods of over £1,500,000
If you’re bringing in goods with an annual, aggregate value in excess of £1.5m, you’ll need to declare this officially as well.
You only need to do this if you’re registered for VAT in the UK (most businesses handling goods at this value will fall within the UK’s VAT-registration regime).
You declare these goods by filling in an Intrastat Declaration.
Once you’re registered, you must make monthly Intrastat Declarations.
Goods that count towards the £1.5m threshold include goods that are:
a) Bought or sold
b) Leased, hired or loaned
c) Supplied free of charge or supplied as part of a contract for services
d) Transferred between two branches of your business that are based in different EU countries
e) Moved in or out of the UK to be used in construction.
But you don’t count services or any goods that you’re bringing into the UK only temporarily.
4. Check if you need an import licence
Not all goods require an import licence, and this usually depends on the type of product you are importing.
You can check if you need one here.
If you're importing goods from outside of the EU, you must...
1. Get a commodity code
This classifies your goods for tax and regulations. It should appear on the commercial invoices accompanying the imported goods, and it will determine what customs duties you’ll need to pay
2. Register for an EORI number
You can apply for one here and it should take around 3 working days to process.
3. Declare your imports to customs
This can be complicated, but a freight forwarder or courier can do this for you.
4. Check if an Entry Summary Declaration has been made
This only needs to be done if your goods go through another EU country before reaching the UK. It should be done by your supplier or the business responsible for transporting the goods.
An Entry Summary Declaration is essentially a statement of the goods and manner of transportation (including vehicle details) that is submitted electronically to the relevant customs office of the ‘pass-through’ EU country, before the goods arrive there.
It is required for safety and security risk analysis purposes and it is common to all EU member states. There are deadlines for when it must be made.
(Once the relevant EU customs office is satisfied that everything is in order, the goods will be allowed to pass through and travel on to the UK, accompanied by a validated Entry Summary Declaration, bearing a unique 18-digit reference (called a Movement Reference Number.)
Some goods will not require an ESD, these include goods entering by pipeline, e.g. gas or electricity, letters, postcards and other printed materials and the personal luggage of travellers.
5. Pay VAT and duty
You'll need to pay the UK rate of VAT, but the amount of duty varies on how the goods are classified and how they'll be used. You may be eligible to apply for a reduced or zero-rate duty (known as preference) if you can prove your goods are imported from certain countries.
6. Check if you need an import licence
Not all goods need one, and this usually depends on the type of product you are importing. You can check if you do need one here.
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