UK Market
Importing & Exporting in the UK
1. Overview
The UK is one of the leading trading nations in the world. It is the second largest exporter and third largest importer of commercial services, and the seventh largest exporter and fourth largest importer of merchandise (Source: World Trade Organization, 2007).
An important aspect of the UK’s import and export policy is its membership of the European Union (please see Appendix A), a customs union where imported goods can circulate freely within European Union member states once customs duty and any other charges have been paid.
Goods that are exported from the UK are not charged customs duty. Due to the UK’s multiple international trading agreements many exports from the UK also receive preferential tariff rates of duty (often nil) in their country of destination.
2. Imports
Imported goods that enter European Union member states from outside of the European Union are subject to a common external tariff entitled the “European Community Common Customs Tariff” (CCT). In order to calculate the CCT, the European Union annually publishes a “Combined Nomenclature” that is based on the “Harmonised Commodity Description and Coding System” used by most trading nations worldwide. The Combined Nomenclature shows the conventional duties payable across the European Union and also gives general information on tariffs and other measures affecting the import, export and transit of goods, the valuation of goods for import duty purposes, VAT and excise duties. Duties are usually calculated as a percentage of the value of the goods imported, although some goods are liable to specific rates (for example, euros per kg). For further information please see: www.berr.gov.uk/europeandtrade/importing-into-uk/import-tariffs/page11291.htm or call the HMRC Customs Tariff Classification Enquiry Helpline on: +44 (0)1702 366 077.
In order to fully establish the level of customs duty to be paid, the European Union applies “rules of origin” to identify the country in which a product has originated (or has “acquired origin”). Once this has been established and the requisite tariff has been paid, the goods can move between European Union countries without further duty having to be paid (although the goods may still be liable to national taxes). The two main types of European Union rules of origin are “preferential rules” and “non-preferential rules”. For detailed information on European Union rules of origin please contact the Department for Business, Enterprise & Regulatory Reform on: +44 (0)20 7215 5059 or see: www.berr.gov.uk/europeandtrade/key-trade-issues/rules-of-origin/page22727.html
Preferential rules
The European Union operates preferential agreements with many countries (known as “preferential partner countries”). These are listed in Appendices B to D and include:
- members of the European Free Trade Area,
- many developing countries,
- the African, Caribbean and Pacific states,
- overseas countries and territories of European Union member states, and
- Central and Southern America.
The preferential agreements allow industrial goods originating in preferential partner countries and being imported into the European Union to pay less duty than the common external tariff, or no duty at all.
A product acquires origin if it is “wholly produced” or “sufficiently processed or worked” in a preferential partner country. Generally, for a manufactured product incorporating imported components, “sufficiently processed or worked” means that the final product must be classified under a different tariff heading from any non-originating components (components not manufactured in the preferential partner country from which the final product is being imported).
Non-preferential rules
The non-preferential rules apply to goods imported from any country outside the preferential partner countries. Non-preferential countries include Australia, Canada, Japan, New Zealand, South Korea and the USA.
For non-preferential rules there are two main categories of goods:
- goods “wholly obtained or produced” in a single country, or
- goods “whose production involved more than one country”. The rules state that the originating country of goods is the country where the last major process took place.
For each consignment of goods imported into the European Union, a customs declaration (“the entry”) must be made in order to assess the duty payable, identify any claims for relief (see below) and help checks on controlled goods. A customs declaration is not necessary for most consignments from within the European Union.
The UK has progressively abolished almost all import licensing controls although some national import restrictions for public health and security reasons have been retained. Most goods are included in the Open General Import Licence (OGIL) and can be imported without further licensing formalities. Some goods, including agricultural and certain textile products, are excluded from the OGIL and require a specific licence for importation. For further information please contact the Import Licensing Branch of the Department for Business, Enterprise & Regulatory Reform on +44 (0)1642 364333 or at: www.berr.gov.uk/europeandtrade
There are various forms of relief that may be available on payments of import duty, such as:
- “Temporary Importation” relief (Customs Notice 200),
- “Inward Processing” relief (Customs Notice 221),
- “End-use” relief (Customs Notice 770),
- “Returned goods” relief (Customs Notice 236), and
- “Outward Processing” relief (Customs Notice 235).
For further information on import reliefs please see: www.hmrc.gov.uk and the relevant Customs Notice.
Businesses operating in the UK can also choose to take advantage of the import benefits offered by Free Zones and customs warehouses:
- There are five Free Zones in the UK in which non-European Union goods are treated, for the purposes of import duties, as being outside of the customs territory of the European Union (meaning that import duties are not payable until the goods are released for free circulation). For further information on UK Free Zones please see the “Customs Notice 334” at: www.hmrc.gov.uk or the UK Trade & Investment information sheet entitled “Free Zones”.
- Customs warehouses allow businesses to hold non-European Union goods without payment of the duty or VAT due at import. Goods can be stored in a specific customs warehouse or in an “inventory system” authorised and approved by HM Revenue & Customs. Duty and VAT must be paid at the time goods are delivered for use in the UK or, under deferment arrangements, within a fixed time afterwards. Deliveries for re-export outside the European Union are free of all duties and VAT. Various operations such as cleaning, stocktaking and packing may also be undertaken while the goods are stored in the customs warehouse, although manufacturing is not allowed. For further information please see the “Customs Notice 232” at: www.hmrc.gov.uk
For a detailed guide to import procedures in the UK please see:
http://customs.hmrc.gov.uk/channelsPortalWebApp or contact the National Advice Service Helpline on: +44 (0)845 010 9000 or +44 (0)2920 501 261.
3 .Exports
Exporting from the European Union and the UK is a straightforward process. Many exports from the European Union receive preferential tariff rates of duty (often nil) in their country of destination. The goods must meet the specified rules of origin contained in the European Union agreement with the particular destination country.
In the UK, exporters of goods must present an export declaration to Customs before the goods leave the country (this also applies to goods that are leaving the European Union via other member states). Most exports are cleared promptly by Customs via the electronic “New Export System”, but licences, permits and certificates are required for certain goods (either for exporting from the UK or for presentation in the importing country). For further information please see: www.berr.gov.uk/europeandtrade/strategic-export-control/index.html
Businesses in the UK must, for VAT purposes, maintain proof of exports, incorporating a valid commercial or official evidence of export, supported by relevant commercial documents. These may include the customer's order, contract correspondence, copy export invoices, advice notes, consignment notes, packing lists, insurance and freight charges, evidence of payment and receipts from abroad. All documents must clearly identify the exporter and the goods.
A detailed guide to export procedures can be found at: http://customs.hmrc.gov.uk/channelsPortal