Getting accurate information on UK customs clearance can seem like finding a needle in a haystack when you are importing goods into the UK for the first time. However, you will be pleased to know that clearing your goods through customs is not too complicated, so long as you are prepared and compliant with HMRC.
To help you have all the information that you need, we have put together this list of the most frequently asked questions that we have received as customs brokers:
What is customs clearance?
Customs clearance is the process of declaring goods as they move through a border, whether importing or exporting. This is so that HMRC can gather statistical data on the country’s imports and exports, ensure that goods are travelling with the required licenses and certification, and collect any taxes that are due on a consignment.
Customs clearance is also required when moving suspended goods outside of a customs-designated area, such as a bonded warehouse, or when cancelling an inward processing relief. This is because the goods have not yet been released into free circulation, and so another declaration is needed to pay the taxes or declare that the goods are moving to another location.
What documents do I need for UK customs clearance?
To process your declaration to customs, your customs broker will need to have a copy of the following documentation for each shipment:
– Commercial invoice
– Packing list
– Transport document – Bill of Lading / CMR
If the following information is not on any of the documents, then these will also be required for clearance:
– Freight rate (when the INCOTERM) is not C or D level.
– Commodity code
– The goods country of origin.
Depending on the commodity code, further documentation may be required for UK customs clearance, including but not limited to:
– Certificate of Origin.
– Port Health Certificates:
o Veterinary Certificate.
o Plastic Declaration Documents
o Aflatoxin Certificates.
o Phytosanitary Certificates
o Organic Certificates
– Preference Certificates
o GSP Certificates
o EUR1 Certificates
o ATR Certificates
What value do I need to declare to customs?
UK customs clearance requires the border value of the goods to be declared. This means the cost of the goods, freight, and insurance at the time of crossing the border. Depending on which INCOTERM you have used, this may be the amount on the commercial invoice. The INCOTERM will also dictate whether or not a value for VAT adjustment will also need to be declared.
View this guide on how to calculate import duty and VAT in the UK for more information.
What are the routes of UK customs clearance?
Import customs clearances are processed through different routes, depending on the commodity, the procedure, or random checks. Pre-lodged (not arrived) declarations are route H, and the following are the most common routes for live declarations:
– Route 6 – This is a straightforward clearance and will proceed to clear as soon as taxes and any additional checks from border authorities are complete.
– Route 1 – This requires that your documentation be sent to the National Clearance Hub for checks before they process the clearance.
– Route 3 – This is a combination of route 1 and route 6, where the clearance is not postponed but the documents must be sent to NCH for checks.
Less common routes for UK customs clearance are:
– Route 0 – This is where the DUCR (Declarant Unique Consignment Reference) has already been submitted to another government body, in order to electronically clear the consignment with them, but there is a query so a route cannot be assigned.
o For example, if the weight declared to DEFRA on the PEACH/IPAFFS system is different to that declared on the declaration to customs.
– Route 2 – This is an indication that customs require physical examination of your goods, as well as a documentation check.
What is proof of customs clearance?
Once your customs broker submits your declaration, they will be issued with a C88 and an E2 (or an X2 if you are exporting) to show that the live declaration has been accepted. Depending on the route of the declaration, the goods will then be cleared provided all the conditions have been met:
– Import Duty and VAT have been paid.
– Port Health / Customs Examinations have been completed and cleared.
– DUCR has been tied to the export manifest by the carrier.
You can ask your customs broker to check that your declaration has cleared customs by using the DEVD command in CHIEF. This will confirm the UK customs clearance date and time.
Where is customs clearance needed?
Customs clearance is needed whenever goods are passing through a border, or when they are leaving a customs authorised facility if the goods are not in free circulation.
Goods that are entering or leaving the UK through any airport, seaport, or by road through the tunnel will require a customs clearance.
A customs authorised facility is a place that goods under suspension have been approved to travel to and be stored at. This if often a bonded warehouse, but can also be a factory, shop, or anywhere else where goods can be altered. The type of facility will depend on the procedure code for relief that is being used.
Can I customs clear goods without being a business?
Goods can be declared to customs by businesses and individuals; however, only VAT registered businesses can reclaim the VAT on imports. Personal imports, and businesses that are not VAT registered, cannot claim VAT back on imports.
In order to reclaim the VAT on a UK customs clearance, your business must have a GB-prefixed EORI number. This declares your company as the importer of record and allows you to reclaim the import VAT on a C79 certificate.
Companies that are not VAT registered can still apply for an EORI number and reclaim the VAT if they do register for VAT later in the tax year.
Do I need to use a customs broker?
A customs broker is not required for your customs clearance; however, it is recommended that you use one due to setup costs and expertise. UK customs clearance agents are likely to have access links to lots of ports of entry (which have a cost per port), customs clearance software (another cost) and the expertise to ensure that your declarations are processed correctly (another cost and training time).
For these reasons, using a customs broker is likely to save you time and money over processing UK customs clearances yourself.
What is a commodity code?
A commodity code tells HMRC what your goods are. Every single item that you can think of has a commodity code in the HMRC tariff, which is harmonised with other (not all) countries so that the same code is recognisable around the world.
The commodity code that you use to transport your goods will determine the amount of Duty and VAT paid, whether or not additional licenses are required, or if additional border checks are required.
Using the correct commodity code is essential, and intentional misdeclarations to avoid paying more tax or omit checks is illegal. If you are unsure of the correct commodity code to use, contact HMRC for binding advice.
How long does UK customs clearance take?
From the moment that the declaration becomes live, a route 6 import customs clearance will take 10 minutes to process if there are no reasons for delay. Reasons for delay on a route 6 clearance include, but are not limited to, outstanding Duty and VAT payment, or an additional border agency check.
UK customs clearances that are marked for additional examination can take a few days, especially if there is a physical move to be made (like a movement to the X-Ray site). Unfortunately, HMRC process these checks in order of arrival or add your shipment to the queue when your documents are received. It is best to be proactive with sending documents when checks are required as your carrier will not waive rent and demurrage for customs delays.
How much is Duty and VAT?
Every commodity has its own duty rate, which will be calculated during clearance based on your commodity code. The Duty will be calculated on the border value of the goods, and your chosen INCOTERM may require additional values to be added to your commercial invoice value.
Find out more about what values to put into your import duty calculator here.
VAT is charged at 20% as standard in the UK, but there are reduced VAT conditions that allow 5% or 0% to be paid on certain commodities. Check the tariff to see if your commodity qualifies for VAT relief.
How do I pay Duty and VAT?
Duty and VAT are payable to customs by individual bank transfer, a prepaid FAS account, or by deferment account.
For individual transfers, the customs broker will need to create a Import Entry Payment Notification (IEPN) to generate a reference for HMRC to match the payment against. This requires the link to the port CHIEF system.
For prepaid FAS accounts, access to the port CHIEF system is required. Funds are added to the account as a lump sum, with Duty and VAT taken from the account automatically by shipments. Note that there is a separate account for each port, and that customs brokers will usually not hold funds as they will have multiple clients using the same account.
Deferment accounts are the preferred method of payment for HMRC and for brokers, where a guarantee against a company’s assets allows for credit against VAT (Duty requires an additional application) which is then collected by direct debit.
Any method of payment will usually incur a fee from the customs broker for management and processing.
When is customs clearance due on a shipment?
Customs clearance is due on any shipment before it crosses the customs border, or before it leaves a customs authorised facility.
The exception to this rule is for the delayed import declarations that have been put in place following Brexit. This allows for goods to be imported without a clearance, but requires a UK customs clearance to be processed within 6 months of import. These declarations require a customs broker with authorisation for EIDR or CFSP processing.
Can I move goods without paying Duty and VAT?
Goods can be imported into the UK without paying Duty and VAT under specific customs procedures, including but not limited to:
– Bonded warehousing.
– Importing samples that have no commercial use past testing.
– Transit movements where the destination is not the UK.
– Inward processing relief, where the goods are due to be re-exported.
– Returned goods, where the goods were initially exported from the UK.
These processes may require additional proof and authorisation for use.
Exports do not usually require payment of Duty and VAT; however, a transit document may be required to prevent taxes being demanded at the first country outside of the UK, where this country is not the destination.
How do I declare goods that have Duty and VAT suspension?
There are 2 ways for goods that have Duty and VAT suspension to be declared on your goods, depending on the type of clearance that is required for the movement.
The first is using a Customs Procedure Code (CPC) that indicates the movement is non-taxable. A CPC is required on every customs declaration and tells HMRC what the clearance is for. Returned goods, bonded warehousing, inward processing relief, and other suspended procedures all have unique CPCs that indicate there are no taxes to be collected on that declaration / item.
The second is by using a commodity code and license declarations that indicate that the commodity has a unique suspension of Duty or VAT against it. This will then be declared in the tax lines of your C88 by your UK customs clearance agent.
How do I customs clear my own belongings?
Your personal effects can only be cleared Duty and VAT free by using a Transfer of Residence (TOR1) form. The goods are required to have been in your possession for over 6 months, and you will need to have recent proof of address outside of the UK.
Without applying for relief through a transfer of residence, you may need to pay taxes on your belongings as you bring them into the UK. Therefore, it is essential to get your TOR1 applied for before moving your goods.
More information on how to move possessions back from abroad can be found here.
If you have any further questions, please contact one of our UK customs clearance experts and we will be happy to assist you.