If you’re considering starting a business involved in importing or exporting products, you’ll need to know about commodity codes and HS categories. These are used to classify goods for import and export, to make sure they’re moved safely and in compliance with customs, tax and duty regulations.

In this guide we’ll look at when and why commodity codes are used, what they look like, and how to find the right one for your needs.

Here’s all you need to know about commodity codes.

>See also: EU import changes – what’s changing from January 1

What are commodity codes?

A commodity code provides details of the goods you’re importing or exporting, such as what they are, what they’re made of, how they’re used and even how they’re packaged. This information is used for tracking imports into the country, and making sure that hazardous items are properly treated, but also for calculating import duty and VAT.

To import anything into the UK, you’ll need to make sure the right commodity code is included in its customs declaration. If you can’t correctly match your goods to the right code, you’ll not only be be paying the wrong customs duties but also risking serious legal consequences.

Possible consequences of using the wrong commodity code

• Having to pay top-up taxes (import VAT and duties)
• Having to pay a customs fine
• Having your deliveries delayed to frustrated customers
• Having your goods seized

You can find the correct commodity code using the online trade tariff lookup tool. Alternatively, you can get specific advice from HMRC, or use the Government-issued product classification guides to help.

Why you need to know about commodity codes

Commodity codes have a number of uses in import and export businesses. They’re used when completing paperwork for customs declarations and can influence the amount of tax and duty you pay to import or export a product. Using the correct commodity code is also important to make sure you’re following any relevant legal or safety regulations when importing products which might be dangerous or restricted.

Structure of the code post Brexit

Commodity codes now have to be included in the customs declaration that you will need to provide to clear any goods through UK or EU customs. This will make clear how much taxes – VAT and tariffs – you should be paying.

The UK is using the standard global 10-digit format, as does the EU, which can add 4-digit codes required to apply certain measures, such as trade defence or certain suspensions.

Commodity codes are made up with a range of digits that identify a particular product. They specify the type of product, materials used and the production method as follows:

• HS code digits: It starts with the global standard – Harmonised System, or 10-digit HS code. The UK has used this format since January 2021
• EU additional digits: The EU has added up to a further four – making potentially 14 in total. These extra EU numbers are: 2 digits CN heading (Combined Nomenclature); 2 digits TARIC (Integrated Tariff of the European Communities)

For example, if you search for the commodity code for “perfume” on the UK trade tariff search engine, the UK HS code is 3303001000.

You can find the EU commodity code through the Access2Markets online service, which should match in most cases.

Pro tip: The Access2Markets is geo-blocked if you’re in Great Britain and the country you enter in the “country from” field is an EU member state; although it’s not blocked if the “country from” is the UK.

It is possible that the EU and UK do not classify every item the same. However, as both are members of the World Customs Organisation, they apply the Harmonised System, which is expressly designed to achieve uniform classification across contracting parties.

Pro tip: If somebody is exporting from the EU then the EU export declaration would only require the EU commodity code to 8-digits. The longer commodity code would be required on the UK import declaration.

A UK business can use the Access2Markets (with the “country from” being the UK), to obtain a commodity code, truncate it to 8-digits for use on the EU export declaration.  Alternatively, you can use the advanced search function on the EU TARIC website and truncate.  

So with just a few numbers, the importers and exporters – and every other authority and organisation which handles the products on the way – know exactly what they’re dealing with.

Find your commodity code with the trade tariff look up

• Go to the UK government trade tariff look up page
• Hit Start Now
• Enter the search term you want to use – the dialogue box will automatically populate with common searches to help you
• Suggested commodity codes will appear, starting with the HS chapter and headings to help you narrow it down to the correct category of products
• You can continue to search the suggestions using other information, such as what the item is made of or how it is packaged
• Once you find the correct item type you’ll be shown the HS code, and any important information connected to this code – such as whether or not you need a licence to import or export items under this code.

What happens if you don’t have a commodity code or use an incorrect one?

If you use an incorrect commodity code, you might find that your goods are seized or delayed by customs. You might pay incorrect VAT or duty, and – if you pay too little – could be liable for extra fees and charges.

Some items can only be imported or exported with a licence, such as plants, animals, or anything potentially hazardous. If you try to move these products using an incorrect commodity code, you’ll be breaking the law, and will find yourself in serious legal trouble.

How to find out the right commodity code

Another option, if you can’t find the commodity code you’re looking for, is to ask HMRC for advice on the best fit code for your product. You can contact HMRC using the following email address:

classification.enquiries@hmrc.gsi.gov.uk

HMRC will respond to your email within five working days. The EU member states have various similar tools.

Before you ask for advice

You’ll need to include information about the product you’re planning to import or export, to get advice on the commodity code. Your message should include:

• Company name, if applicable
• Contact name
• Contact details (email address and a contact number)
• The option which best describes your item: agricultural, chemical, textiles or ceramics – including food, drink, plastics, cosmetics, sports equipment, games, toys, clothing, shoes, electrical, mechanical or miscellaneous – including vehicles, optical and measuring devices, machinery, musical instruments, metal, furniture, lighting, paper, printed matter, straw, glass, wood, jewellery
• What the goods are made of (if more than one material, provide a breakdown of materials)
• What the goods are used for
• How the goods work or function
• How the goods are presented or packaged
• Any code you think best fits your goods
• Part of the code if you’ve been able to partially classify it

You should send a separate email for each product you need help with.

>See also: How will Brexit affect my imports and exports? Where to find customs help

How to obtain an EU-wide BTI ruling

In some cases it might be helpful to apply for a BTI – a Binding Tariff Information ruling, to confirm your commodity code. It’s a legal document that confirms the commodity code agreed for the product you’re exporting, so there’s no guesswork involved.

Getting a BTI can be helpful because you’ll have certainty about the commodity code needed for your imports or exports. It doesn’t cost anything to get a BTI ruling, but you may need to pay if there are tests needed, for example, to determine the materials used in your product.

This ruling usually lasts for three years and is legally binding throughout the EU.

The EU operates a centralised EU Customs Trader Portal that all BTI ruling applications have to go through. All processes through this portal are now done electronically and you can find the relevant details and related resources here: European Commission Taxation and Customs Union – BTI

How to apply for a BTI ruling

tariff.classification@hmrc.gov.uk

Use the above email to apply to access the EU Customs Trader Portal if you’re based in Britain, putting “Enrolment EU Central Service” in the subject line, including your EORI number.

You can find out more about the process here.

HMRC will aim to reply to your email within five working days to confirm you’ve been set up to access the EU Central Service and give you the link to access it.

Once you have the link, you’ll need to provide:

• Detailed information about your goods, which can vary depending on your goods
• Brochures, manuals, photographs and samples where appropriate. If you want this information to remain confidential, you must tell HMRC

You can also let HMRC know what you think the commodity code should be.

What happens after you’ve applied

HMRC aims to reply to your application within four months. You’ll be given a legal document informing you of the correct commodity code for your goods and the start date for the period of validity of the information. The document also shows:

• Unique reference number
• The name and address of the holder of the information, legally entitled to use it (decisions are non-transferable)
• Description of the goods (including any specific marks and numbers) to identify your goods at the frontier
• Basis of the legal justification for the decision

However, six countries – including Britain – have their own BTI ruling application sites that you can go through in addition to the EU central service.

• Croatia
• France
• Germany
• Poland
• Spain
• United Kingdom

Applying for a BTI if you’re in Northern Ireland

Binding Tariff Information decisions can be issued by HMRC to traders or individuals that have an EORI number that starts XI for goods you’re intending to import into or export from:

• Northern Ireland
• any EU member states, if you’re established in Northern Ireland

You can find more information about applying for a BTI decision if you’re based in or exporting to Northern Ireland here.

Why commodity codes are important

Finding the right commodity code is one of the first things you’ll need to do before you can import or export goods. It can be a little complex, but there is help at hand to make sure you get the right code for your business needs. With the resources outlined here, you should be able to find all you need to start getting your import/export business off the ground.

Further resources and guides

Import guide: three essential tips and everything you need to know – Guidance for navigating importing in a post-Brexit world.

Tariffs on goods imported into the UK – How to check the tariff rates that apply to goods you import.

The Border Target Operating Model and how it will affect your business – An explanation of the new rules and processes for food and plant imports that will come into force in 2024

5 things to remember when exporting for the first time – Exploring the key challenges for first-time exporters

The post The essential guide to commodity codes and HS categories appeared first on Small Business UK.

Import licenses are government-issued permits or authorisations required for individuals or businesses to import specific goods or commodities into the country. These licenses are a part of the UK’s trade regulations and are used to regulate and control the inflow of certain goods, often for reasons related to public health, safety, national security, or economic protection.

The process may involve meeting specific criteria, providing documentation, and paying fees. Importers typically need to apply for these licenses well in advance of the intended importation.

Failure to obtain a required import license can result in legal consequences and the rejection or confiscation of imported goods at the border.

Do I need an import licence for the UK?

Deciding whether you need an import licence to import goods into the UK depends on what commodity you are importing. Your first step is to identify the customs HS code which should be available from your supplier/manufacturer that you are purchasing the goods from.

Related: The essential guide to commodity codes and HS categories

When importing goods into the UK, there is a lot of documentation involved. Although a vast majority of products do not need an import licence, a few do.

Products do often need licenses to “export” them before they’re allowed to leave their country of origin – but, unless you’re buying on EXW terms, the export licence cost is not your responsibility.

Who needs an import licence?

The thing to remember about import licences is that a licence is a way for the Government to cap and monitor imports. Most goods will be unaffected, but certain goods like firearms and military-use goods will require a licence. Goods that require a licence are the same; items that the Government would not want an unlimited supply of saturating the market.

An example of a few goods you need an import licence for are below:

• Military goods
• Paramilitary goods
• Dual-use technology
• Artwork
• Plants
• Animals
• High risk foodstuffs
• Medicines
• Most chemicals
• Waste

How do I get an import licence?

You can apply for an import licence via the Department for International Trade here. Email enquiries.ilb@trade.gov.uk for advice on the import controls ILB is responsible for. Read “Import goods into the UK: step by step” on the Government website here for information on licences and certificates.

>See also: How to import from the EU

What documents do I need for a licence?

When it comes to importing, the certification that is needed is not the same across the board. There are, however, certain documents that all importers will need to get their goods into the country, regardless of what those goods actually are, namely a commercial invoice and packing list. Thereafter you should find out the HS code of your commodity and yourself or your freight forwarder can check the HM Customs & Excise tariff to see if that HS code requires more documentation such as certificate of origin, test certificate, material safety data sheets and so on.

Paula Bellamy is managing director of freight specialists OL UK

Further resources

Import guide: three essential tips and everything you need to know

Trade Tariff: look up commodity codes, duty and VAT rates

EORI number – What it is and how to get or check one

Everything you need to know about customs brokers

The post Do I need an import licence? appeared first on Small Business UK.

From October 1, the EU will start the transition to the Carbon Border Adjustment Mechanism (CBAM) on certain imports.

Coming in as the world’s first ‘carbon border tax’, CBAM will initially apply to the following imported goods:

• Cement
• Iron and steel
• Aluminium
• Fertilisers
• Electricity
• Hydrogen

These goods have high emission levels and a higher risk of carbon leakage – this is where businesses transfer operations to another part of the world with weaker carbon emission regulations. The aim is to encourage manufacturers to make their products as green as possible.

Most of the guidance at present is geared towards EU companies importing goods as they’ll be taking on the reporting. This guidance aims to ‘facilitate dialogue with third countries’. However, third countries – including the UK – will need to provide emissions data to these companies, so they’ll be a key part of the process too. The following comes from a European Commission Memo:

Non-EU producers should provide the information on embedded emissions for goods subject to CBAM to the EU-registered importers of their goods. In cases where this information is not available at the time when the goods are being imported, EU importers will be able to use default values (even once the definitive system has kicked in) on CO2 emissions for each product to determine the number of certificates they need to purchase.

In addition, production sites outside the EU will have the possibility to register in the EU
central database to communicate their emissions reports. This should facilitate compliance for any importer of CBAM goods produced in these sites.

As a manufacturer, make sure you know which of the above products you supply to EU businesses as a starting point. For extra clarification, it’ll also be worth having a chat with them.

The transition will start from October 1, 2023, rolling-out from 2026. Several countries, including Canada and Japan, are planning their own versions of CBAM.

Most UK SMEs unaware of the CBAM changes

A survey from the British Chambers of Commerce (BCC) showed that 80 per cent of its 733 SME respondents weren’t aware of the upcoming reporting rules.

Commenting on the research, William Bain, head of trade policy at the BCC, said: “It is a serious worry that more than four out of five manufacturers who export have no knowledge of the EU’s new Carbon Border Adjustment Mechanism, which begins roll out in just over three weeks’ time.

“It is just the start of a series of changes, that will gradually ratchet up over the next three years.

“This is a very complex set of rules, the EU’s published guidance runs to more than 200 pages. It is likely manufacturers that export will have to think about allocating dedicated staff resources just to deal with these reporting requirements.”

He added that the BCC and Chambers will be pulling together as much information as possible to help businesses understand the changes.

Read more on exporting

Exporting goods abroad: A complete guide for small businesses – In this article, we present the main considerations for a business looking to break into international markets – and look at two businesses that found success in exporting

5 things to remember when exporting for the first time – Micro businesses are put off exporting, despite knowing there is an overseas market for their products. Mike Wilson offers a guide to exporting for the first time

Exporting: why no business is too small to send goods overseas – More UK companies are exporting than ever, but it shouldn’t be limited to big business, according to Geoff Runcie of Morgan Goodwin

The post CBAM – EU’s new green import tax explained appeared first on Small Business UK.

Following Brexit, the UK is responsible for designing and implementing its own border arrangements for biosecurity and food safety and as such will introduce the Border Target Operating Model – also known as TOM. 

The new trading model, which was initially planned to come into effect on 31 October 2023 before being delayed until 2024 amid inflation fears, will officially classify the EU as ‘overseas’ and treat EU imports accordingly.

It will categorise food and plant imports into three risk categories: low-risk, medium-risk and high-risk.

This will mean more checks on foods such as meat, fish and even fruit and vegetables from the EU – in line with checks from countries outside Europe. It is the biggest change to UK import rules since Brexit.

It’s likely the new measures will now be implemented in 2024 – something Andrew Thurston, a consultant at MHA, says will frustrate businesses.

“Another post-Brexit border check delay will be no surprise,” he says. “The government is reluctant to place additional costs on businesses and risk pushing inflation higher. The most likely scenario is that border checks will be delayed by three to six months.

“Those businesses that invested time and money to prepare for the checks, only to see them delayed again, will be frustrated. We should be encouraging firms to think ahead but those who did repeatedly see their good efforts go to waste.

“While unlikely, there will be businesses who would welcome some form of compensation, particularly as this is the fifth delay to border checks.”

What is the Border Target Operating Model?

The Border Target Operating Model is the new security and biosecurity model applying to animal and plant imports – from the EU and rest of the world.

It is designed to improve sanitary and phytosanitary (SPS) controls on imports. The aim is to improve biosecurity, better protect the environment from pests and diseases and deliver safe food to the shelves.

One change will be the introduction of a risk scale for sanitary – such as meat, fish and dairy – and phytosanitary products, including seeds and plants, “with controls appropriately weighted against the risks posed both by the commodity and the country of origin.”

Phytosanitary changes will include digitisation of health certificates. The government will also pilot a scheme whereby authorised importers of plants and some animal products can be eligible for streamlined controls providing they can prove they are meeting regulatory requirements and standards.

The ‘Single Trade Window’ is the final aim of the changes – the creation of a single digital gateway where importers and exporters can upload their standardised paperwork and apply for licences.

Timeline

The TOM will be introduced in stages. The first stage will be the requirement for high-risk animal and plant products to carry a health certificate. These are high risk in the sense that they carry the highest risk of pest and disease-related problems and will be judged according to the commodity and the country of origin.

There have been drafts of TOM so far. The final publication will likely be released later this year.

First changes (scheduled for January 2024) – Health certification will be needed for imports of ‘medium-risk’ animal products – such as meat, dairy and fish – and products of non-animal origin considered ‘high-risk’. Certificates will be required for phytosanitary products arriving from the EU.

Second round of changes (scheduled for April 2024) – Documentation, identity and physical checks at the border will be implemented on ‘medium-risk’ animal products, plants and ‘high-risk’ food of non-animal origin.

Third round of changes (scheduled for 31 October 2024) – EU imports will require safety and security declarations (SSDs). There will also be a reduced dataset for imports and use of the UK Single Trade Window will remove duplication across different pre-arrival datasets.

How do I prepare my small business?

Once the model is underway, each consignment of food imports coming into the UK will require a fee of between £20 and £43.

Businesses are being urged by the government to work with their supply chains in preparation for the first set of changes now.

The new risk categories and the types of foods associated with each will be as follows:

High risk – live animals, live aquatic animals and germinal products

These will require pre-notification, health certificates, documentary checks and a high level of ID and physical checks.

Medium risk – raw, frozen meat, dairy, animal by-products for feed, fishery and aquatic animals

These will require pre-notification, health certificates, documentary checks and may be liable to identity and physical checks at the border.

Low risk – Processed, shelf-stable products such as canned meats

These will require minimal controls with no health certification required. There will be no routine physical checks.

Similarly, the risk categories for importing plants are as follows:

High risk – Plants for planting

Medium risk – Plant products – risk linked to a trade

Low risk – All other plant products

However, without a definite timescale for when to prepare, many businesses are left sitting on their hands, according to Christopher Salmon of import consultants Clear Border.

“This time I’m not aware of any who have made material changes to systems anticipated in the Target Operating Model and they’ll be very pleased now because the government has shied away from doing it again,” he told Small Business.

“But the government will have to do something because there is a risk and the longer you leave it the bigger it gets.

“If we get a case of swine fever in the country, that’s the pig industry out and then you’d lose your trading partners as well.”

More on importing and exporting

Importing from India – India is a natural and growing trading partner for the UK, with the UK government pushing for a full UK/India trade deal. But what steps should you take if you want to import from India right now?

Microbusinesses lead way when it comes to exports – Nearly half of microbusinesses made exports last year compared with 39% in 2021

The post Border Target Operating Model and how it will affect your business appeared first on Small Business UK.

The proportion of microbusinesses making exports overseas jumped last year to 46 per cent compared with 39 per cent in 2021.

A microbusiness is defined as having up to nine employees.

Four out of ten SMEs (up to 250 employees) exported last year, while just over half (54 per cent) of large businesses with 250+ employees exported.

Exporting goods abroad: A complete guide for small businesses – In this article, we present the main considerations for a business looking to break into international markets – and look at two businesses that found success in exporting

Overall, the percentage of all businesses that have never exported having has fallen from 71 per cent in 2015 to 59 per cent last year.

The annual poll by the Department for Business and Trade (DBT) focusing on businesses with revenues of more than £500,000 showed that the number of active exporters in 2022 held steady, and that the proportion had changed in the past seven years only from 33 per cent to 34 per cent.

The survey of 3,000 businesses acknowledges that businesses faced significant challenges in 2022, including ongoing fallout from Covid-19 plus the Russian invasion of Ukraine and inflation.

However, Brexit remained the biggest challenge to business exports, with the percentage of all businesses saying that they had stopped exporting in the previous 12 months doubling to about 14 per cent. Asked why, 53 per cent said it was because of Brexit, followed by the impact of Covid and falling demand.

Help maximise your international trade opportunities – It’s never been easier to sell your products overseas using platforms such as Amazon, Shopify or PayPal. But the rules and regulations get increasingly complicated. Don’t worry, help is at hand

There was also increasing scepticism about the value of free trade agreements, such as plans to join the CPTPP trade bloc, with almost three in five businesses saying they expected FTAs to have absolutely no effect on their business.

Tina McKenzie, policy chairwoman of the Federation of Small Businesses, told The Times the findings painted a mixed picture of exporting. “As far as small businesses are concerned, excessive customs paperwork, cost burdens and supply chain and logistical issues can put overseas markets out of reach,” she said.

In total, UK businesses made £815bn worth of exports in 2022.

More on exports

A step-by-step guide to shipping and exporting goods – Before you start exporting, take these factors into account, step-by-step

The Export Support Package from The Institute of Export and International Trade – What is it and how do I apply?

The post Microbusinesses lead way when it comes to exports appeared first on Small Business UK.

The Institute of Export and International Trade’s Export Support Package is open for registrations of interest.

It aims to help micro, small and medium-sized businesses (MSMEs) get started with exporting. According to government figures, 5.5m businesses are registered in the UK, with 99.9 per cent being classified as MSMEs. However, less than 10 per cent of them export.

The launch coincides with the United Nations’ World Micro and Small and Medium Enterprise Day. This year’s theme is ‘building a stronger future together’.

Marco Forgione, director general of The Institute of Export & International Trade said: “As a leading organisation in international trade, founded on the principle of equipping people and companies to trade internationally, we have designed the Export Support Package to enable UK MSMEs to fulfil their business potential through exporting.

“Through this bespoke package of consultancy, training and implementation we will provide businesses with the knowledge and expertise to trade confidently and compliantly with the world.”

What’s in the Export Support Package?

The package is made up of three components.

Export Readiness Review

Complete a simple questionnaire, so that the IOE&IT can highlight any authorisations or licenses you need and match you with a suitable expert. It allows them to identify any challenges and suitable training options.

Training

Your answers will be used to create a bespoke training programme of three programmes that would be most beneficial to your needs based on your assessment.

Implementation

Expert guidance from the IOE&IT will help you tie up loose ends, identifying ways to help you optimise your business.

Am I eligible?

Any MSME in the UK can apply.

How do I apply?

Registration of interest is now open through the IOE&IT’s website here: https://www.export.org.uk/page/export-support-package. Successful applicants will be notified within 72 hours.

Further reading

Exporting goods abroad: A complete guide for small businesses – In this article, we present the main considerations for a business looking to break into international markets – and look at two businesses that found success in exporting

How to avoid paying £130,000 in VAT registration fees if you export to EU – UK small businesses face having to register for VAT in each EU country they sell direct to, which could cost tens of thousands of pounds for the privilege of paying tax in Europe

Top five tips for SME exporters in a post-Brexit world – We share the top five exporting tips after leaving the EU

The post Export Support Package – what is it and how do I apply? appeared first on Small Business UK.

There is no such single tax as import duty: what there is are different taxes and duties, including Import VAT and Customs Duty.

Import VAT, Customs Duty, Excise Duty

If you purchase goods from abroad into Great Britain (England, Scotland and Wales) and Northern Ireland from outside the UK and EU, you may need to pay a number of different taxes and duties, depending on the nature of the goods and where you purchased them from.

In the UK there are three main forms of import taxes that may apply: Import VAT, Customs Duty, and Excise Duty. Depending on the nature of your imports, you may need to pay one, or in some circumstances, multiple taxes.

Import VAT

As a result of Brexit, the UK is now out of the EU Customs Union and VAT regime. This means goods being imported from the EU into Great Britain (GB), face new customs declarations, inspection, and Import VAT obligations.

Northern Ireland however has a unique position, as it is treated as being part of the EU for VAT purposes for supplies of goods. This means that instead of Import VAT being due, acquisition VAT is self-accounted for by the customer on imports of goods from EU countries into Northern Ireland.

In addition, there is no customs duty on goods between the EU and Northern Ireland (and vice versa).

Import VAT requirements

If you are importing goods from abroad, the standard value VAT rate of 20 per cent needs to be paid if their value exceeds £135 (excluding transport and insurance costs and any other taxes and charges identified by the customs authorities).

Where the sale is made to a consumer in the UK, VAT for goods valued below this threshold is charged and collected at the checkout by the seller.

In instances where a sale for goods below the threshold is made to a business, it is then the customer who is responsible for self-accounting for Import VAT through its VAT return as a reverse charge.

HMRC’s Integrated Tariff tool sets out the classification of goods and the rates of duty in detail.

How much extra you could be charged depends on the total value of your order. Also known as the consignment value, this is the price of the goods you’ve purchased excluding the shipping and handling costs. How much you pay also depends on the firm you’ve bought from.

In some cases, because delivery firms have paid shipping and import costs, you may be asked to pay additional fees by the couriers delivering your items.

If you must pay VAT to the delivery company, it’s charged on the total package value, including:

• Value of the goods
• Origin of the goods
• Classification of the goods

Paying import VAT

To help avoid goods getting stuck at the border, you will need to plan how you wish to settle UK Import VAT for the first time. This will also help make sure you avoid losing it as an unrecoverable cost.

There are several options depending on the value of the goods, the type of customer (B2B or B2C), and who is the importer of record (the consignee who acts as the named importer):

Have your customer pay under Delivered At Place (DAP) Incoterms

However, where the customer is a private consumer (B2C) and the goods are below £135, this is not an option as there is a requirement for the seller to register for VAT and charge VAT at the point of sale. Many B2B customers may accept this model if they are aware of their responsibilities and there are no hidden costs e.g., customs duty due. For goods over £135, consumers will be unlikely to shop with you again if they are hit with an unexpected and unwelcome Import VAT and customs duty bill.

Pay at Customs via your freight, shipping, or delivery agent

If you are paying VAT to the delivery company, this will generally need to be paid to the delivery company either before the goods are delivered or when you collect them.

Defer the import VAT payment via Postponed VAT Accounting in your UK VAT return

Whichever route you take, it’s important to ensure that you retain the necessary evidence of the import VAT paid so you can recover it from HMRC. This is a C79 document for instances where Import VAT has been physically paid where you are the importer or the Postponed VAT statement where you are the importer and have opted to use Postponed VAT Accounting.

Do I have to pay import VAT straight away?

In January 2021, at the end of the Brexit transitional period, the UK introduced an option for UK VAT registered businesses to defer paying Import VAT when goods are imported into the UK and instead apply a reverse charge (a self-assessment with a simultaneous input tax deduction) in the UK VAT return.

Key features of Postponed Import VAT Accounting (PIVA) are:

• All UK VAT registered businesses can use PIVA – both UK businesses and foreign companies
• No bank or financial guarantee is needed
• No need to obtain or use a duty or VAT deferment account
• Sign up to the Customs Declaration Service (CDS) online just once
• Option to postpone UK Import VAT by using PIVA on each customs declaration
• UK VAT number and Economic Operators Registration and Identification number (EORI) quoted on declaration together with a code triggering PIVA
• Monthly PIVA statements will usually be available to view and download as PDF documents by the sixth working day of the month
• Businesses will take the value of postponed Import VAT shown in the PIVA statement and self-assess that amount as a reverse charge in the VAT return
• HMRC will only show import statements in the online VAT account that are dated within six months from the date of being published.

If you do not have the support of a third party, you will need to work closely with your customs agent who will need to support you by providing you with the documentation you need in order for your accountant to factor in VAT on your VAT return and reclaim the import VAT as input tax in the same return.

Low-value consignments

If you are importing goods below the £135 threshold, you may already have been charged VAT as a seller.

The rules for collecting VAT on low-value shipments coming into the UK depend on who the buyer is. Since the Brexit transition period ended, the Low-Value Consignment Relief (LVCR) was a type of tax relief for import VAT which applied to shipments with a value worth less than £15. Since the UK left the European Union, this threshold has been lifted to £135: for both businesses and regular customers.

Under current low value import rules for shipments directly to consumers:

• Imports directly to consumers (B2C) should pay VAT at the point of sale for shipments worth less than £135
• The seller is responsible for charging VAT on the sale

If the shipment is worth more than £135, the customer will pay import VAT and duty at the border as detailed above.

For low-value goods, sellers do not need to register for UK VAT and VAT does not need to be displayed on the customs invoice: however, the customs invoice must show the value of the consignment to be higher than the £135 threshold.

It is also worth noting that there are different rules when selling to UK businesses, or through an online marketplace. Where UK customers buy goods from overseas via an online marketplace (e.g. Amazon), VAT is paid at the point of sale – responsibility to collecting and paying VAT sits with the marketplace: not the individual seller.

For business-to-business sales (B2B), low-value imports made by UK businesses the following applies:

• VAT does not need to be charged at the point of sale as long as the following apply:
  • The buyer is a UK registered business
  • The goods are bought from another business which is overseas
  • You import those goods into the UK
  • The shipment is worth less than £135

Import VAT checklist

• VAT on imports is generally charged at the same rate as for domestic sales in the UK
• You can usually self-account for import VAT on your VAT return by using Postponed Import VAT Accounting. This means you do not need to pay the VAT upfront and then recover it
• You must have an EORI number and include your VAT registration number on any customs declaration and opt to use Postponed Import VAT Accounting
• If you are not registered for VAT, or the goods are not for business use, you must pay import VAT and cannot reclaim it

Avalara’s Guide to UK Postponed Import VAT Accounting is a handy reference to make sure you have all that you need.

Customs Duty

For businesses based in Great Britain, Customs Duty applies in cases where the total value of the consignment (not each individual item) is valued at more than £135 entering from anywhere outside the UK. For businesses in Northern Ireland, Customs Duty applies for goods entering from outside the UK and the EU.

The fee can range from 0-25 per cent depending on the classification and origin of the goods you’ve bought.

Correct Classification for your goods

To help make sure you are paying the correct rate of customs duty on your imports, you need to be aware of the correct commodity codes (also known as Harmonized System (HS codes). These codes are designed to make sure the correct rate of tax is being paid as well as to help keep goods flowing freely across borders.

>See also: The essential guide to commodity codes and HS categories

Harmonized System codes

Harmonized System (HS) tariff codes are used globally for the uniform classification of goods and as the basis for Customs tariffs and duty across the world. Every five years, the World Customs Organization (WCO) reviews and updates HS codes so it’s important these are regularly reviewed.

Commodity System codes

A commodity code is the EU and UK custom’s HS tariff code system to classify goods being imported. You’ll be asked for a commodity code for your customs declaration to work out the rate of duty you need to pay.

You can use the UK government online Trade Tariff service to look up commodity codes. This tariff also sets out the Import VAT rate too.

Whether you are an importer, exporter or involved in cross-border transactions, you will need to use the right codes for your products to pay the correct duties and taxes. Using the incorrect codes can cost your business money.

Rules of origin

The EU and UK have agreed a system of nil or preferential customs duties (tariffs) for goods that comply with the ‘rules of origin’ from 1 January 2021 in their Trade and Cooperation Agreement. This means for most goods shipped between the EU and GB (and vice versa), there is zero customs duty levied if products have been largely produced and manufactured in the EU, or GB where goods are sold into the EU.

For the rules of origin to apply, goods must largely originate from the respective countries. Proof of the origin and claims in customs declarations must be made to support this. Importers must be also able to properly classify goods with UK and EU commodity codes. Failure to comply with this will mean EU or UK import tariffs will still apply.

Currently most goods imported between EU and UK are nil rated for customs duties. Customs charges should not be applied to products of EU origin, due to the rules of origin agreement between the UK and the EU.

Excise Duty

Excise Duty designed to limit the consumption of products that are seen to be damaging to the environment or to consumers’ health (for example, alcohol, tobacco, or fuel products).

Plastic Packaging Tax

There is a global trend for governments to introduce green and ecotaxes to promote sustainability, encourage recycling and reduce pollution and waste. The UK introduced on 1 April 2022, Plastic Packaging Tax (PPT) that applies if goods contain a greater weight of plastic than any other component. This could include drinks bottles, bubble wrap and bin bags.

How to pay import duty

If you need to pay customs duty, the payment process is usually handled by the freight agent, courier or delivery service handling your goods. They should contact you to explain how much is due and your payment options.

If your customer is a consumer (B2C) and Import VAT and customs duty hasn’t been paid at the border already, they will be contacted by Royal Mail, Parcelforce or your courier company and presented with a bill stating exactly which fees they need to pay to receive the goods.

They’ll normally hold the goods for around three weeks. If your customer has not paid the bill by then the goods will be returned to sender.

Claim import duty VAT or customs duty refund

You may be able to defer, suspend, reduce or reclaim VAT on goods you import. For instance, if you’re VAT registered you can claim VAT back on goods you’ve imported with an Import VAT certificate C79. Where you have opted to use PIVA, you will reclaim the VAT in the VAT return when you account for the Import VAT. The reverse charge will produce a nil net effect in the VAT return.

Where you have sold goods to UK consumers and the goods have been imported from outside the EU and are below £135, as VAT would have been charged at the point of sale (and not at the border), this VAT can be refunded to the customer and the business through the issue of a credit note which is then processed through the VAT return.

You may be able to claim a refund from HMRC for example if you’ve paid the wrong amount of duty or rejected imported goods.

Seeking a refund on the VAT and import charges paid may be difficult though. To claim a refund on customs duties for goods that you have returned you’ll need to fill out different customs forms based on the courier that delivered your items:

Download and fill in:

• Returns Goods Information Sheet
• Returns Good Relief Claim Form C1314

• form BOR 286 if Royal Mail or Parcelforce delivered the goods
• form C285 if a courier or freight company delivered the goods

Unfortunately, it is unlikely you will be able to reclaim courier handling fees or the cost of sending goods back if you’ve paid to collect them.

In summary, keep good compliance records for all your imports to help you with customs duty or if you need to reclaim the goods.

Alex Baulf is senior director of global indirect tax at tax compliance solution Avalara

Further reading

Import guide: three essential tips and everything you need to know

The post Import duty explained appeared first on Small Business UK.

If you want to move goods into the UK, it’s important to understand how various payments are calculated and how they are paid as the classification and origin of the goods will affect the amount of import duty and VAT you pay.

Classification of goods

The Trade Tariff look-up page available on the Government’s website is a great reference to help you classify goods by giving you the information you need for importing and exporting goods in or out of the UK.

You should also see our guide to commodity codes and procedures that will enable you to complete your Single Administrative Document (SAD) for importing and exporting goods.

>See also: How to import plants into the UK

To classify goods, you’ll need a Commodity Code so that customs can apply the correct rates of duty and Import VAT. These are listed in Volume 2 of the Tariff.

Your SAD must also show the accurate value of your imports. This value is used to calculate any duty or VAT liability. If your invoice is in a foreign currency the invoice value must be converted to sterling.

If you import from certain countries outside the European Union (EU), you may be able to benefit from Import Preference. This scheme allows you to import goods originating from these countries with a reduced or nil import duty rate. To qualify, it must be clear that the goods have originated in a country with preferential import status. Proof of preferential origin is issued in the country of origin and submitted in the country of import.

Additional duties

In some cases, you may have to pay additional duties. This might apply in instances where the UK decides that products from certain countries are being sold at such a low price as to be damaging to British industry.

Deferment Accounts

Where there are significant amounts of customs duty and import charges to be paid, businesses could consider using a Deferment Account for both customs duty payment and clearance of goods. A deferment account lets users defer paying the importation levies until a prescribed payment day.

To open an account, you’ll need to supply financial security to cover every sum you defer up to an overall maximum amount in any calendar month. Your agent can also use a deferment account on your behalf.

>See also: How to import from Turkey to the UK

At the end of the Brexit transitional period, the UK introduced an option for UK VAT registered businesses to defer paying Import VAT when goods are imported into the UK and instead apply a reverse charge (a self-assessment with a simultaneous input tax deduction) in the UK VAT return. In this case, businesses may not need to use a deferment account (either their own or their agent’s) to secure or pay Import VAT.

You are likely to be using the services of a freight forwarding agent. It would be helpful to talk to them as they will be able to provide further practical information.

Alex Baulf is senior director of global indirect tax at tax compliance solution Avalara

More on importing

Importing wine from abroad

The post Import duty and zero VAT rated goods appeared first on Small Business UK.

If you’re thinking of starting up a plant business, you may well have to import them.

It’s not just a simple matter of ordering the plant and waiting for it to arrive, either. You’ve got some protocol to follow.

The following guidance covers England and Wales. Scotland’s rules are a bit different. For contact details and more info on plant imports in Scotland, read over the Scottish government’s plant health guidance.

As for importing to Northern Ireland, there are no changes to the way plants are imported from non-EU third countries to Northern Ireland. Imports can continue in the same way as before.

But if you’re importing to Great Britain, the guidance differs between importing from EU and non-EU countries so be careful when filling out forms.

Before we begin, note that import controls on EU goods to Great Britain planned from July will not be introduced in 2022. Controls that have already been introduced will remain in place. Dates for new import controls will be coming in autumn 2022 – keep up with the government website for more.

What counts as a plant?

According to government guidance, ‘plant’ means a living plant or a living part of a plant at any stage of growth. This includes trees, shrubs and seeds. A ‘plant product’, meanwhile, is a product of plant origin that is unprocessed and has had a simple preparation, including wood and bamboo.

What do I have to do to import plants?

Sally Cullimore, technical policy manager at the Horticultural Trades Association (HTA), told Small Business: “Importing plants is complex and highly regulated, so The Horticultural Trades Association recommends that any business considering importing plants or plant material registers with their relevant Plant Health authorities first to obtain advice and legal guidance.”

Now for the need-to-knows. From January 1 2022, the following regulated and notifiable goods imported from the EU (except the Republic of Ireland) must go through plant health controls:

• Growing medium attached to plants
• Root and tubercle vegetables
• Some leafy vegetables
• Some fresh produce (fruit and vegetables)
• Some seeds, in addition to those on the high-priority list
• Some cut flowers

A full list of regulated and notifiable goods can be found on the Plant Health Portal.

The high-priority goods list includes:

• All plants for planting
• Ware potatoes
• Some seed for sowing and other plant or forest reproductive material
• Some wood and wood products
• Used agricultural or forestry machinery

There is a set of steps you need to follow if you import high-priority goods. You can find them here.

What documentation do I need?

If you are importing ‘regulated and notifiable’ plants and plant products from the EU (excluding Ireland), Liechtenstein and Switzerland to GB after January 1 2022, you will need to pre-notify them. The likelihood is that you’ll be registering for IPAFFS – more on that in a moment.

‘Pre-notification’ means giving advance notice to the responsible authority for goods that arrive in Great Britain. You must give notice:

• At least four working hours before the goods land in Great Britain, for air and ‘roll-on-roll-off’ freight
• At least one working day before goods arrive in Great Britain for all other freight

Failure to give enough pre-notification notice means that your consignment may be held until the requirement is met. It could also result in your consignment being destroyed.

After you’ve pre-notified, you’ll receive a message on the relevant IT system to say if your goods need any checks.

Those importing from the EU will need to meet their customs requirement as well as having an EORI number.

>See also: EORI number: What it is and how to get or check one

You’ll also need a phytosanitary certificate.

Do I use PEACH or IPAFFS?

If you are new to the process of pre-notifying your goods, register for and use IPAFFS (Import of Products, Animals, Food and Feed System). If you are currently using PEACH for EU pre-notifications (that’s Procedure for Electronic Authentication for Certificates from the Horticultural Marketing Inspectorate – you can see why it’s shortened), please continue to do so until directed to move to IPAFFS. 

What is a phytosanitary certificate?

A phytosanitary certificate, which is what the UK requires since leaving the EU, is needed for each consignment from the plant health authority in the country where your supplier is.

It’s a statement from said authority that the plant has been officially inspected and complies with standards to come into Great Britain and is free from quarantine pests and diseases. The inspection must be done no more than 14 days before the consignment is dispatched from the country where your supplier is. Someone at the inspecting plant must have also signed it within the same 14-day period.

You don’t need a phytosanitary certificate to import these plants into Great Britain:

• Fruit and vegetables that have been processed and packaged such as salads, sandwiches and frozen material
• Composite products such as nut or seed butters that contain processed fruit or vegetables
  

These unregulated plants and plant products do not need to go through any plant health controls and won’t need a phytosanitary certificate:

• Pineapple (fruits of Ananas comosus)
• Kiwi (fruits of Actinidia spp. Lindl)
• Coconut (fruits of Cocos nucifera L)
• Citrus (fruit and leaves of Citrus spp. L.)
• Kumquat (fruit of Fortunella spp. Swingle)
• Bitter orange (fruit of Poncirus L. Raf)
• Persimmon (fruit of Diospyros spp. L.)
• Durian (fruits of Durio zibethinus Murray)
• Cotton (bolls) (fruits (bolls) of Gossypium spp.)
• Curry leaves (leaves of Murraya spp.)
• Banana and plantain (fruits of Musa spp.)
• Mango (fruits of Mangifera spp. L.)
• Dates (fruits of Phoenix dactylifera L.)
• Passionfruit (fruits of Passiflora spp. L)
• Guava (fruits of Psidium spp.)
• Any fruit and vegetables that are processed and packaged (for example, soups, salads, sandwiches, frozen material)
• Composite products such as nut or seed butters that contain processed fruit or vegetables

It may be possible to import prohibited goods into Great Britain with a scientific licence, if they satisfy criteria. Take a look at the government’s website for more.

Phytosanitary certificates have a ‘quantity declared’ section which may trip you up. Just remember to measure the quantity of flowers by their stems. Meanwhile, quantities must be stated in kilograms (kg) for fruit, vegetables, soil and branches which have foliage, potatoes, grain and the following plants for planting: bulbs, corms and rhizomes, plants in tissue culture and seeds. As for any other plants for planting, the quantity has to be listed as the number of items in the consignment.  

If you’re importing from the EU and need a phytosanitary certificate for your consignment, check that your EU exporter has issued a phytosanitary certificate before it arrives in Great Britain. Make sure you get a scanned copy from your exporter.

When and where do I submit the phytosanitary certificates?

Within three days of your consignment reaching Great Britain, post the original phytosanitary certificate to your animal and plant health agency (APHA).

For consignments landing at Heathrow or Gatwick, send the certificate to:

Animal and Plant Health Agency
1st Floor
Building 4
Heathrow Boulevard
284 Bath Road
West Drayton
Middlesex
UB7 0DQ

For consignments landing anywhere else send the certificate to:

Animal and Plant Health Agency
Foss House
1st Floor
Kings Pool
1-2 Peasholme Green
York
YO1 7PX

Get in touch with the Forestry Commission for orders of wood, wood products or bark. Your local forestry inspector will agree with you which address you need to send the phytosanitary certificate to.

What if the consignment fails?

If all or part of your consignment fails, an inspector might be able to advise you on what to do to help it pass. If your inspector decides that the failed goods pose a risk to plant health, they could destroy your goods or ask you to return them. If you need to return goods to the EU, they’ll be considered an export. You’ll need an exporters licence for that.   

Do I need to worry about plant passports?

After your shipment passes plant health controls, you can move it on. You will need a UK plant passport for movement of goods from the first place of destination if:

• They are moved to another professional operator
• They are sold to final users (those buying for personal use) under a distance contract such as buying online
• They are moved to another one of your premises that is more than ten miles from the premises the consignment arrived at
• The phytosanitary status of the consignment changes – for example, if it is reconfigured, such as two plants previously in separate pots planted up in a new pot together

The EU plant passport is no longer recognised in Great Britain. UK plant passports have replaced EU plant passports but even then, plant passports are only really issued to professional operators.

If you import goods from a non-EU country to Great Britain via the EU, your goods could be treated as an EU import. While in the EU, they must have:

• Entered into free circulation
• Passed EU plant health checks

They will be treated as a non-EU country import if they didn’t enter into free circulation or pass plant health checks in the EU.

Fees and charges

You’ll have to pay fees for each consignment imported from a non-EU third country. Inspection fees for documentary and identity checks are split.

How much you have to pay for imports to England and Wales will depend on the type of plant material as well as its risk level.

If you’re importing from the EU and your shipment needs plant health checks, these fees will apply:

• Documentary checks. You have to pay £5.25 in England and Wales. This fee applies to all regulated plants and plant products, including those on the high-priority list
• Identity checks. How much you have to pay in England and Wales will depend on the type of plant material you import, including its risk level
• Physical checks. How much you have to pay in England and Wales will depend on the type of plant material you import, including its risk level

Check out this link for more about risk levels and the associated inspection fees for EU imports that apply in England and Wales.

I need help

Ring the HMRC helpline 0300 322 9434 Monday-Friday 8am-10pm and Saturday-Sunday 8am-4pm if you need more guidance.

For more information on plant imports in England and Wales, email planthealth.info@apha.gov.uk or phone 0300 1000 313.

To learn more about physical checks and importing goods with wood packaging material, check out the government guidance on importing plants from EU and non-EU countries.

Case study: Joe Thompson, Underleaf

Small Business spoke to Joe Thompson, director of operations at Underleaf. The company purchases lots of indoor, tropical and subtropical plants along with lots of planters and associated materials, plus items such as special wheels for the pots.

He explains why importing plants has become more difficult in recent years.

Where do you get plants and plant products from?

We purchase from various different suppliers, but most comes from one supplier in Holland. We get the odd Mediterranean plant from Holland as well.

The supply chain is really interesting. We purchase lots of plants from suppliers in the UK, which originated in Italy in Spain. They’ll come with plant passports, but we won’t have to deal with the import processes for those. We also buy planters and pots, which will originate in China or Vietnam that will come through Europe. Some of those will be subject to import tariffs.

All indoor plants come through Holland, the biggest hub in the world. They’ll be buying from Spain and Italy or importing from Costa Rica. Some of those people further down the chain will also be having to produce the passport.

We have to be registered with Defra (Department for Environment Food & Rural Affairs) for various numbers that we need to have. That gives us the right to import these items.

Why do you advise small businesses against importing plants?

It’s really costly. Part of the issue is we getting our heads around all the costs that are associated with importing, because it has become very complicated. We now have to pay VAT on these items. You have to have a VAT deferment account in place with HMRC to be able to manage that process. If you don’t have one of those accounts, which we don’t, because we don’t know how to set it up as it’s too complicated, then we use the VAT account of an import agency, who will then charge us for that service.

Duty’s different for different products. There’s a lot ambiguity. The agency that is organising that on our behalf charge us for that privilege. There’s a cost to having everything inspected, which is undertaken by our supplier and depends on the product that you’re importing.

Then we’ll pay double, because then Defra will charge us for inspection, once the goods get to the UK. That’s particularly painful. The feeling we got was that we got a bit clobbered when new regulations came in this year, and the agencies are doing on our behalf. We’re getting to grips with all of these new regulations and I think they then charged us for the extra time [they spent].

Then the other issue is that we have to now have the addresses associated with our PEACH account. Every time we’re importing, we’re paying £35 for that shipment to be registered. We could just do it ourselves, but we don’t really have the know-how or the resource. At some point, when we have some time, we’ll look into it and see if we can bring some of this process in-house because I just know that we’re getting hammered left, right and centre by all these different agencies. The sooner we can do it ourselves, really, the better.

What other issues have you encountered?

We had so much flexibility before. So firstly, the time that it took to get things was much reduced. We could place an order and get something two days later. Then if there was a problem with that order, we could send it straight back, you just refused to take it. That’s not possible now because we have to be a registered exporter in order to send something back. This has horrendous consequences for us. We were doing a project up in Scotland, which was a massive project for us, and all of the plants for that project got sent to London – two months early. So suddenly, we had £5,000 of plants that we had to find a space for. Unless you’ve got really good greenhouse conditions, the quality of those materials decline so quickly. So, we had to deal with all these plants that we couldn’t send back and our supplier was just shrugging shoulders. So yeah, a lot of consequences like that.

Roughly, how much do agencies charge? Where do you find such an agency?

The agencies have just been given to us by our suppliers. Our supplier was very good in that they managed the whole process on our behalf. We just went with it, because we couldn’t not get our plants – that would have been catastrophic. But we’re just getting to grips with how much they’re charging. It could be between five and ten per cent. It’s opaque because different products have different levels of duty and that’s not really broken down clearly. So yeah, we haven’t quite worked that out yet.

It’s been like an avalanche of paperwork. We’ve been receiving invoices left, right and centre. And you think, well, it’s very important to understand what you’re getting charged for. But we’re firefighting on so many different fronts, so it’s lower down the list of priorities. We were just getting through the few months, what we were focused on. Now it’s at the back of our mind, we really need to get to grips with it to find out what they charge.

What’s been the biggest change post-Brexit?

The flexibility was a big one, because we could place an order and receive it two days later. If clients had last-minute requests, we could fill them quite easily. We could normally just add something onto another delivery. First of all, we had more deliveries, because we’re now in a position where you have to spend the minimum amount which is much, much higher. We could spend £1,000 and it wouldn’t be a problem. Now if we place an order of £1,000, we’re going to lose money on it. I think our business developed because we were so flexible, and we were able to deliver things very quickly for our clients as a lot of our projects time are time-sensitive.

We had lots of difficult conversations with clients where we say, “Things are different now – you have to give us a lot more warning.” Also, that poses logistical difficulties, because it’s a lot easier to deal with £1,000 order in terms of taking it in and stocking whatever you’re doing. Having double or triple that takes more organisation and more space. So yeah, that’s one main area that’s really got a lot harder.

The supply and demand has been very difficult. That’s partly because of Covid. There are certain plants now that we can’t get hold of because they’re subject to different restrictions. And so there’s one particular plant, a staple of ours for lots of projects, and we used to be able to get those in from Spain or Italy, but we can’t get them anymore because they don’t have the plant passports.

We used to get plants delivered directly to sites where we were going to use them. But now because you have to register the address of that site a week in advance, it sometimes doesn’t line up properly. More and more, we’re taking deliveries in to where we have our basic operations. And then we are taking those plants ourselves to the site in question. So that’s incurring more delivery costs there as well.

Are you using more British plants and products now, as was the general expectation when we left the EU?

The Dutch have ruled the world when it comes to plants. There’s no way that the UK could match up to their expertise and their infrastructure. We’ve thought about whether it would make sense for us to have a nursery in the UK, but the cost associated with it – you need massive investment just to get started.

The cost of setting up a proper greenhouse is astronomical. You can do it on a small scale and be a specialist producer. But if you’re doing it on a scale then that could potentially be millions and millions of pounds.

Obviously, there are those places like flower markets where lots of people will go, and I guess for smaller businesses, they’ll do. But then there’s another step in the chain and what tends to happen, obviously, the cost doubles and the quality isn’t as good, which is why we import. They’re buying from other suppliers that maybe aren’t as good and buying in volume and may be holding on to them longer so they may be deteriorating and possibly buying them from sources which aren’t as good, getting them at a lower price.

The New Covent Garden Flower market (wholesaler) is very accessible for all sorts of people, both businesses and end consumers. We don’t tend to buy indoor plants there but if small businesses want to avoid the rigmarole of importing plants from Holland, it’s a good place to go. My recommendation would simply be to check quality carefully before buying.

Another channel is the SE Asian growers that send plants in the post. A lot of them sell on Instagram and Etsy but it’s a very risky business so I would avoid buying any so called ‘rare’ plants from those sorts of sellers.

>See also: 4 steps to help your small business grow on Instagram

What common mistakes do small businesses make when importing plants?

I know the mistakes that we make – our retail business doesn’t make any money at all. I have a feeling that there are a lot of others like coffee shops, though dozens and dozens out there, they’re probably not making that much money. There’ll be a person that is putting every hour of their life into it. They’re enjoying it, but not really making any money.

My feeling is if you want to be successful, then you have to be really disciplined and keep your range narrow. You should probably figure out how to make online work. You can lose a lot of money on plants, they deteriorate. It’s hard to keep plants looking good for any length of time, you really have to know what you’re doing and have good conditions. Although you can have some plants sitting in the shop for months, I think in a lot of cases after a week, after a couple of weeks, they’re not going to look very good. You’re going to lose a lot of money on waste.

What we specialise in, or what we focus on, is really knowing your plants and being able to recommend the right plants to the right place. That’s important. There are a lot of businesses that just kind of churn out the same plants and treat them like flowers for so you can keep them for a month or two and then just replace them. I think people are getting more and more concerned about where plants are coming from and working on supply chain procedures. I guess it’s the same for many businesses – just be passionate about what you do. Let that passion shine through to your customers.

Read more

Import duty explained

The post How to import plants into the UK appeared first on Small Business UK.

For centuries, Turkey has been a trading power linking Europe and Asia with its ideal transcontinental location.

Today, the country enjoys close trading ties with the UK. In 2021, the total trade in goods between the two countries totalled £18.1bn, an increase of 20.2 per cent on 2020’s figure of £15.1bn, according to the Department for International Trade.

Of this £18.1bn, the UK imported £11.6bn over the 12-month period – a 26.8 per cent increase on the year before, meaning Turkey ranked as the UK’s 14^th largest import partner, accounting for 1.8 per cent of UK imports, while the UK is Turkey’s second largest export market.  

What to import from Turkey

Turkey’s biggest exports to the UK were: vehicles other than cars, which accounted for 18.5 per cent of all goods imported to the UK (£2bn), clothing, electrical machinery, cars and miscellaneous electrical goods.

Of all UK imports from Turkey, the majority of trade were goods (92.4 per cent).

In 2020, around 11,800 UK companies imported goods from Turkey (around 4.7 per cent of UK companies importing from around the world).

Free Trade Agreement between Turkey and UK

In 2021, the UK signed a trade agreement with Turkey, along the lines of a traditional free trade agreement to allow trade between the two countries to remain uninterrupted post Brexit. Preferential tariff rates apply to trade between the two nations.

The trade agreement includes:

• Provisions on preferential tariffs
• Intellectual property
• Competition
• Dispute settlement

It was reported that without a deal, 75 per cent of goods imported from Turkey would be subject to tariffs, amounting to a loss of £2bn in 2021.

How to import from Turkey to the UK

#1 – Complete a customs declaration form

It is compulsory to have customs forms attached to all goods arriving to the UK from abroad. This will declare any goods you’re bringing into the UK and what it’s worth to HMRC. You can get a broker to sort the customs declaration on your behalf.

#2 – Get an EORI number

When importing from Turkey, you’ll need an EORI number. This will start with GB (or XI in some cases in Northern Ireland). If yours doesn’t, you’ll need to request a new one. You can register for an EORI online, and you’ll receive it within a couple of days.

>See also: EORI number: What it is and how to get or check one

#3 – Comply with rules of origin

You must declare you hold proof goods comply with rules of origin so you can benefit from any preferential tariffs. Rules of origin state where goods originate from, which may not be from the country you’re shipping from, and which are covered in trade agreements.

The gov.uk site provides the specific wording you can use for a declaration of origin. You will need to date and sign this.

Check also that the company exporting is permitted to export to the UK.

#4 – Complete an import declaration

You will need to include the customs procedure code, declaration unique consignment reference and commodity code in your import declaration. Commodity codes disclose how much duty your business needs to pay and if you need an import licence. You can match your goods to the correct code using the trade tariff tool on the gov.uk website.

>See also: The essential guide to commodity codes and HS categories

Some goods, like plants and animals, are likely to also require a special certificate.

#5 – Pay duty and VAT to have your goods released by customs.

Freight options

You can receive your goods from Turkey via air freight, shipping or via the road.

Air freight is the quickest, but also most expensive, option. It will take between two and three days to receive your goods using this method. Sea freight can take between nine and 19 days whereas land will take up to 40 days.

Road haulage is the typical route to importing goods from Turkey, though freight forwarder and shipping agency Good Logistics advises using sea freight to ensure goods arrive in the best condition.

Costs from Turkey to the UK (via DFS Worldwide):

Sea freight: 1cbm (cubic metres) £98, 5cbm £356

Air freight: 50kg £98, 100kg £140, 300kg £380

Road freight: 1cbm £206, 2cbm £249, 10cbm £420 (converted from euros)

Where can I get help?

There are customs agents able to help with importing documentation. Agents like Clearlight Customs, The Customs People and Customs Support can ensure you pay the right amount in duty and tax, to avoid the chance of paying a fine further down the line.

Similarly, there are shipping specialists like Good Logistics to help you save time by managing your supply chain. For any other queries about trade, you can contact the Department for International Trade (DIT).

More on importing to the UK

Import guide: three essential tips and everything you need to know

The post How to import from Turkey to the UK appeared first on Small Business UK.

With industry experts claiming that exporting goods abroad makes small businesses more competitive, innovative and productive, winning trade overseas is a key way for companies to kickstart growth and prosper in the marketplace.

But how can small businesses crack international markets? Given the various demands companies need to satisfy to ship their products abroad, expanding can often be a complex and time-consuming process.

For business owners in pursuit of global opportunities, research into the key principles and legislation of exporting is vital in getting a firm grasp of the current marketplace and the scope for expansion. This guide looks at the dos and don’ts for trading overseas and offers practical insight for small businesses preparing to ship their products abroad.

Export changes after Brexit

From January 1 2022, exports between Great Britain and the EU are subject to full EU custom controls.

This means that traders must submit declarations on all goods that they export and that everything must be presented to customs. The declarations must be entered into HMRC systems to check if any further checks are required. Note that you can check if you can pay a reduced amount of duty or delay customs and declarations.

Generally speaking, you’ll need an EORI number and, as it’s such a lengthy process, it’s wise to find someone who can do your export declarations. On top of that, a customs representative can help you avoid additional customs duties and stop you from falling into fraudulent activity.

>See also: EORI number: What it is and how to get or check one

Remember that you’ve got to be able preserve certain records so that you can present them to HMRC upon request. If you’re VAT registered you must keep records and accounts and you must declare any goods that you move and keep records. You’re required to keep records for all traded goods for four years.

There’s loads of valuable guidance on the government website around exports and customs for business.

If you’re exporting to Northern Ireland, register for the Trader Support Service which will help you navigate changes in the Northern Ireland Protocol.

Before you decide to export anywhere, make sure you’ve considered the following:

• Companies that have a good track record for exporting are already successful in the UK. Think carefully about exporting unless your company is enjoying increasing sales at home.
• Conduct research into whether your competitors in the UK are already exporting, as well as who your local competitors would be in new markets.
• Assess whether your exporting objectives clear and measurable.
• Investigate whether the demand for your product exists abroad.
• Evaluate if your company has the financial resources for additional market development and additional human resource to satisfy an increase in product demand.
• Consider the standard practices in the countries you are exporting to and the current marketplace – getting local knowledge will be invaluable when you come to launching your products internationally.
• Consider if you’ll need to visit the country you’re exporting to and how often.
• Make sure you understand the cultures and customs of the country you want to export to.

The risks involved in exporting

Exporting products abroad also poses financial, product and operational risks. Doing some simple research into the standard practices of the countries you are exporting to and making necessary precautions will ensure you can export your goods safely and hassle-free.

Here are the key issues to consider:

Protect your business from late (or no) payment. Insure against non-payment of export invoices. Alternatively, if you are concerned about your customers’ ability to pay, try and negotiate payment upfront or set up payment in stages.

For expert advice minimising financial risk, head to UK Export Finance.

• Fluctuating exchange rates. Your company’s profit margins can be impacted by dips in currency rates. Avoid this by matching the income you receive in a currency by your expenditure in that currency. It’s also common amongst UK exporters to borrow money in the country to which you are exporting, especially in the Eurozone where interest rates are lower.
• Consider opening a multi-currency account. There are ways to manage multiple currencies and receive international payments without overpaying on fees. Fintech companies are helping businesses save money when they buy and sell products abroad with their multi-currency accounts.
• Make sure your product is compliant. Check your product specifications against the regulations and standards of the country you are exporting to.
• Be vigilant about product quality. Some companies have to transfer manufacturing process overseas to meet a country’s regulations and standards. If you do this, stay close to the production process to ensure the standards don’t suffer.
• Check if you need a licence. If you are exporting machine tools, electronic equipment, computers, telecommunication equipment and related components you’ll need a licence. Contact the Export Control Organisation for more information.
• Make sure you’re covered. Although there is no legal obligation to do so, it’s best to insure your goods. Marine insurance is the general term used for cover against damage and loss for goods while in transit – whether by road, rail or air freight.  To protect yourself against credit risk, you should also insure your company against the commercial and political risks of not being paid under an export contract. You can read more about export insurance policies here.

Should I use a distributor?

You have the option of selling directly or using a distributor who can introduce your products or services in a different territory. A distributor (sometimes known as a dealer or a reseller) purchases goods from an exporter and has a ‘title’ of the goods purchased. The distributor then sells on the goods onto the final customers having added their profit to the price.

If you do decide on a distributor, the government advise that you to select the distributors rather than the other way around. Carry out an assessment before you commit to anything. The assessment should include their experience within your sector and what their reputation is like – try and talk to one of their existing suppliers if you can. Make sure you write up an agreement so that each party is clear on the other’s responsibilities. You might want to consider how your values align as businesses.

To find distributors, ask trade associations and other suppliers working within your sector. Once agreed, find out how your agent prefers to be contacted and keep in contact regularly.

Government support

Good news for companies expanding abroad – the UK government is urging businesses to pursue overseas trade opportunities and the Department for International Trade has a number of programmes to help with exporting goods:

Virtual events: These are aimed at agriculture, food and drink.
Local experts: You can contact your local trade office for support.
Funding: The Department for International Trade offers match-funded grants up to £9,000 to help you grow your international sales.

Alternatively, you can find specific exporting opportunities through the Department of International Trade’s website.

Practical advice

• Speak to SMEs at a trade show. there are regular trade shows and events which give you the opportunity to speak to a UK Trade & Investment expert, join seminars and practical workshops and speak attract prospective customers. The UK Tradeshow Programme provides grant support for eligible SME firms to attend trade shows overseas.  provides grant support for eligible SME firms to attend trade shows overseas. The Chamber Network runs hundreds of international trade events throughout the year. For full listings, you should check your local Chamber’s website.
• Help with trade documentation. The British Chambers of Commerce offers helpful guidance and training courses on paperwork for the movement of goods.
• Speak to a freight forwarder. Freight forwarders offer helpful advice and support with documentation as well as quotes for moving goods abroad. Increasingly freight forwarders offer digital platforms that are easy to use and enable SMEs to get rate quotes quickly, and book, pay and track ocean and air shipments around the world.

Case study 1: Robinson of England

Here, David Robinson, founder of furniture company Robinson of England, discusses how his business started and its journey into exporting. 

We specialise in the restoration and craftsmanship of the finest furniture. Our signature item is the quintessentially British Chesterfield sofa and chairs. We offer six bespoke crafting options, at varied price points, for each of the unique designs in our signature collection. Our emphasis on the importance of British craftsmanship and design has secured our business as one of the supreme manufacturers of bespoke furniture in the UK. Prioritising quality has regretfully become a rare concept in the world of furniture, but we remain passionate about the manufacturing process and continue to craft our furniture to the highest level– this passion has served us well.

Before Robinson of England was launched, I was working for a corporate investment firm to support another business venture I was pursuing – creating a lady’s fashion house. In 2002, aged 23, I began selling second-hand Chesterfield sofas on the side – I fell into the industry purely by chance, but fell in love with the industry immediately!

Falling into furniture

The idea came by chance; however, I began selling furniture after my mother acquired a modern Chesterfield suite, which didn’t quite suit her needs. I sold it to a pub, via a well-known auction site, and this is where my journey began. In the early days, I also dealt extensively in cars and motorcycles, while pursuing the fashion-house business, and then I added second-hand Chesterfields into the mix – it all grew from there.

The company’s revenue has been a rollercoaster ride over the years, having approached sales in a host of different ways. I have been down the route of stand-alone showrooms; and concessions in high-end department stores. While this created very good revenue, it was not necessarily the best option for business growth and development.

“One of my earliest export pieces was a 19th century Chesterfield sofa that was exported to the USA for use in Harvard University”

Currently, Robinson of England operates online only. Although, we still encourage clients to visit the workshop for a behind-the-scenes look at our unique methods of craftsmanship. I think operating online is the most suitable platform for our business needs as it frees up enough time for me to focus on larger client projects. For example, we have worked with some very high profile interior designers as well as large organisations, such as the Bank of England. Most of my time is spent building and retaining those important relationships.

Our current revenues are around £500,000 and for me, the most important thing is maintaining efficiencies.

The road to exports

I began exporting very early on in my career, so for me, the process is now relatively simple. In fact, one of my earliest export pieces was a 19th century Chesterfield sofa that was exported to the USA for use in Harvard University.

Despite my confidence in exporting, there are still obstacles. For example, we have had issues ranging from our goods being disembarked from ships to goods being held in airports, due to closures. We often face problems with goods being held in quarantine, documentation inconsistencies and customs regulations – you name it! The list of problems you can face when exporting is endless, however, if you have a good freight partner, you should be able to work around any situation.

How much of your business does export trade account for?

Export sales are a very important part of our business operations, in fact, in June 2018, 50 per cent of our sales are generated from overseas custom – everywhere from Brazil, to Switzerland! We do advertise in several overseas locations, as well as the UK, to support this revenue. We have our eyes firmly on expanding on this, we intend to explore more foreign markets and aim to support this custom by launching our website in different language.

The key things are to be knowledgeable about the rules and regulations of the different markets, to find a reliable freight partner, and to deal in a way that best suits yours and your businesses requirements.

Case study 2: Oxcloth

A focus on international sales right from the beginning can set a company up for export success. Sean Hammon, founder of clothing brand Oxcloth, discusses how this happened for his business.

Oxcloth is a premium clothing brand that specifically caters to muscular and athletic men who struggle to find high quality, well-fitted clothes. I launched the company in November 2016 with ten styles of shirts and four chinos. Previous to this, I was working for my family’s international nail and beauty company, working in the warehouse and taking sales calls. After facing some trouble with our current suppliers, I was presented with the task of starting up a manufacturing company to produce and supply the core product sold by the family business. The manufacturing company I started was going well, and within the next four years the new business had become well established, turning over £500,000 annually and produced private labelling to the industry’s top brands.

Once the new company was established, I felt it was time to take the next step in my career and start my own company in an industry I was very passionate about: bodybuilding. Since the age of fourteen I was a gym enthusiast, and while I was not the biggest guy in the gym, even I struggled to find shirts and trousers that fitted me properly. This lead to the concept of Oxcloth.

“I wanted Oxcloth to be recognised globally so international sales were going to be vital”

Knowing I couldn’t be the only one with these struggles, I began my market research and was surprised to see there were very few brands out there who offered true muscle fit clothing; having identified a gap in the market, this gave me the idea to become one of the first.

The company has turned over more than £95,000 since the launch and now supplies over 30 styles of shirts, chinos and jeans. Due to the size and growth of the fitness industry, I don’t see any foreseeable limits on potential turnover.

I was fortunate enough to be able to invest £30,000 of my own money that I had saved from dividends earned from my shares in the manufacturing business to start Oxcloth. The challenges of this came from having the discipline to save, knowing there was a possibility that I was about to invest my life savings into a business that could ultimately fail.

An export focus from the outset

The business really started exporting from the beginning; I wanted Oxcloth to be recognised globally so international sales were going to be vital. With such a unique business concept I felt it was important for us to become the brand for a market that we are essentially creating for ‘true muscle-fit’ clothing.

My online marketing strategy involved looking at the spending habits of our existing customers in different countries, to understand what advertising they responded to and what products were of most interest to them in order to identify sales opportunities overseas. It became noticeable that spending habits varied from country to country; in the US, for example, consumers seem to buy from retailers they can trust, and so it was important for me to ensure the brand was reputable. By reaching out to leading influencers in these regions, sales increased the more the brand was recognised. In Australia, however, we found a 5 per cent increase in conversions when a discount was offered. Identifying these opportunities helped to grow the brand overseas and increase our exporting.

Bodybuilding and the fitness industry has a larger audience overseas (the US, for example, has the largest number of professional bodybuilders) so I began to target these areas more closely, as well as branching out to neighbouring countries. The increase in sales and interaction helped to improve the profile of Oxcloth as an established, trusted retailer which in turn led to an increase in domestic sales here in the UK.

In the first month we launched, 32.5 per cent of total orders received were exported to five international countries. In sixth months, this had grown to 46.7 per cent, exporting to ten countries. After 19 months of trading, Oxcloth exported 49 per cent of total sales to 20 international countries. Now, we’re exporting to over 60 countries.

Social media boosting exports

The biggest attribution to our growth in exporting would be successful social media marketing campaigns. We understand our customer base and creatively narrow down our demographic and find these potential customers abroad through influencers and ads, coupled with a high-quality product and word of mouth, the growth has come naturally.

As an online retailer, the biggest challenge in the export market is the high cost of postage and returns. The best way we have learnt to deal with this is through excellent customer service and a unique sizing tool on our website that enables our customers to be sure of their size before purchasing.

“If you have the margins, target international customers; there is a big market out there”

For an online retailer, exporting isn’t as hard as you may think it is. Websites are open 24 hours a day, meaning your customers on any time zone can shop around the clock. Make sure your website is user friendly; having an automatic currency converter coded into your website will encourage customers to explore your products and make a purchase. Modern postage is also relatively inexpensive with fast delivery times meaning you can post products overseas from as little as £10 more per parcel than domestic rates. Ensure you have a clear returns policy for international customers, however; if you go for a 14 day returns policy, for example, this may not be practical if selling overseas, so be ready to adapt your policies for customers abroad.

Take caution, however, and expect to take a small hit in your profit margins if you offer free delivery or returns for all your sales, no matter where they come from. This is something that I felt was almost impossible not to offer when I launched Oxcloth, with competitors from all around offering competitive prices and promotions. If you have the margins, target international customers overseas; there is a big market out there and in order for your company to grow and expand, it is important to use modern day technology and resources to reach potential customers abroad. The positives of establishing yourself as an international brand, however, far outweigh this; expansion of your brand can only come from expansion into the wider world and exporting is fundamental to this. Be sure to stay on top of your paperwork! Keep your proof of export and stay organised – there is no reason why you can’t do it.

Further reading on exporting

• 5 things to remember when exporting for the first time

The post Exporting goods abroad: A complete guide for small businesses appeared first on Small Business UK.

Acquiring wine from, for example, Spain or anywhere else in the EU will give rise to a liability to account for both UK Excise Duty and VAT because such taxes are payable in the state of consumption.

When it comes to excise duty, any person importing wines for commercial purposes, other than on a casual basis, will be treated as a revenue trader for the purpose of the Customs and Excise Management Act 1979.

The amount of excise duty you pay depends on the strength of the alcohol and whether it is still or sparkling.

>See also: How to import from the EU

“As excise duties are payable in the EC state of consumption, the movement of the goods from Spain to the UK will require ‘close control’ during transit and up to the excise duty point. As a consequence the importer must be registered as a Registered Excise Dealer and Shipper (REDS) with Customs and Excise,” advises Stephen James, associate director of tax adviser and specialist WJB Chiltern.

He adds that once registered, the wine can be purchased under duty suspension in Spain, without payment of excise duty to the Spanish authorities.

“A document, known as an Administrative Accompanying Document (AAD) (which must be produced on demand to any revenue official) must accompany the movement of the wine. If you don’t have this, it may cause forfeiture of the consignment,” explains James.

>See also: How will Brexit affect my imports and exports? Where to find customs help

“In France, it might take 24 hours before they sign the paperwork,” Mike Overington from Dains Accountants says. “In Germany, they require 24 hours’ notice. Europe is difficult to say the least.”

Excise duty point

On arrival in the UK excise duty becomes payable at the excise duty point – normally when the goods are delivered for consumption. Alternatively, if the importer is an occasional importer the excise duty must be paid to Customs and Excise, prior to movement of the goods. A certificate of payment will then be issued and the transfer from Spain to the UK can be under cover of a Simplified Accompanying Administrative Document (SAAD).

“It is generally the case that wine would be put into a bonded warehouse, where the duty is suspended until such time as it is removed for consumption, in which case the excise duty point will arise.

“An excise approved warehouse may be used for this purpose or alternatively the importer could apply to Customs and Excise for approval to use his own warehouse. But this may prove to be an expensive option because of the security requirements for approval, and significant delays may be experienced before approval is given,” believes James.

“Once in the UK, you need an import document and a UK EORI number,” adds Mike. “If you’re VAT registered, that’s standard. If you’re not, you can still apply for an EORI.”

“Then, you need to get an agent and register for GVMS (Goods Vehicle Movement Service) – a traffic light system so HMRC can review entry, or you need an agent that has one who can then show it to HMRC.”

If you’re importing wine regularly, it is also best to get a deferment account.

“It’s a bit like a credit card,” explains Mike. “It’s requested by HMRC on the 15^th day of the following month and makes the experience a lot more seamless. Or, you use an agent’s deferment number. It costs around £30 and 3 per cent of the value of the excise duty.”

When it comes to VAT, the movement of the wine from Spain to the UK will be treated in precisely the same way as for any other goods. The importer should provide the supplier with details of his UK VAT registration number and this will be shown on the supplier’s invoice.

‘The despatch of the wine from Spain will be at the zero rate and the importer must account for the acquisition by declaring the purchase in his VAT records. If the importer is not registered for VAT the supplier would usually charge local VAT on the sale,’ concludes James.

Further reading

Import guide: three essential tips and everything you need to know

The post Importing wine from abroad appeared first on Small Business UK.

In this third PayPal Check-In Festival webinar it’s all about maximising your international trade opportunities.

Our experts explain how it’s never been easier to set up an ecommerce business, yet the rules and regulations around selling overseas get increasingly onerous.

But don’t worry, help is at hand.

Watch it on-demand now to discover:

• Why it’s never been easier to set up an ecommerce business
• How using international marketplaces such as Amazon allows you to test the market
• Why you’re not alone and how using partners, whether it’s for website building, shipping, payments or security take the pain out of international trade
• 3 tips to soothe the pain points of Brexit
• 7 ways to build trust of customers overseas

International trade and you

Our international trade session featured three panellists and was chaired by SmallBusiness editor Tim Adler

• James Gurd, ecommerce re-platforming and strategy consultant at Digital Juggler whose clients include Samsung, House of Fraser and Victoria Beckham
• Rachael Twumasi-Corson, CEO Afrocenchix
• Ben Ramsden, head of SMEs PayPal UK

We’ve summarised the key takeaways below.

Pandemic and the ecommerce boom

Covid-19 saw two years’ worth of ecommerce sales within three months, according to consultancy McKinsey & Company.

Forty per cent of businesses told PayPal that because of the boom in digital selling they are planning to expand to new markets, despite the pandemic.

Ramsden says: “Consumers are adapting to digital services such as shopping online. Small businesses are taking advantage of digital tools. We’ve seen an acceleration of these trends and see the boom in ecommerce continuing.”

Rise of the marketplacesOnline marketplaces such as Amazon mean you can test the water with your product before committing to building your own website.

And then there’s low-cost website builders such as Shopify, Wix and Big Commerce – all of which integrate with PayPal as a payment gateway.

The good news is that small business owners need fewer tech skills than ever to start selling. Before you needed to have some coding and development knowledge to get up and running. Now you can plug into these marketplaces cheaply and easy.

Even better, shopping and logistics systems can talk to each other using APIs.

Says Ramsden: “It’s about making payments globally more accessible, which makes it easier for businesses having access to a bigger market.”

PayPal also integrates with shipping carriers to facilitate delivery to foreign customers.

And remember, it’s not just a question of selling on Amazon or building your own website on Shopify. Each territory has its go-to online marketplace. In China the dominant marketplace is Alibaba, while in Thailand it’s Shopee.

Compliance and regulation

Although it’s never been easier to go to market, at the same time it’s never been more complicated.

Compliance regulations when it comes to international trade keep changing, whether it’s GDPR rules over data here in the UK or the Americans with Disabilities Act in the USA.

Soothing the pain points of Brexit

The biggest shakeup of rules and regulations when it comes to international trade here in the UK has of course been Brexit.

Afrocenchix, which exports afro hair products to 53 countries worldwide, has lost half of its sales to Europe since Brexit.

Twumasi-Corson says: “Brexit has made it much more difficult to export goods with customs and paperwork. The biggest challenges have been organisational. The EU was an exciting market for us but it’s now been pushed down in our five-to-ten year business plan.

How to overcome Brexit pain points

• Unless you’re a tax and duty specialist work with a carrier that provides a Delivered Duty Paid (DDP) service
• Software such as Avalara can automate paying duty and customs, as well as calculate what you need to pay here
• Think about having product packaging in French or German – official EU languages now that Britain has left the EU.

What if I’m selling to Europe for the first time?

If you’re selling into the EU for the first time, use a marketplace such as Amazon and its Fulfilled By Amazon (FBA) service. Yes, you still have to do the paperwork and yes, you will make less money but it’s the simplest way to put your toe in the water. That way, you can test the market.

How to build trust in your brand overseas

A recent PayPal survey of 14,000 online shoppers discovered that their biggest concern was staying secure while shopping online.

• Have very clear terms and conditions on your website including your returns policy and buyer protection
• Make sure you’re compliant with all local regulations
• Ensure your website has an SSL certificate
• Work with a payment gateway that customers recognise, such as PayPal
• Try and gain local knowledge on the ground. Understand what customers are looking for when shopping online, which varies from country to country
• How people like to contact you differs from country to country. US customers, for example, prefer toll-free phone numbers, while other countries prefer live chat
• People appreciate you speaking their language. Use Google Translate when speaking to overseas customers

Perhaps the key takeaway is that every pain point from shipping to cybersecurity, fulfilment and payment methods can all be outsourced.

Find partners such as website builders, goods carriers, e-commerce sites and payment systems to make international trade as easy as possible.

Understand the markets you want to sell to and how those customers like to pay.

Remember, you are not alone!

For advice on facing your financial wellness head on and building resilience into your business, head to Build Business Resilience – Tips &Tools at PayPal UK

More PayPal Check-In Festival

The PayPal Check-In Festival is a series of practical webinars aimed at supporting small business owners.

Each session shares stories, expertise and knowledge from peers and industry experts around a particular pain point for business owners

How to control your small business cashflow – Our experts cover everything from common cash flow problems to your different financing options

How to help grow your small business sales on and offline – We look at one of the biggest opportunities for small businesses – selling on and offline

The post Help maximise your international trade opportunities appeared first on Small Business UK.

Selling in the UK is relatively straightforward. Exporting is another matter altogether, because you then have to worry about a whole lot more, including logistics, regulations, stronger packaging and so on.

You do have the option of using a freight forwarder or agent, who can sort out a lot of the paperwork and regulatory compliance issues for you; the downside is that you will have to pay them – and that could seriously cut into your profits.

1. Changes on exporting to the EU

The UK-EU Trade and Cooperation Partnership (TCA) came into effect on January 1, 2021, permanently changing exports from GB – this means new customs processes, administration and checks.

First off, make sure you have an EORI number. If you don’t know it, you can check it through the government website.

To make it easier for EU businesses to import, check the necessary import customs declarations. The country you’re exporting to may also need a license or certificate to import some types of goods. You can use the free Trader Support Service to import into Northern Ireland.

The UK and EU have a zero-tariff agreement on trade goods as long as they meet Rules of Origin requirements.

You will need customs declarations paperwork in order to move goods. Sanitary and phytosanitary border checks will also be required for trade of live animals and products of animal origin, with extra costs and burden to accompany it.

Make sure you have someone to do your export declarations if you don’t feel confident doing them yourself. The government’s export website says you “should not underestimate how much time and effort it will take.”

Goods will have to undergo two sets of conformity assessments rather than one if your business will be putting a product on both the UK and EU markets. However, in specific sectors such as medicines, wines, automotive and chemicals, the UK and EU have streamlined conformity assessments.

>See also:  What is the UKCA mark and how does it affect my small business?

Failure to meet these requirements could lead to delays at ports and disruption to supply chains.

2. Exporting to countries outside of the EU

a) Commodity codes

The first thing you need to do is to get the commodity code for your product – you can see the list by clicking here. It’s pretty comprehensive; for example, if you’re looking to export false beards made out of human or animal hair, your code will be 6704.

A commodity code determines levels of duty and tax that you’ll need to pay, plus lets you know whether you’re going to need an export licence. It is your responsibility to make sure all this is right, even if you’re using an agent.

If you’re not sure which category your product fits into, don’t just take your best guess; get help from the Tariff Classification Service by emailing classification.enquiries@hmrc.gov.uk. Send a separate email for each of the goods that you’re asking for advice on, otherwise your email(s) will be rejected. Your email should be answered within five working days but don’t email for a progress check if this timeframe hasn’t passed. Note that the advice given is not legally binding.

b) Export declarations

To export goods, you need to submit an electronic declaration.

To do this, you’ll need to register for an Economic Operator Registration Identification (EORI) number and access to the Customs Handling of Import and Export Freight (CHIEF) system before making your export submission through the National Export System.

If you’re using a freight forwarder or commercial agent, they will handle this side of the process.

See also: EORI number: What it is and how to get or check one

c) VAT and duty

Most goods exported to a third country can be zero-rated for VAT, but you have to make sure you register the sale on your VAT return, and make sure you can provide evidence that the goods have actually left Britain.

The amount of duty you pay is set by the country you are exporting to and will depend on what it is you are exporting and its value.

The UK Trade Tariff should tell you all you need to know for your particular product (using the commodity code from above).

It is possible to get duty relief through various schemes. There are also various agreements in place with different countries that will allow you to export certain goods at lower rates or even for zero duty.

d) Restrictions

There are certain items that you can’t export to certain countries; many of these are war zones, and the items involved are armaments, or items which could be used for military purposes, so if you have any doubts at all, make sure you check the government’s Sanctions, embargoes and restrictions page for the latest information.

3. Exporting to and from Northern Ireland

There are a couple of services which can help you navigate the rules around the Northern Ireland Protocol.

Trader Support Service
Movement Assistance Scheme (for agrifood goods)

4. Exporting to a third country via an EU member state

The below applies to Northern Ireland.

Known as an ‘indirect export’, this involves special procedures and paperwork, which will mainly depend on the final destination.

The main thing you’ll need is the movement reference number of the export declaration that covers your goods. It’s available on the Export Accompanying Document issued by the customs authority of the EU country of export.

5. Apply for any necessary licenses

You may need to get specific licenses or certificates if you’re exporting any of the following goods:

• Animals and animal products
• Plants and plant products
• Drugs and medicines
• Medical devices
• Chemicals
• Ozone-depleting substances and F-gases
• Radioactive substances
• Diamonds
• Art works, antiques and culturally significant goods
• Waste
• Goods that could be used for torture or capital punishment
• Firearms, ammunition and related equipment
• Military goods, services and technology
• Items that can have both civil and military uses

6. Packaging

You also need to give extra thought to the type of packaging you’re going to use. There are restrictions on the use of untreated wood in order to prevent the spread of insects and disease that could negatively impact on a country’s ecosystem.

Alternatives are easily available in the form of plywood shipping crates, which have a similar strength but can be sent anywhere, as the wood has been treated in the manufacturing process.

You can also get heat treated and kiln dried pallets which have the same unrestricted usage. If you’re not sure, look for what is known as the ‘wheat stamp’, which tells officials that it’s safe to use.

Cardboard boxes are also unaffected by these regulations; you’ll want to get something stronger than if you’re just shipping within the UK, as your box is likely to be subject to greater stresses, such as being on the bottom of a large stack of boxes. Heavy duty double wall and triple wall boxes have been designed to deal with just these kinds of conditions.

Whether you use cardboard or plywood will partly depend on the weight of what you’re shipping, but also the distance it will need to travel and the climatic conditions it will pass through.

If it’s likely to be exposed to high levels of damp or humidity, the plywood option will offer far greater protection.

If there is any aspect of exporting your product that you’re unsure about, it’s always best to get expert advice, because the cost of getting it wrong can be a lot greater.

7. Keep invoices and records

You must keep commercial invoices and any customs paperwork. If you’re VAT registered, record the goods in your VAT accounts, even if they are zero-rated.

If you exported controlled goods, such as firearms, keep the paperwork that shows who owns the goods.

This article was updated on July 6 2022. 

Further reading on exporting

• How UK online retailers can increase their exports

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