Considerations when importing goods into the UK

Welcome to our comprehensive Doing Business in the UK article series, designed specifically for international businesses and investors looking to establish or expand their operations in the United Kingdom. This series aims to provide you with essential insights and practical guidance on navigating the UK business landscape.

Throughout this series, we will cover the initial setup of your business, understanding business taxes, and the process of registering a UK business. We will also delve into workforce setup, payroll, employment costs and international hiring considerations for businesses employing people in the UK. Finally, we also explore accountancy processes, compliance and management reporting requirements, and discuss the complexities of importing goods and services into the UK.

When you're importing goods into the UK, there are several Value Added Tax (VAT) and customs considerations to keep in mind. Here's a high-level overview to help you navigate the process:
 

VAT considerations

• Import VAT: You'll need to pay import VAT on most goods brought into the UK, usually charged at the same rate as domestic sales. Although some items will be zero rated so no import VAT would be due
• Postponed VAT Accounting (PVA): This allows you to account for import VAT on your VAT return rather than paying it upfront, which can help with cash flow.  You actively need to instruct your customs agent to opt for PVA
• VAT rates: Familiarise yourself with UK VAT rates, including standard, reduced, and zero rates. The rules concerning VAT rates can be complex (for example, food, drink and clothing can have different rates depending on the exact nature of the item).  It is worth reviewing your products to determine the appropriate VAT treatment
• VAT Registration: If you're not already registered for VAT in the UK, you might need to do so, especially if you're selling goods within the UK. This includes direct sales to consumers (B2C) and depending on the incoterms agreed, business to business sales (B2B) where different VAT rules apply
• VAT Reclaim: You can generally reclaim import VAT if you're registered for VAT in the UK, own the goods being imported and the goods are used for wholly making taxable sales.  Depending on the nature of your business, full recovery may not be possible – and so please seek advice
• Online Marketplace: Sales through an online marketplace have specific VAT obligations, especially for goods sold to UK consumers. (B2C)
• Northern Ireland: Special rules apply due to its unique position post-Brexit, affecting VAT processes

 

Customs considerations

Prior to importing the following steps should be considered:

• EORI: When importing into the UK you will need to have an Economic Operator Registration and Identification number. This is a unique 12-digit number. If you are registered for VAT, your EORI will usually be linked to your UK VAT number
• Customs Declaration: You'll need to complete a customs declaration for your goods, including details about the goods, their value, and their origin. Depending on the type of goods, you may need to pay customs duty
  • Tariff Classification: Ensure you use the correct tariff classification for your goods to determine the right duty rates. The classification also drives any ‘non-tariff barriers’ such as licencing requirements
  • Origin Rules: Check if your goods qualify for preferential duty rates under trade agreements. For example, imports from some developing countries can be declared under the “DCTS” agreement and imports from EU countries can be imported under the “UK/EU TCA” both of which reduce duties. There are also opportunities for exporters to confer UK origin on exported goods, which allows customers to save on customs duty costs
  • Import Licences: Some goods require specific licences or permits to be imported into the UK. These requirements are contained in the UK Tariff and are based on the tariff classification of imported goods
• Incoterms: The agreed incoterms should specify whether the buyer or the seller is responsible for importation.  They define the responsibilities of buyers and sellers, including who pays for shipping, insurance, and duties.
• Duty Deferment Relief: This allows you to delay payment of customs duties, which can improve cash flow
• Understand the Customs Declaration Data: You should always review the customs data submitted to HMRC on your behalf by your customs brokers. This is necessary in order to ensure you are not exposed to the risk of customs duty assessments and civil penalties. BDO has developed the Customs Data Analytics Tool to help identify potential risks and uncover opportunities for reclaim
• Carbon Border Adjustment Mechanism: This proposed measure addresses carbon emissions associated with imported goods, potentially affecting costs. That is why the EU and the UK are implementing Carbon Border Adjustment Mechanisms
• Freeports: Freeports operate as secure customs zones, usually located at ports or airports, where business can be carried out inside a country’s land border, but where different customs rules and other tax incentives apply
• Border Target Operating Model: The Border Target Operating Model outlines the UK's approach to border controls, impacting how goods are processed and cleared
• The Plastic Packaging Tax (PPT): Plastic Packaging Tax applies to all businesses that trade in the UK and either manufacture or import more than 10 tonnes of plastic packaging a year. Companies that meet these criteria must register and pay a tax
• The Windsor Framework introduced a new UK internal market system (aka a “green lane”), expanding the number of businesses able to move goods tariff-free between GB and Northern Ireland

 

Navigating VAT and customs can be complex — we recommend seeking tailored advice from a professional tax advisor to ensure compliance and optimise your import process.