For businesses that rely on international trade, a customs broker would be a great help when navigating the complexities of regulations, paperwork and logistical hurdles surrounding the task of importing and exporting goods.
A customs broker is a licensed professional that specialises in streamlining cross-border trade whilst ensuring that all operations are compliant. Using a customs broker can help you to mitigate risks to your business, create efficiencies, ensure customs compliance, and therefore save you time and money.
Read on for more insight on the role of a customs broker and the advantages they can offer internationally trading businesses.
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What is a customs broker and what do they do?
Customs brokers, or customs clearance agents as they are sometimes referred to, are usually experienced professionals whose job it is to ensure that the import/export of goods across international borders is handled correctly and efficiently as possible. They’re licensed by the government and will see that all regulations relating to the movement of goods are met, with duties including handling the customs clearance process and making sure that all the applicable taxes are paid, logistical hurdles are overcome, and that procedures are as smooth as possible.
Be picky when you look for a customs broker, as experience matters in this role. Your chosen broker should have knowledge of the specific countries that you intend to deal with, including an understanding of their import/export rules and any necessary import and export declarations.
It is also beneficial to choose a broker that specialises in your particular industry or import/export location. For example, you can find automotive specialists, or pharmaceutical brokers, or brokers who choose to specialise in dealing with European Union countries, other European or Asian countries.
There are many ways to search for the right customs broker. You can search online directories. The International Association of Registered Customs Brokers (IARBA) for example, will give you a list of all the custom brokers.
You can also get in touch with a local chamber of commerce. A local chamber of commerce or a trade association can easily recommend you experienced custom brokers that will be suitable for your business. If you want, you can even ask other similar businesses for good recommendations. As with any key business hire, take time to interview and assess the skills of your candidates before choosing who you want to work with.
What are the risks of importing/exporting without a customs broker?
Whilst it’s entirely possible to navigate imports and exports without customs brokerage, it can increase the risk of things going wrong within this complicated process, especially if you don’t have experience in this field yourself.
To go it alone, you would need to understand the rules and regulations surrounding customs for the countries that you want to trade within, understand how to make your own customs declarations, interpret and file customer paperwork on time, and pay duty owed on the shipments – these figures can add up quickly! If you use a freight forwarder, they may be able to file customs declarations and transit documents on your behalf, but if you run into other problems, it may become your responsibility.
If you don’t quite hit the mark for these tasks, the business can hit lengthy delays and costs and you may have to spend a rather a lot of time dealing with customs agents working on behalf of the relevant government agency in that country.
What are the basic customs regulations when importing to the UK?
Customs regulations are designed to protect the economy of the country where goods are moving through. It’s important to know the customs regulations before importing goods into the UK as they will help to ensure that only goods that meet the required standards can enter the economy.
The basic regulations for importing to the UK are:
- You must have an import licence from HM Revenue & Customs (HMRC). This document sets out the conditions and standards that must be met by the products being moved in order to be allowed entry into the country.
- All imported goods must be declared. This is managed via a declaration form being submitted to HMRC. It outlines the nature of the goods, their value and origin. Mistakes on this form can lead to the shipment being refused entry.
- Duties and taxes must be paid. Once declared, the goods move through customs clearance and this is where duties and taxes like import VAT must be paid. This sum will be based on the value of the goods.
- Goods must meet the required safety and security standards. The UK has product standards for safety, security and restricted items.
- Post Brexit changes mean that businesses need an EORI number and must declare goods values from the EU. They may also need an import licence for some EU products.
What are the basic customs regulations when exporting from the UK?
If you are sending products from the UK to other countries, you need to be aware of the export rules and regulations. Just like imports, there are licences, taxes and classification of goods to consider.
- Obtain an export licence. This is required for certain classes of controlled goods.
- Classify the goods. There is a harmonised traffic code that should be used to work out the duties owned.
- Complete customs declarations to HRMC, including specifying the type of product being exported, its value and destination.
- Proof of export is needed – this can include commercial invoices and packing lists
- Post Brexit changes means that customer declarations are now needed for all EU exports and businesses may need an EORI number.
Export regulations are designed to control the exportation of sensitive goods, collect any taxes or duties owed and comply with international trade policies.
In the UK, the UK border force and HMRC are responsible for ensuring that the import and export regulations are met. They also deal with the penalties and seizing of goods for non-compliance. A good customs broker will be able to ensure that all obligations required to meet these standards are met.
What are the penalties for breaking customs laws in the UK?
Custom laws are there to ensure the good transfer of goods between two countries. In the UK, HMRC is responsible for issuing fines and seizing goods if the rules surrounding import and export are broken. In some serious cases of rule breaches, it can even lead to imprisonment depending on the nature of the offence.
Customs offences are divided into two classifications: civil or criminal. HMRC customs officers and have full authority to stop and search people crossing the border. They can even search vehicles at ports and airports. They can also detain goods that do not comply with the customs laws.
Keep in mind that if customs officers find you in possession of banned or restricted goods, you will have customs charges to pay. After paying, your goods may or may not be released afterwards. Those suspected of snuggling will be arrested. Then, the case will be referred to the Crown Prosecution Service for further action. Customs offences are not to be taken lightly. If found guilty of breaking customs laws, there are severe penalties to face.
What fee does a customs broker charge?
In the UK, custom brokers typically charge a percentage of the customs value over the goods to be imported along with some fees. This custom value is calculated based on several criteria. This includes:
- Declared value of goods
- The cost of freight
- Insurance
- Other charges (Known as FIFC)
A custom broker’s fee can be as low as 0.5% to anywhere of up to 2.5%. Most custom brokers will charge an additional flat fee for their services too. This amount will vary for different customs brokers and the type of goods being imported. As with any business purchase or hire, it’s best to shop around and compare quotes for several brokers simply to find the right mix of service and value for money that your business needs.
What to do if a customs broker makes a mistake
The role of a customs broker is to make sure that your goods are customs cleared and moved through countries effortlessly, but the people in these roles are human, and they can make mistakes.
When custom brokers make a mistake, it can lead to long delays, penalties, lost revenue and cargo, and more. It’s understandable then, why business owners want to minimise the chance of mistakes and avoid delays.
Common mistakes include:
- Inaccurate product valuations – which can result in the wrong tax calculations
- The wrong classification of goods and tariff codes
- Not getting the relevant licences needed for restricted products
- Making errors in customs documents like export and import declarations<
- Missing paperwork, payment or compliance deadlines
When a mistake has been made, you should politely raise it with the broker and ask them what they’re able to do to rectify it. If they are unable to solve the issue, you may need to liaise with border agencies or contact HMRC directly to try and resolve the matter.
To do this, you will need to have all relevant documentation to hand so that HMRC can try to solve the issue as quickly as possible.
Whilst mistakes are unfortunate, being able to have a paper trail and a contingency plan can help to minimise the impact, reduce delays and save money. Serious compliance errors have the potential to cripple small businesses, so it’s imperative that the customs brokers you use are accountable and highly professional.
What are the new rules for importing to the UK after brexit?
After the UK left the European Union, a lot of import regulations have changed. Companies should learn more about these significant import changes otherwise they may suffer from delays which will disrupt their business.
Applying for an EORI number is one of the big changes that has been brought in. Businesses now have to apply for one in order to import goods from the EU. Customs will use this number to track shipments and calculate tariffs. You can apply for your EORI number online via the HMRC website.
Businesses must now declare the value of their goods when importing from the EU. This is so that taxes and duties owed can be calculated. This declaration can be done online or via the C88 form.
There are also new rules regarding the import of food and for importing products of animal origins from the EU. In fact, businesses can no longer import these products from the EU unless they have an import licence from the APHA. You should research how to apply for the licence as it will be different for different types of products to be imported.
The time limits for importing goods from outside the EU is also different now. For example, businesses must pay VAT on goods imported from non-EU countries within 14 days of arrival in the UK.
Failing to meet these new post-Brexit rules means that goods can be delayed or even seized. It’s essential therefore that businesses familiarise themselves with the new trading requirements if they want to move goods through Europe.
What are the new rules for exporting from the UK after Brexit?
Post Brexit, export rules have also undergone significant changes. Businesses must now fill out customs declarations for all the goods destined to the EU. This includes items like commercial goods, personal belongings as well as gifts. Businesses will also need to apply for their EORI number from the HMRC and only then will they be able to move their goods between the UK and the EU.
If a business fails to meet these new regulations, there could be delays or even fines, meaning it’s important for businesses to review the updated guidance from HMRC before they export goods from the UK to the EU.
Final thoughts
Importing and exporting goods across country borders can be a challenging process full of rules, fees and documentation requirements. Navigating this alone can be a full time job and daunting for smaller businesses and this is why seeking the support of a customs broker and other experienced staff can be a game changer for those looking to avoid costly international trading mistakes.
A licensed customs broker that offers an end-to-end service can manage customs clearance, provide advice on compliance, payment handling, and be an expert in the intricate processes needed to ship goods internationally.
Trade agreements and regulations continue to evolve post Brexit, so having someone that can stay on top of the latest developments and ensure that your business stays ahead of the rules can be an invaluable asset to your business if you want to capitalise on global growth opportunities.