Customs Planning
Planning & Compliance

Modern customs regulations are complex and hard to understand for even the biggest players in International Trade. However, following recent developments such as the Finance Act 2009 and the phasing in of Authorised Economic Operators, the onus is even more on you to get to grips with the law and HMRC and the courts may impose hefty penalties for any mistakes made by you or on your behalf.

The need for effective and robust customs planning is paramount. Customs law can be broken down into 4 "building blocks", each with its own set of complex rules and regulations:

  • Origin of goods
  • Classification
  • Customs Valuation and;
  • Duty reliefs.

Planning

Customs planning includes, for example, determining:

  • Whether the origin of your product confers lower duty rates under any trade agreements?
  • Which classification attracts the lowest legitimate rate of duty?
  • The lowest legitimate customs value for your imports, specifically by looking at the method of valuation to be used and the appropriate adjustments to that valuation?
  • Whether any customs duty procedures apply to relieve your imports or duty or delay the incurrence of your customs costs?

Compliance

  • Origin: Have you got the correct certificates of origin? (GSP, Form A) Do you understand the rules of Origin? Do you have proof that the origin rules are met? Do you make use of the Good Faith Provisions?
  • Classification: Are you correctly classifying your goods? Who is classifying your goods and how are they classifying them? Do you have legal rulings to provide certainty? (BTI's)
  • Valuation: Are you using the correct method of valuation? Are you including all the additions that are legally required in your customs value? Are you stripping out unnecessary costs?
  • Duty Reliefs: Are you aware of the different duty reliefs available? Are you authorised to operate the duty relief? Are you complying with the terms of your authorisation?

Potential Consequences

HM Revenues & Customs use audit-based controls to check whether you meet your customs obligations with import transactions remaining open for three years. This is even more significant with regard to the Senior Accounting Officer provisions in the Finance Act 2009 as well as the introductions of Authorised Economic Operators at EU-level. As well as the "traditional" consequences of failed compliance, you may face:

  • Additional duty demands
  • Penalties
  • Delays in customs clearance and;
  • A poor relationship with HMRC, suppliers, clients and investors.

Businesses may also face:

  • Personal liability and fines for Senior Accounting Officers and;
  • Being precluded from obtaining Authorised Economic Operator status and being blacklisted for a period of three years.
 

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