The Week’s Energy News – 09/12/2016
This week’s energy news covers an acquisition and a host of renewable energy stories. Drax buys Opus Energy ...Read More
Buying goods from abroad to sell on or to use in your company’s production processes can be much cheaper than sourcing them from manufacturers based in the UK. Although these cost advantages may be significant, importing is not always a straightforward business and can come with a lot of red tape and potential risks.
But Phil Couchman, CEO of freight company DHL Express UK & Ireland, says that there are “fantastic opportunities” for British firms to expand and trade internationally: “SMEs must think long-term and remember the benefits to growing internationally,” he explains. “It can take time but with research suggesting that companies trading internationally are twice as likely to outstrip their counterparts, the benefits regularly outweigh the risks.”
Before you start importing, you need to be aware of the potential risks and drawbacks:
Researching your choice of supplier thoroughly is crucial. Talk to other UK companies – in your industry, if possible – that already import similar goods to get their views.
You need to be clear in advance about what are the total costs you face: when you pay your supplier, does this cover import duty and tax, for example? How much will it cost to warehouse the goods?
Will you have to pay the full amount before goods are shipped? How long will shipping take, and what factors could delay shipments?
You also need to ensure that the goods you are bringing in meet UK or EU safety or quality standards.
There is a large amount of red tape involved in any kind of importing, and you may have to deal with these issues yourself depending on the agreement you have with your supplier.
If you are importing from an EU member state, you will not have to pay an import tariff but you may have to pay VAT (see our guide on upcoming changes to EU VAT rules).
Any products brought in from outside the EU may incur import tariffs as well as VAT and duty, and in some cases you will need an import licence.
Here is what you need to do if you want to import a product:
The government has a searchable Trade Tariff database where you can find the right code to use on documentation. The tariff will show you how much duty is liable and tell you whether you need an import licence or not – you probably will do if you are importing firearms or foodstuffs, for example.
This allows you to complete customs information electronically and this is where you declare your imports. Any imports from outside the EU should be declared via a Single Administrative Document (SAD) through the CHIEF system.
You don’t have to pay duty on goods produced in and imported from the EU. If a firm in another EU country has already imported the goods and paid duty on them, you won’t have to pay duty when you bring the goods to the UK.
VAT is liable on most imports regardless of where they are from, although certain classes of products are exempt. If your imports are used as raw materials in your business, you will be able to claim back VAT provided you are VAT-registered.
While not strictly necessary, this is recommended: a face-to-face relationship may help your partnership run more smoothly. This may also put you in a better position to negotiate a discount or more favourable payment terms.
On-site visits also allow you to check the manufacturing process, which both informs quality and how your goods are being produced, which can be important in avoiding charges of exploitative labour practices.
Your supplier may have arrangements in place to deal with the bureaucracy described above, although this will add to the price you pay.
If not, a freight-forwarding company or import agent can complete customs paperwork and any other documentation, pay duty and taxes and may also be able to offer you insurance on your stock.
If your importing needs are quite straightforward, however, it may prove cheaper to do this yourself, perhaps with the help of a courier company.
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