Import Obligations
All goods entering the EU (customs territory) must be presented to customs or placed under a customs procedure by a trusted trader. There must be a declaration and return to the customs authority. The declaration must be made for all goods at the first point of arrival in the EU.
The arrival of goods sets the point at which tax arises. Customs duty and VAT must be accounted for on goods when they are released into free circulation within the European Union. Duty and VAT may be accounted for by immediate payment or under some conditions, by deferred payment.
Presentation
Goods imported by sea must be landed at an approved wharf. Goods imported by air must be landed at an approved airport. Some airports are only approved to handle certain types of goods.
When goods are cleared, they may be removed to an approved temporary storage premise, namely, an inland clearance depot, transit shed, remote transit shed or enhanced remote transit shed. Alternatively, goods may move under local clearance procedures to an authorised importer’s approved premises.
Imported goods from third countries must arrive at a designated place and must be presented to HMRC by the person who brought the goods into the Community. Presentation means informing us in the required manner that the goods have arrived. Once goods have been presented goods to HMRC, a summary declaration must be lodged later than the first working day following the day of the presentation.
The person, or the person representing them, who has brought the goods into the Community, or the person who assumes responsibility for their onward carriage, should present them.
The presentation may be by
- using an approved computerised trade inventory system linked to Customs
- lodging form C1600A at the designated Customs office, the address of which will be advised by the port or airport concerned
Goods must be presented within 3 hours of their arrival at the place of unloading.
Declaration on Arrival
A summary declaration must be made within 24 hours of presentation. The summary declaration is form C1600. HMRC accept commercial documents or computer records instead if they contain the necessary details. Acceptable commercial documents include: bills of lading, air waybills, container manifests, load lists, manifests or consignment records (on computerised inventory systems)
Where goods have travelled under the Community or common transit procedures, the copy of the transit document retained by the Office of Destination will be the summary declaration. This applies to manifests used under the Community transit simplified procedures for transport by air or sea.
It is necessary to submit the import declaration by the SAD or simplified declaration at the point of entry into the European Union. This may be a port, airport or clearance depot. Many entry points use the Community Systems Provided (CPS) which can give electronic access to “CHIEF” so that declarations can be filed online.
There are a number of options in relation to making customs declarations. Some traders use representatives which can be advantageous because they use the software compatible with HMRC systems.
Most products imported from non-European Union countries are eligible for Customs Freight Simplified Procedures (CFSP), which is a streamlined process for clearing imported goods that covers authorisation, removal and release, reporting and auditing. Supplementary Declarations (SDs) play a key part in CFSP, along with Simplified Frontier Declarations (SFDs). SFDs and SDs are the mechanisms for reporting under CFSP.
Traders can make simplified declarations under certain conditions. This procedure may be used to release goods into free circulation or other customs procedure. When goods arrive in the EU it is only necessary to complete a Simplified Frontier Declaration (SFD). A Supplementary Declaration is then required for all goods declared using an SFD. This must be sent to HMRC and be accepted before the end of the fourth working day of the month following which the SFD was submitted.
Preference documents are required to claim reduced duty which is available for certain goods. A commercial invoice is required which must incorporate the amount paid, including VAT. Certain documents may be required to detail the route of the goods.
Pre-Entry Summary Declarations
The Import Control System (ICS) is part of the EU-wide Automated Import System to facilitate import procedures. EU Safety and security laws mean goods destined to arrive in the EU must be declared to the Office of First Entry to the EU (that member state’s ICS) within set time limits. It is mandatory for carriers to provide customs authorities with the advance information, by way of ENS, for goods being brought into the customs territory of the EC.
The onus is on the carrier of the goods to make the ICS declaration, but the carrier can, with its explicit knowledge and consent, delegate this activity to the importer and/or his agent. If so, an Entry Summary Declaration must be made for the goods. UK ICS will provide the carrier, or delegated declarant, with a Movement Reference Number for the goods.
The ICS does not replace the need to make customs import declarations that ordinarily are submitted to the Customs Handling of Import and Export Freight (CHIEF) system.
When a customs OoFE is satisfied with the ENS data and validates the declaration, a unique 18-digit alphanumeric reference – the Movement Reference Number (MRN) – is automatically allocated and issued to the declarant lodging the ENS. Where this is not the carrier, the MRN is also issued to them.
Goods for which an ENS will not be required include:
- letters, postcards and printed matter, including on electronic media
- goods contained in travellers’ personal luggage goods for which an oral customs declaration is permitted
Depending on the mode of transport or shipping service used, there are different time limits for submitting the ENS.
- When shipping goods via the ENS must be submitted
- maritime containerised cargo at least 24 hours before loading at the port of departure
- maritime bulk/break bulk cargo at least four hours before arrival
- maritime sea voyages of less than 24 hours at least two hours before arrival
- short-haul flights – less than four hours’ duration at the time of actual take-off
- long-haul flights at least four hours before arrival
- rail and inland waterways at least two hours before arrival
- road traffic at least one hour before arrival
- Import risk analysis for safety and security
On receiving an entry summary declaration, member states carry out a risk analysis for safety and security purposes. Where a risk is identified, the customs OfFE will do one of the following, depending upon the level of the threat
take immediate action
pass on the risk analysis results to any identified subsequent ports or airports
In exceptional circumstances, where the level of physical threat is deemed to be severe, the customs office may decide not to allow goods to be loaded.
Single Administrative Document
The SAD is the principal EU customs document and declaration and contains up to 8 parts. Shorter versions are available for particular customs procedures. Electronic submission of customs declarations is the norm.
In order to complete the SAD, it is necessary to use the Common Customs Tariff. The Tariff lists the codes which must be put in each box. The most important box is for classification of the goods and the customs procedure code. The code determines what duty is owed. The customs procedure refers to a number of possible procedures which may be opted for in particular circumstances some of which involve referral of Customs Duty.
The Single Administrative Document is recognised internationally by customs authorities. Many of the boxes in the SAD require information from other paperwork such as valuations, invoices and shipping documents. A completed SAD must detail what the goods are, the movement of the goods, the good’s commodity good and the customs procedure code.
The SAD comes in eight parts for use at different points in the trading process. Parts 1,2,3, and 4 are for exports. Parts 6,7, & 8 are for imports. Parts 1, 4, 5, & 7 are for transit. Traders should use the part 3 of the tariff to complete the boxes. There are 54 boxes in the SAD that are grouped as follows:
- Status of goods
- contact details
- Duties and tax
- Description of goods
- Additional information
- Reference details for agents
- Valuation details
- Preference
- Delivery, Transport and Description of Goods.
The HMRC clear declarations. There are different methods by which to make declarations. Generally, the declaration need only be made on the arrival of the goods in the European Union. However, some goods particularly agricultural product must be declared in advance so it can be inspected by Port Authorities.
Community Systems Providers
Community Systems Providers (CSP) are businesses that provide computer networks that collect information which is used to clear goods. CSPs gather and process information from shipping lines, airlines, traders, agents, freight forwarders and Government Departments. Each CSP communicates with the customs handling and export freights (CHIEF) system. Goods being cleared require a reference number called the unique consignment reference (UCR) which must be included in the import entry. Some Port Authorities have their own community system to clear goods.
As well as processing customs information, the Community System is used to return a response message from HMRC to tell the trader or agent the tax and duty which must be paid before goods can be cleared and whether the goods need to be inspected. HMRC will allocate the clearance route and advise the Community System interface. CHIEF will then send the CSP a customs clearance message which confirms that the goods can be released (assuming other commercial requirements have been satisfied) for free circulation or into another customs procedure. If for any reason goods are being investigated, an intermediate message may be sent.
Valuations
When goods are imported, HMRC must be provided with details of their value. The value must be declared manually or electronically. Valuations are required for customs duty, import VAT and trade statistics.
There are a number of methods of calculating import VAT. Method 1 applies to 90% of goods. If not already included in the seller’s price, the following must be added:-
- cost of delivery to the EU border
- most commissions except buyer’s commission
- royalties and licence fees paid on the goods
- postage and packaging
- goods and services provided to the seller for free or at a reduced cost.
The following are excluded:-
- delivery costs within the EU
- EU tax and duties
- taxes in the country of origin or export
- quantity and trade discounts
- dividend payments in the seller
- marketing activities related to the imports
- buying commission
- export quota costs
- interest costs
- management fees
The methods for calculating value should be charged consecutively so that if method 1 does not apply method 2 applies and so on. Method 1 is the transaction value or the price payable to the seller. If there has been no sale the transaction value of identical goods (Method 2) applies. If there are no identical goods Method 3 provides that the customs value of similar goods may be used. The other methods may be applied if the earlier methods do not yield a valuation.
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