5 Insider Tips For Clearing Customs With Ease

Gain a competitive edge as Tim Harding, SEKO's UK Customs Manager, shares invaluable tips for effortless customs clearance.

Nearly 10% of small businesses in the UK ceased international trade in the last five years due to complex customs paperwork, rising costs and disrupted supply chains, according to a new report from the Federation of Small Businesses (FSB). While customs checks can indeed pose a challenge for businesses across the board, a bit of know-how can streamline the process.

If you're a customer-focused business engaged in international trade, here are my top five tips to ensure your products breeze through customs.

1. Provide instructions

Whenever you engage in any type of customs clearance, it’s important that your customers understand the type and quality of information that is needed. It’s up to you to provide guidance. For some importers and exporters, this might not be obvious.

While larger organisations may have dedicated teams that deal with customs, compliance and shipping, businesses on the small to medium end may not have the resources to dedicate to shipping and international customs clearance requirements. This is the space that most customs brokers and intermediaries spend most of their engagement with customers and their clearance requirements.

Having a clear template for customs clearance information will save time when onboarding new customers. You can find this information online and remember to adapt each template depending on country and region. 

2. Understand representation types

Part of the process when dealing with customers, and to a certain extent, the commercial teams in your freight forwarding, brokerage and intermediary business, will be understanding the roles and responsibilities of the different customs representation types (how a company is represented in customs matters) and what this means in terms of risk to the business. There are two main types of customs representation, both are required to have written authorisation, along with the customer authorising you to use their Customs Declaration Service (CDS) duty deferment scheme. 

• Indirect representation. If your customer has no established office in the UK then you may be dealing with them, for customs purposes, in an indirect way. The risk and responsibility for the duties, taxes, supply and archiving of the information will be shared by you and your customer. In essence, HMRC will come to you, as the broker, intermediary, to collect the taxes and hand out any fines for non-compliance or potential fraud. It’s a question for the business managers and directors if they are willing and able to manage the risks to their business and commercial reputation.

• Direct representation. For most customs clearance, for businesses based in the UK, and trading from and to the UK, then direct representation will cover the customs compliance requirements. This type of representation reduces the risk to the business as you are working directly with the importer and exporter, and they will be liable for all the customs risks for non-compliance, duties and taxes. It does not mean that the intermediary or broker can walk away. You will have commercial responsibilities to your customer, albeit with reduced risk to the company.

3. Always conduct due diligence

Never accept, on face value, the information given to you without doing due diligence checks. HMRC will expect that you have done the basic checks, and you should have a process in place to do this. You may want to include this as part of the commercial side of the business, just before any agreements to onboard new customers, or you can include this as part of the customs clearance check and request, conducted by the operations team.

These checks should include the following:

• Check the UK VAT number—you can do this online at HMRC Check a UK VAT number
• Companies house and credit checks.
• Get written confirmation from the customers that they will pay HMRC any VAT that is postponed at the time of import.
• Get the direct or indirect letter completed and signed by a director if the company.
• Can you identify the person instructing you.
• Check the instructions they give you—the suppliers, if you can, and the commercial invoice details—as well as the details of goods, value, description, UK tariff numbers.
• Check where the goods are being moved from and to.

Consider the following:

• Does the price of the goods seem reasonable in the current market?
• Is there a genuine market for the goods at the place of delivery?
• Does the overall deal look to good to be true?

4. Achieving AEO status

Dealing with customers who have achieved AEO status can help with both the customer and the broker/intermediary relationship. It shows that both parties work towards common standards that already address most of the questions raised by engagement with cross-border customs requirements. If the customer does not have AEO, then showing them that your process and procedures conform to AEO standards can help them when dealing with the customs red tape, through the structured approach that AEO provides. Having AEO confers some advantages to the business, in terms of the monetary guarantees required and can help with speeding up any HMRC border checks on your goods, should that happen.

5. Engage with your customers

Regular engagement with your customer via your commercial teams can help establish your credentials as a knowledgeable and safe pair of hands when it comes to customs and cross border trade questions, building relationships gives your customer the reassurance that your organisation is committed to the quality and quantity of any advice or future engagement with customs requirements, as and when they change and develop. Since the UK left the Single Market and Customs Union there will be a slow drift towards nonalignment with some EU customs regulations and you need to keep them updated of any changes.

If you'd like to learn more about SEKO's customs clearance tips, please reach out to a member of the team.