Importing and Exporting: an Introduction

2. What do we mean by International Trade? Imports from non-EU countries. Exports to non-EU countries. We mean Importing and Exporting! This covers the movement of goods for commercial purposes. Clarify that this does not include services (such as consultancy, insurance, etc): only tangible goods. Clarify that this does not cover intra-EU dispatches and arrivals. EC= European Community; EU= European Union. We mean Importing and Exporting! This covers the movement of goods for commercial purposes. Clarify that this does not include services (such as consultancy, insurance, etc): only tangible goods. Clarify that this does not cover intra-EU dispatches and arrivals. EC= European Community; EU= European Union.

3. The Countries of the EU Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxemburg Malta

4. Import/Export: Basic requirements All commercial goods must be declared. This declaration is known as an ‘entry’. Import and Export entries can be made using the C88/ Single Administrative Document (SAD), however they are usually made electronically. Simplified procedures for declaring both imports (e.g. CFSP) and exports (NES) are available. Copy of SAD in Pack – Hold up for Audience to see. Mention the term “C88”. SAD is an official multipurpose form comprised of numbered boxes. Manual SADs are effectively no longer used for export [see National Export System (NES)]. For the purposes of Customs clearance and transportation of goods, a freight forwarder or shipping agent is often employed. The Importer/Exporter named on the declaration usually has legal responsibility for the accuracy/completeness of the entry. Civil Penalties introduced w.e.f. Dec 2003, to encourage accurate completion of declarations and general compliance with the law. Min penalty per contravention= £250; maximum= £2,500 (with warning letters & ‘stepped’ amounts used in between as appropriate). Reasonable Excuse, co-operation & mitigating circumstances may reduce (or even avoid) a Civil Penalty. No penalties for discovering & disclosing a contravention voluntarily.Copy of SAD in Pack – Hold up for Audience to see. Mention the term “C88”. SAD is an official multipurpose form comprised of numbered boxes. Manual SADs are effectively no longer used for export [see National Export System (NES)]. For the purposes of Customs clearance and transportation of goods, a freight forwarder or shipping agent is often employed. The Importer/Exporter named on the declaration usually has legal responsibility for the accuracy/completeness of the entry. Civil Penalties introduced w.e.f. Dec 2003, to encourage accurate completion of declarations and general compliance with the law. Min penalty per contravention= £250; maximum= £2,500 (with warning letters & ‘stepped’ amounts used in between as appropriate). Reasonable Excuse, co-operation & mitigating circumstances may reduce (or even avoid) a Civil Penalty. No penalties for discovering & disclosing a contravention voluntarily.

5. What are some of the more important elements of a declaration? Commodity Code. Customs Procedure Code (CPC). Valuation for import charges. Three areas chosen for the presentation These to be looked at in more detail over the following slides…Three areas chosen for the presentation These to be looked at in more detail over the following slides…

6. Commodity Code 8 or 10-digit code number Sometimes referred to as :- “Classification code” “Harmonised Code” “Tariff Code” or “Tariff Number” “Comcode” The code goes in Box 33 of the import/export entry. Show SAD again Goods entering/leaving EC have to be identified with a numeric code 10-digit commodity code when importing 8-digit commodity code when exporting Sometimes referred to as “HS number” or “Harmonised System Code” The code is based on the common international Harmonised System, and identifies the goods in question Show SAD again Goods entering/leaving EC have to be identified with a numeric code 10-digit commodity code when importing 8-digit commodity code when exporting Sometimes referred to as “HS number” or “Harmonised System Code” The code is based on the common international Harmonised System, and identifies the goods in question

7. Why must the Commodity Code be correct? To ensure that the correct customs charges are paid. To provide accurate trade statistics. To help establish whether the goods need an export or import licence. To identify goods with special import or export arrangements. The process of finding the right code is called.…. “Classification” Notice 600 Licences issued by other agencies: not by HMRC e.g. Department for Business, Enterprise and Regulatory Reform (BERR) [Formerly the Dept. of Trade & Industry (DTI)], Department for the Environment, Food and Rural Affairs (DEFRA) and the Home Office. If you want a commodity code after attempting yourself, you can then contact the Tariff Classification Service, NOT the NAS. Based in Southend Tel: 01702 366077. Operates between 09:00 and 17:00 Monday – Thursday & 09:00 and 16:30 0n Fridays. Refer to PN 600 on classifying your imports and exports An Example of Special Import Arrangements is Anti Dumping Duty: When VCR’s were first invented an EU company had designed one of the first models (Phillips) and had invested a great deal of money in the development of the product. Some Far East manufacturers obtained models and copied them and then flooded the EU market at a much reduced price as they didn’t have to incur development costs, Anti Dumping duty was levied on these imports to ensure fair trade. Another example is with the Byrd report where the US Government gives subsidies to their own manufacturers against WTO rules enabling them to have an advantage in world markets by offering their goods cheaper than competitors. The EU under the Byrd Report counteracts this “unfair” practise by levying additional duties up to 20% on many US originating products. Licences issued by other agencies: not by HMRC e.g. Department for Business, Enterprise and Regulatory Reform (BERR) [Formerly the Dept. of Trade & Industry (DTI)], Department for the Environment, Food and Rural Affairs (DEFRA) and the Home Office. If you want a commodity code after attempting yourself, you can then contact the Tariff Classification Service, NOT the NAS. Based in Southend Tel: 01702 366077. Operates between 09:00 and 17:00 Monday – Thursday & 09:00 and 16:30 0n Fridays. Refer to PN 600 on classifying your imports and exports An Example of Special Import Arrangements is Anti Dumping Duty: When VCR’s were first invented an EU company had designed one of the first models (Phillips) and had invested a great deal of money in the development of the product. Some Far East manufacturers obtained models and copied them and then flooded the EU market at a much reduced price as they didn’t have to incur development costs, Anti Dumping duty was levied on these imports to ensure fair trade. Another example is with the Byrd report where the US Government gives subsidies to their own manufacturers against WTO rules enabling them to have an advantage in world markets by offering their goods cheaper than competitors. The EU under the Byrd Report counteracts this “unfair” practise by levying additional duties up to 20% on many US originating products.

8. Customs Procedure Code (CPC) Under SAD Harmonisation the CPC is a seven digit alpha numerical code Tells Customs what the goods are doing. For example: Goods temporarily imported for repair. Goods temporarily exported for repair. Goods imported into the EU and staying there (“Free Circulation”). Code goes in Box 37 of the import/export entry. Show SAD Next slide about the Tariff explains where CPC’s can be found… Show SAD Next slide about the Tariff explains where CPC’s can be found…

9. The Tariff Volume I Background information about importing and exporting. Volume II Commodity codes. Import Duty rates (inc. preferences). Special provisions. Volume III Import/Export procedures. How to complete the declaration. Tables and miscellaneous codes (inc. CPC codes). Tariff available from: The Stationery Office, large libraries, agents, etc Available for £250 annual subscription [@ 2006] Available Formats: CD-Rom form or in ‘hard-copy’ and on Internet at: www.uk-customs-tariff.co.uk Vol II duty rates shown are for import purposes (not export). Volume III gives a box-by-box guide to filling in an entryTariff available from: The Stationery Office, large libraries, agents, etc Available for £250 annual subscription [@ 2006] Available Formats: CD-Rom form or in ‘hard-copy’ and on Internet at: www.uk-customs-tariff.co.uk Vol II duty rates shown are for import purposes (not export). Volume III gives a box-by-box guide to filling in an entry

10. The ‘Customs’ import value Legal requirement to give value of importation for Customs purposes Cost of items Insurance Freight charges to EU = C.I.F. value Notices 251 and 252 This is an introduction only as it can be a complex subject (involving e.g. royalties, tooling, technical assistance, commission, etc) Further information is available in Notices 251 (paperwork) and 252 (methods) Mention Incoterms 2000 Give other examples of Incoterms e.g. Ex-works, Free on Board (FOB), DDU / DDP (Delivered Duty Unpaid/ Delivered Duty Paid) Using method 1, certain additional amounts may have to be added to the invoice price depending what the terms of trade are i.e. what does the invoice price include? If goods are invoiced in currencies other than sterling you will need to convert these amounts to sterling for customs duty and VAT purposes when declaring goods at import and export. The rates of exchange can be accessed via the HMRC website using quick links on the left hand side of the Home Page.This is an introduction only as it can be a complex subject (involving e.g. royalties, tooling, technical assistance, commission, etc) Further information is available in Notices 251 (paperwork) and 252 (methods) Mention Incoterms 2000 Give other examples of Incoterms e.g. Ex-works, Free on Board (FOB), DDU / DDP (Delivered Duty Unpaid/ Delivered Duty Paid) Using method 1, certain additional amounts may have to be added to the invoice price depending what the terms of trade are i.e. what does the invoice price include? If goods are invoiced in currencies other than sterling you will need to convert these amounts to sterling for customs duty and VAT purposes when declaring goods at import and export. The rates of exchange can be accessed via the HMRC website using quick links on the left hand side of the Home Page.

11. What types of charges can be incurred at import? Customs duty (usually based on value). Anti-dumping duty (usually based on value). Excise duty (usually based on units of quantity). CAP charges/agricultural levies. (usually based on units of quantity). Import VAT (based on value). Some of the taxes that may be raised at import VAT rating rules are the same at import as when the goods are being supplied within the UK Emphasis that with excise goods containing alcohol the quantity is normally based on the quantity of alcohol. E.G. on a litre bottle Of Vodka @ 40%proof the duty would be payable on 0.4 litre only. Copy of page of Tariff in pack. Show page of Tariff indicating comcode and rate of duty for goods. Mention Duty Deferment & SIVA. Some of the taxes that may be raised at import VAT rating rules are the same at import as when the goods are being supplied within the UK Emphasis that with excise goods containing alcohol the quantity is normally based on the quantity of alcohol. E.G. on a litre bottle Of Vodka @ 40%proof the duty would be payable on 0.4 litre only. Copy of page of Tariff in pack. Show page of Tariff indicating comcode and rate of duty for goods. Mention Duty Deferment & SIVA.

12. Could you save time and money? This is an introduction to schemes and and reliefs Import duty/VAT is reduced because of what is happening to the goods Must be authorised by Customs Rules/conditions for each relief must be followed to the satisfaction of Customs Correct CPC must be used.This is an introduction to schemes and and reliefs Import duty/VAT is reduced because of what is happening to the goods Must be authorised by Customs Rules/conditions for each relief must be followed to the satisfaction of Customs Correct CPC must be used.

13. Customs Warehousing Can help cash-flow; ease problems with un-finalised contracts, or where import licence is not yet available, by delaying the time at which goods are deemed to be present within EU. Charges only become payable on removal. If (re)exported from EU, no Duty or VAT to pay. Notice 232 Can help where delivery logistics and contracts are not finalised at time of importation. Imported and/or non-imported goods can be stored at same premises.Can help where delivery logistics and contracts are not finalised at time of importation. Imported and/or non-imported goods can be stored at same premises.

14. Inward Processing Relief (IPR) Allows relief from import charges to be obtained on goods imported from outside the EU that are processed and re-exported. Helps EU manufacturers to compete in world markets. Two Types: Drawback and Suspension Notice 221 and 221A Define processing-give examples (e.g. manufacturing fabric into garments; carving wood into furniture; blending, etc). Define processing-give examples (e.g. manufacturing fabric into garments; carving wood into furniture; blending, etc).

15. Outward Processing Relief (OPR) Provides relief from import charges on goods previously exported from EU for processing or repair upon subsequent re-importation. Import charges only levied on added-value element of imported goods. Notice 235 Simplified procedure available Examples include: manufacturing fabric into garmentsSimplified procedure available Examples include: manufacturing fabric into garments

16. Samples Samples must be declared using the correct Commodity Code. Usually have to be defaced to be accepted as samples. Limited Quantities apply If goods are required undamaged then full charges need to be paid Notice 367 Emphasis defacement. E.g shoe trade imports shoes as samples and will punch a hole in the sole of each shoe to deem them unusable for general purpose but allowing them to be used for modelling purposes indoors Emphasis defacement. E.g shoe trade imports shoes as samples and will punch a hole in the sole of each shoe to deem them unusable for general purpose but allowing them to be used for modelling purposes indoors

17. Rejected Imports Allows charges to be refunded on non-EU goods imported from outside the EU that are found to be not in accordance with contract. 12 month time-limit. Notice 266 Goods not according to contract. Examples include: goods not the correct specification; defective, etc The ‘fault’ must have existed at the time of importation.Goods not according to contract. Examples include: goods not the correct specification; defective, etc The ‘fault’ must have existed at the time of importation.

18. Import and Export Preference Using preference allows you to import and/or export eligible goods from/to qualifying countries at a reduced, or even nil, rate of customs duty. Subject to goods meeting strict origin criteria. Claims supported by EUR 1 Certificates, Invoice Declarations or for imports only GSP Certificates (‘form A’). Notices 826, 827, 828, 829, 832 & 812 (Turkey) There are many varied rules to preferences, need to read relevant Notices. Need to verify origin; goods must originate in a preference country and either be grown/raised there or made entirely from originating materials there OR meet Rules of origin set out in Notices Good faith/authenticity PN 826= Import Prefs; 828 & 829= various Seek more information and advice Show page of Tariff indicating country codes and rates of duty for qualifying countries. Pick out a particular country code. There are many varied rules to preferences, need to read relevant Notices. Need to verify origin; goods must originate in a preference country and either be grown/raised there or made entirely from originating materials there OR meet Rules of origin set out in Notices Good faith/authenticity PN 826= Import Prefs; 828 & 829= various Seek more information and advice Show page of Tariff indicating country codes and rates of duty for qualifying countries. Pick out a particular country code.

19. Merchandise In Baggage Merchandise in Baggage is any commercial consignment carried as hand luggage or in In baggage Notice 6 If you’ve got anything to declare, make sure you see Customs before you check your bag in or docs cannot be authenticated Temporary imports are imported duty and Vat free but in the case of exhibition goods can be diverted to home use if sold etc.If you’ve got anything to declare, make sure you see Customs before you check your bag in or docs cannot be authenticated Temporary imports are imported duty and Vat free but in the case of exhibition goods can be diverted to home use if sold etc.

20. Shopping on the Internet . Commercial and Personal Internet imports are liable to Customs Duties, VAT and Excise Duty. Customs duty will be charged where the amount due is £7 and over. Import VAT will be charged if the value of goods is £18 and over. Special rules apply to Excise goods i.e. cigarettes, alcohol, tobacco. Notice 143 Guide for International Post Users And Information Leaflet: Shopping on the Internet Point 2 Duty free allowances from outside the EU enjoyed by travellers does not apply to postal goods, even if you post them to yourself whilst abroad. Point 3 Most commonly by post or fast parcel operators. Fast parcel operators will deliver according to their terms and collect the charges. Post office usually requests you go to local sorting office to collect and pay. Both may also include a charge for clearing customs on your behalf. Point 4. Requirement for c88 Import Entry. Responsibility for classification and declaration remain yours. Financial and legal penalties can apply.Point 2 Duty free allowances from outside the EU enjoyed by travellers does not apply to postal goods, even if you post them to yourself whilst abroad. Point 3 Most commonly by post or fast parcel operators. Fast parcel operators will deliver according to their terms and collect the charges. Post office usually requests you go to local sorting office to collect and pay. Both may also include a charge for clearing customs on your behalf. Point 4. Requirement for c88 Import Entry. Responsibility for classification and declaration remain yours. Financial and legal penalties can apply.

21. Future Developments in International Trade Authorised Economic Operators available from 1st January 2008 Security Amendment New Customs Code Information on these Developments is available on the Internet and from the ITDLO Network Sad Harmonisation : Explain that some boxes and the content on the C88 will change on the 1/7/07 AEO : Explain that the EU is introducing AEO WEF 1/1/08 and this may offer benefits to traders involved with IT Security Amendment : Explain that the current Customs Code has been amended to incorpoarte the security Amendment to enhance safety and security within the EU New Customs Code : Currently the Customs Code is being re written and will replace the current code and also Incorporate the Security Amendment Explain Further information is available from the HMRC Internet site and from the ITDLO network and ITDLO presentations at the BOADSad Harmonisation : Explain that some boxes and the content on the C88 will change on the 1/7/07 AEO : Explain that the EU is introducing AEO WEF 1/1/08 and this may offer benefits to traders involved with IT Security Amendment : Explain that the current Customs Code has been amended to incorpoarte the security Amendment to enhance safety and security within the EU New Customs Code : Currently the Customs Code is being re written and will replace the current code and also Incorporate the Security Amendment Explain Further information is available from the HMRC Internet site and from the ITDLO network and ITDLO presentations at the BOAD

22. Authorised Economic Operator Authorisation not mandatory but AEO status….. Provides operators with internationally recognised quality mark Facilitates the movement of goods within secure supply chain Recognised throughout the EU and by other trade partners Provides benefits for legitimate operators Implemented early 2008 ~ applications accepted from 1.7.07

23. Do you need more help? HMRC Contact Centres – initial contact for basic enquiries: Tel: 0845 010 9000. HM Revenue & Customs websites: www.hmrc.gov.uk www.uktradeinfo.com Importing & Exporting Guide: “Breaking Down the Barriers” Tariff Classification Advice Line: Tel: 01702 366077 Refer to local Customs stand/drop-in centre Direct to the website’s Importer/Exporter Starter Pack, “Breaking Down the Barriers” Invite questions A copy of the presentation and useful numbers/information are available in the blue packs and on the Customs stand. Ask delegates to complete feedback questionnaires. Refer to local Customs stand/drop-in centre Direct to the website’s Importer/Exporter Starter Pack, “Breaking Down the Barriers” Invite questions A copy of the presentation and useful numbers/information are available in the blue packs and on the Customs stand. Ask delegates to complete feedback questionnaires.

24. Do you need more help? Please see one of our staff at the H M Revenue and Customs Stand in the Exhibition Hall Refer to local Customs stand/drop-in centre Direct to the website’s Importer/Exporter Starter Pack, “Breaking Down the Barriers” Invite questions Invite delegates to email BEST team for copies of presentation. Useful numbers/information are available in the blue packs and on the Customs stand. Ask delegates to complete feedback questionnaires. Refer to local Customs stand/drop-in centre Direct to the website’s Importer/Exporter Starter Pack, “Breaking Down the Barriers” Invite questions Invite delegates to email BEST team for copies of presentation. Useful numbers/information are available in the blue packs and on the Customs stand. Ask delegates to complete feedback questionnaires.