The Customs Practice has learnt that a temporary suspension of customs duties will apply to imports from Pakistan of a range of products, predominantly textiles and clothing, from 15 November.  We understand that duties will be eliminated from 75 separate commodity codes, until 31 December 2013, although final details have yet to be published.  This measure is intended to assist Pakistan’s recovery from the effects of the flooding of 2010.

We would welcome contact from importers of yarns, fabrics, garments and footwear, of textiles and leather, from Pakistan, so that we can update as soon as more information becomes available.  Please contact us on 01635 521 624, or by email to ian.worth@thecustomspractice.com

During 2011, over £28 billion in duty and import VAT was paid in the UK using deferment accounts.  That means that the remaining importers are still paying around £20 billion a year at the time of import, without taking advantage of additional cash flow available to those with deferment accounts.  If you don’t yet have a deferment account, or are unsure of the benefits, then call us on 01635 521624 – we can probably help.

September update

Here is a summary of some of the key news items and developments over the last month.  Please note this is not intended to be exhaustive, nor is it intended to be used as definitive advice upon which you may rely in making decisions of importance to your business.  If you would like more detail about any item, please call The Customs Practice on +44 (0) 1635 521624, or email ian.worth@thecustomspractice.com

Anti-dumping duties (ADD)

Ceramic tableware from China: the investigation into alleged dumping is continuing.  We expect to have news by mid-October on whether provisional anti-dumping duty will be imposed by its target date of 16 November.

Aluminium Foil from China: provisional ADD has now been imposed on aluminium foil from China, ranging from 13% to 35.4%.  Importers may wish to consider whether this additional cost might be mitigated – give us a call, we have some ideas.

Bicycles from China:  an investigation has been initiated into possible circumvention of ADD on Chinese bicycles, consigned from Indonesia, Malaysia, Sri Lanka and Tunisia.   During the investigation, shipments from these countries are subject to registration so that if the investigation concludes that circumvention of anti-dumping measures has taken place, the Commission can collect appropriate levels of ADD.

Organic coated steel products from China:  provisional ADD has been imposed on a range of flat-rolled coated steel products, in Chapter 72.  ADD rates range from 13.2% to 57.8%, which represents a significant increase in cost for importers of these products.

There are also continuing investigations into Chinese manufacturers of solar panels and telecommunications products, as well as US investigations into Chinese manufacturers of automotive parts.

UK Customs U-turn on IPR drawback

Drawback is a version of Inward Processing Relief whereby imported goods are declared to IPR with a simultaneous declaration to free circulation.  In this way, customs duty is paid at time of import, then is reclaimed following export of compensating products, subject to the conditions of the processor’s authorisation. 

Over the past couple of years, UK Customs have refused new applications for IPR drawback, on the basis that drawback was not envisaged by the Modernised Customs Code, even though the MCC had not been enacted.  Now, the MCC is to be redrafted as the Union Customs Code, and could take several years before it can be a) finalised and then b) enacted by its Implementing Regulation.  This means that the original Customs Code and its Implementing Regulation remain in force – this includes provision for IPR drawback.  Consequently, Customs have advised that they will accept new applications for drawback, and extend current authorisations up to 31 December 2014.  This deadline may be extended depending on progress towards implementation of the UCC.

We would like to hear from any businesses which have had applications or renewals for IPR drawback rejected, or who simply would like to know more about whether IPR drawback could benefit them.

Ex-works sales for export

Customs have issued clarification - CIP (12)47, that where goods are sold to a non-EU buyer for export under ex-works terms,

1. an agent making the export declaration must do so under indirect representation, and
2. the declared consignor (box2) must be the EU contracting party, with the non EU buyer being shown in box 44.

There are some exceptions – in the UK an instructed agent can make an export declaration under direct representation, but this must be authorised in writing by the UK seller.  Also, care is needed to ensure any export declarations comply with the requirements of, for example, inward processing relief. 

If you have regular export shipments under ex-works terms, we can help to ensure your related processes are compliant with customs requirements, and that any agents used are instructed appropriately.

Duty deferment guarantees

For those who have existing deferment guarantees, when was the last time you looked at whether they are efficient and appropriate for your business?  We can review their efficiency and, in many cases can source an alternative, cheaper guarantee solution.

Unable to obtain a bank guarantee?  Whatever the obstacle preventing you from obtaining a bank guarantee – give us a call.  We may be able to help you get around the obstacle and then you can  start reaping the benefits of a duty deferment account.

Compliance checking service

Do you have the time to undertake post-entry checks on the accuracy of your customs declarations?  Most importers don’t have the resource to do this, and consequently the first time any checks are undertaken are during a Customs audit.  This can (and does!) often result in an unexpected demand for underpaid customs duty, going back up to 3 years.  Regular compliance checks of import entries  not only give some comfort that declarations have been correct, but they also enable timely corrections where necessary, which helps to ensure that duty has not been underdeclared, or overdeclared.  If you don’t have the resource to carry out these checks, then please ask about our compliance checking service.

And finally…..

A recent success story.  The Customs Practice was approached by a business which had been found to be using rebated fuel (red diesel) in two of its vehicles.  Customs issued a demand to the business for almost £22,000, plus penalties.  After detailed analysis of the business records, we were able to secure a reduction of the demand to just over £300, and withdrawal of the penalties.

The message here is that if your business receives a demand from Customs, please don’t assume that it cannot be successfully challenged.  We are here to help.

UK Customs permit importers to defer payment of their customs duty and import VAT liabilities until the 15th of the month following physical import. 

What does this mean?

This enables goods to be cleared and delivered without being delayed pending payment.  A deferment account is set up with Customs, subject to an agreed maximum limit – usually this is sufficient to cover a full month’s customs duty and import VAT liability.  No interest is charged by Customs, so in effect an importer obtains up to six weeks of positive cash flow.

A deferment account is a prerequisite for customs warehousing, which opens much greater opportunities for substantial cash flow benefits, as well as hard savings, and is also extremely useful for administration of duty relief regimes, by extending the point at which customs duty and import VAT becomes payable to its absolute maximum.  These benefits cannot be fully exploited without a deferment account.

However, Customs require security, in the form of a guarantee.  The guarantee must be sufficient to cover two months of liability, because the limit in month two could be reached before payment is collected from month one.  In most cases, guarantees are provided by banks, but are subject to conditions imposed by the banks – in some cases this can mean a restriction on borrowing, or a requirement for a cash deposit equal to the guarantee amount.  For many businesses, this restricts working capital, which renders a deferment account unviable.

The Customs Practice can help

There is, however, an alternative.  One which provides sufficient security to obtain a deferment account and does not restrict working capital.  It is based on a risk assessment and can be attractive to importers who cannot obtain a cost-effective bank guarantee.

So, if you don’t currently have a deferment account, perhaps because the cost of a guarantee has been prohibitive; or if you would like to review your current deferment arrangements, please call us on 01635 521624 or by e-mail to ian.worth@thecustomspractice.com.

The Customs Practice regrets that the AEO event planned for 10 July is postponed.  We are, however, offering individual AEO consultations during the next few months – for further details please call us on 01635 521624.

The Customs Practice is pleased to announce the development of a strategic partnership with the Customs and Trade Practice in Hong Kong. 

What does this mean?
This partnership enables us to jointly address a greater range of supply chain issues, by working directly with product manufacturers and their agents in the Far East, as well as with their customers – the importers in the UK.  In this way, we can provide more comprehensive customs planning solutions, optimising the tariff classification of products through first-hand knowledge of the manufacturing process and removing non-dutiable elements of cost from the importer’s duty calculation.

The Customs and Trade Practice is particularly experienced in helping manufacturers to obtain the most favourable outcomes to anti-dumping investigations, which complements our work in minimising the impact of anti-dumping duties for importers throughout the EU.

The Customs Practice, with The Customs and Trade Practice HK, can help
For further information on how we can minimise customs duty costs, please call us on 01635 521624 or by e-mail to ian.worth@thecustomspractice.com.

Importers of products which meet the exact descriptions shown on the list will be able to claim a 0% duty rate (in most cases) from 1 July.  This is because the Commission has established that there is insufficient EU manufacture of these products to justify the protection to EU manufacturers afforded by positive rates of import duty.

What does this mean?
Any business which imports materials or components because they cannot obtain supplies from EU manufacturers can apply for a tariff suspension, where the savings to be gained amount to at least €20,000 a year.  The application process is, however, quite lengthy as new suspensions are announced only twice each year – January and July.  The next round of applications must be submitted in September 2012, and if successful, will result in new tariff suspensions effective from 1 July next year.

The Customs Practice can help
The Customs Practice can assist importers with applications for tariff suspensions – for further information, or to check whether your imports may be eligible for a tariff suspension, please call us on 01635 521624 or by e-mail to ian.worth@thecustomspractice.com.

We are hearing that UK Customs / Border Agency are currently stopping all postal consignments from China and Hong Kong, for inspection.  Average delays are understood to be around 10-12 days.  We understand that this is part of an initiative by UK Customs targeted at protection of Intellectual Property / Trademark etc breached by imports of counterfeit / grey market goods – in particular UGG, NIKE and HERMES are believed to be among a number of designer brands involved in this initiative.

What does this mean?
Clearly, this is causing significant delays for many innocent shipments, so any UK importers who receive goods by airmail from China and Hong Kong should expect delays for the foreseeable future.  If any shipments are time-sensitive, they may need to consider alternative options - e.g. accompanied merchandise in baggage.

The Customs Practice can help
The Customs Practice has a presence in Hong Kong and can help exporters from Hong Kong and China to minimise the risk of delays at the UK border by ensuring their exports are fully compliant with EU Customs requirements.

To find out more, please call us on 01635 521624 or by e-mail to ian.worth@thecustomspractice.com.