A blog by the TransportCloud team. We write about shipping, E-Commerce, international business, and customs.
The trade relations between China and the UK are strong. In 2021 alone, the UK imported goods worth over £63 billion from China. These Chinese imports accounted for about 13% of the UK's total imports in the same year. Based on these figures, it is safe to say that there is great demand for Chinese products in the UK. Thus, it is unsurprising that China has recently become the UK's largest import market. However, as lucrative as Chinese imports seem, importing goods from China to the UK can be complex. This article will discuss the necessary points you need to note on Chinese imports and the primary documents you should prepare.
From your shipping costs to the import taxes you have to pay in the UK, costs are the most crucial factor in the importation process. A rough estimate of your costs will help you prepare and work within your budget. Moving goods from China into the UK market, the Customs Authority will require you to pay both import duties and VAT. The VAT rate is fixed at 20%, but the import duty rate depends on the product's value. You can calculate your total by using the official calculator. Notably, if the Customs Authority (HMRC) overcharges you for the import duty or VAT, you can file a claim for a refund.
One common feature of the UK importation system is that the Customs Authority can reject goods if they do not conform to the UK's market standards. If these goods do not meet the requirements, the Customs Authority will not release them. For example, the UK has strict labelling requirements for importing plant seeds, food products, and manufactured goods. The requirements include the mandatory provision of a list of ingredients, best before date, country of origin, and address of the food business operator.
Like every other country, the UK has import restrictions that it uses to regulate the volume of goods in its territory. The restrictions are regularly updated, so it would be helpful to check before importing. Also, you must get an import licence if your goods are hazardous.
As stated earlier, the importation process can be highly complex. You can outsource to a freight forwarder or a customs broker to avoid stress and confusion. A freight forwarder is responsible for organising and shipping your goods, while a customs broker helps conduct your customs clearance. The UK has a register of verified customs agents you can hire.
Economic Operators Registration and Identification (EORI) number is a code the UK customs authority requires from all importers who are importing goods into the UK. If you do not possess the EORI number, the HMRC will hold your goods until you get the EORI. You can apply to the UK government for an EORI number. You will need details like your Unique Taxpayer Reference and VAT number to apply.
The UK has some schemes through which importers can access various benefits. However, there are currently no free trade agreements with the UK for Chinese imports. This situation is primarily due to rising political tensions between both countries. On the bright side, the UK authorities have special import schemes for importers established in the UK. They include:
The Authorised Economic Operator Status scheme applies to international businesses recognised for importing quality goods. Businesses with this status will access benefits like priority treatment from the Customs Authority and reduced import declaration requirements. You can apply to the HMRC for this status if your business is established in the UK and your business is actively involved in international trade. If your business is new to international trade, you can apply, but you must provide evidence of your quality assurance processes.
In certain circumstances, importers can bring goods into the UK at a reduced duty rate. The End-Use Special Procedure scheme is one of such circumstances. Under the scheme, businesses can import products at a duty-free rate as long as the products are designated for a specific purpose. The importer must trade the goods for the specified purpose and for a limited time. Failure to abide by the initial purpose will lead to paying the total duty rate.
Inward Processing is a scheme that allows the duty-free importation of goods used for processing. The finished product must be circulated and sold within the UK. The importer must be based in the UK to apply for Inward Processing. The HMRC will also require your EORI number, a bank guarantee, and an import license (if it applies).
You will require many documents to import your goods safely from China to the UK. Apart from the generic requirements like a packing list, bill of lading, and the commercial invoice, other documents are specific to the UK importation process. They include:
You must make a full import declaration before your goods arrive in the UK. The required window is usually between 30 to 90 days, and you can send your declaration through the CHIEF system (Customs Handling of Import and Export Freight) for faster clearance. Your declaration must include the commodity code of your products and your custom procedure. The CHIEF is an electronic database of the UK Customs Authority. It accepts import declarations and scans the list of incoming goods to determine goods with lower risk. These goods go through faster checks at the Point of Entry.
This document requirement only applies to importers that engage the services of customs brokers. A power of attorney is an instrument showing that the importer has given authority to the customs broker to act on their behalf. The Customs Authority might decline to let your customs broker handle your import paperwork without the Power of Attorney. The importer must sign the POA, and it must contain an accurate EORI number.
After going through the entire process of shipping your goods from China to the UK, remember to keep all bills and invoices safely. Also, if your importation is targeted at resale, it might be helpful to actively look out for Chinese products with rising demand in the UK. This awareness will help you identify potential markets.