ics-global

Is the UK–US Trade Deal Valid?

Sun, 31 Aug 2025 15:02:04 GMT

Are US Tariffs Against the UK now Illegal?

Many of Donald Trump's tariffs, according to a federal appeals court, are an abuse of his presidential emergency powers.

The US Court of Appeals ruled on Friday 29 ^th August that the so-called reciprocal tariffs, which are levied against almost all nations (including the UK) are unlawful. The verdict supports a Court of International Trade decision in May 2025 that similarly dismissed Trump's claim that the International Emergency Economic Powers Act (IEEPA) of 1977 permitted his global tariffs. After a national emergency is declared, the President has broad authority to regulate a range of economic activities under the International Emergency Economic Powers Act (IEEPA).

The US President stated, "If allowed to stand, this decision would literally destroy the United States of America."

The court laid the stage for a subsequent legal battle in the US Supreme Court by ruling that the tariffs would remain in effect until mid-October 2025 rather than stopping them.

More Uncertainty for British Businesses

Whether the United States will now be required to reimburse billions of dollars collected through extra import duties on goods from the UK and other nations paid in recent months will be a topic of discussion. By deciding that the additional 10% tariffs would not be stopped but would instead remain in place until mid-October 2025, the court has provided more uncertainty for British Businesses.

As from 5 April 2025, most goods imported from the UK were subject to an additional ad valorem rate of duty of 10 percent on top of existing US duties, fees and taxes on imports from the UK. This rate of duty applies to UK imported goods entered for US consumption or withdrawn from US bonded warehouses for US consumption.

If the tariffs are ruled illegal, it could also throw into question the Economic Prosperity Deal (EPD) between the US and UK, which was secured with the US ahead of this US Court of Appeals ruling.

What is the Economic Prosperity Deal (EPD)?

On May 8, 2025, the US and the UK signed the Economic Prosperity Deal (EPD), a set of general parameters to lower or eliminate tariffs on important exports like steel, aluminium, and cars. It is not a complete Free Trade Agreement (FTA). Although the agreement is not legally binding and leaves precise policies and deadlines to future negotiations, it aims to decrease costs for UK exporters in exchange for UK tariff reductions on US beef and ethanol. Although the UK's digital services tax is still a source of dispute, the EPD also contains pledges to negotiate further mutual recognition agreements and work on a digital trade deal.

What does the Economic Prosperity Deal (EPD) cover?

A non-binding framework for future trade talks, the US-UK EPD covers topics like preferential treatment for U.K. pharmaceuticals and aerospace parts, subject to certain supply chain security standards. Expanded market access for specific U.S. agricultural exports (beef, ethanol) are included. Additionally, it provides the foundation for cooperation in sophisticated technological sectors and attempts to address national security issues pertaining to vital industries like steel, aluminium, and cars.

Rules of Origin

The United States and the United Kingdom plan to implement origin regulations that optimise bilateral trade and stop non-participants from abusing the bilateral agreement to avoid tariffs. The "economic nationality" of goods is determined by their rules of origin. This refers to their place of manufacture or production rather than their shipping location.

Cars

According to the Economic Prosperity Deal (EPD), the United States will establish a quota of 100,000 cars per year as per the general conditions in May 2025, and tariffs on UK car exports and car parts have been lowered from 27.5% to 10% as of the end of June 2025. The quota of 100,000 cars from the United Kingdom nearly matches the total number of cars the country sent to the United States in 2024, according to a news release from the U.K. government.

US Beef

The UK has agreed to establish a preferential duty-free quota of 13,000 metric tonnes (mt) of US beef every calendar year. In addition, the UK will eliminate the 20% duty on US beef imported under the current World Trade Organisation quota of 1,000 mt annually shared by the US and Canada.

Steel and Aluminium

For UK steel and aluminium, as well as some derivative steel and aluminium products, the US will set up a quota at Most Favoured Nation rates. The UK will endeavour to comply with US regulations regarding the safety of steel and aluminium product supply chains. A "quota at Most Favoured Nation (MFN) rates" refers to a limited quantity of goods that can be imported at a reduced tariff, with that reduced duty rate applied.

Ethanol

Ethanol imports from the US into the UK will no longer be subject to tariffs. The manufacturing industry in the United Kingdom makes extensive use of ethanol. The Economic Prosperity Deal (EPD) granted duty-free access for up to 1.4 billion litres of US ethanol annually, a substantial quantity for the whole UK market.

Pharmaceutical Products

Both nations are still committed to obtaining notably better results for pharmaceutical exports from the UK to the US that might be the target of section 232 enquiries or other tariff actions. If the amount or conditions of US imports are thought to pose a threat to national security, the president of the United States may modify the importation of products or materials from foreign nations under Section 232 of the Trade Expansion Act of 1962. In some situations, the president of the United States may apply tariffs through executive action, circumventing Congress, according to Section 232 of the Act.

Section 232 of the Trade Expansion Act of 1962

If the Department of Commerce determines that imports represent a threat to national security, the President of the United States may impose tariffs on those imports under Section 232 of the Trade Expansion Act of 1962.The president may subsequently apply duties, quotas, or other measures to "adjust" imports and protect the country after the Bureau of Industry and Security (BIS) completes the investigations. The clause has been used to cover goods like electronics, steel, and aluminium.

Free trade agreements: what are they?

A formal agreement that reduces or eliminates trade restrictions, including tariffs, quotas, and regulations, between two or more nations is known as a Free Trade Agreement (FTA). Bilateral agreements between two countries, multilateral agreements involving numerous countries, and unilateral agreements for the advantage of one country are common forms of Free Trade Agreements (FTAs).

The World Trade Organisation adopts the widely accepted concept of a free trade agreement as an international agreement to lower or do away with tariffs, quotas, and other trade obstacles between member nations rather than offering a formal, clear definition. FTAs facilitate trade and investment, giving consumers access to a wider range of reasonably priced goods and facilitating import and export for enterprises.

United Kingdom

The UK has signed 40 trade agreements with 74 countries and territories plus the EU. These agreements are in force for 72 partners. These agreements were mostly "rollover" agreements that replaced EU agreements, but there are also more recent customs agreements like those with Australia, New Zealand, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The UK does not have a Free Trade Agreement in force with the USA.

United States

According to the Office of the United States Trade Representative, there are currently 14 free trade agreements between the US and 20 other nations. As a result, U.S. businesses can export goods and services to trading partner markets more easily and affordably.

ICS Global Services Limited provide businesses with advice on international trade, customs compliance and import / export matters. If you would like to receive more detailed advice, please contact us by sending an e-mail to info@icsglobalservices.co.uk

ICS Global Services Limited

Low-Value Commercial Imports into the USA

Thu, 28 Aug 2025 14:35:09 GMT

Changes to US import rules for low-value shipments

Requirement for Low Value Commercial Imports

The US will eliminate the $800 de minimis requirement for commercial shipping on August 29, 2025. The great majority of overseas companies that export low-value goods to the US are impacted by this move, including those goods that were formerly duty and tariff free.

In the past, a streamlined procedure allowed most exports under $800 (about £590) to enter the United States duty-free. Exports will now be subject to tariffs, levies, customs clearance, and administrative fees regardless of their value. There will be more data obligations as well.

Why is the USA ending the de minimis exemption?

The de minimis rule's proponents claim that reduced prices are one way it helps American consumers. US critics claim it unjustly benefits foreign corporations and in addition raises safety concerns. President Trump referred to the exemption as "a big scam."

What is de minimis for Commercial Shipments?

The Latin phrase "de minimis" means "trifling or of little importance," according to the U.S. International Trade Commission. The provision, which dates to the Tariff Act of 1930, has reduced customs processing, including inspections, and allowed US consumers to avoid paying import taxes and tariffs on low-value goods. The threshold has been raised by US Congress through multiple amendments to Section 321 of the act, reaching $800 in 2015. The US Congress initially enacted Section 321 of the Tariff Act of 1930 in 1938 to improve administrative efficiency and to avoid expense and inconvenience to the government.

Low Value Imports into USA

The prior US $800 threshold was essentially eliminated on July 30, 2025, when the US issued an Executive Order (EO) suspending the de minimis exemption for all low-value commercial exports, including those from the UK. As a result, goods from overseas entering the US, even those valued under $800, will face tariffs and duties starting on 29 August 2025.

The most recent executive order states that companies may be charged $80 per item for countries with tariff rates below 16%, $160 per item for those with tariff rates between 16% and 25%, and $200 per item for those with tariff rates above 25%.

After the de minimis restriction is lifted, all shipments will undergo US customs clearance procedures. The delay at the US border may lengthen as a result.

US Customs Clearance

Exports to the US will now be subject to a full customs procedure. Previously, some customs clearance data fields were optional, but now exporters to the USA must submit correct and complete information. This comprises of:

An invoice with precise product descriptions.
Each item and its component parts country of origin must be stated, as Section 232 tariffs will also be applied to component parts according to their Harmonised System (HS) codes .
The carrier and US Customs Broker will use the data supplied to determine additional expenses, such as duties, levies, and other administrative and customs clearance fees. Depending on the agreed Incoterms 2020 and the status of the US Importer of Record, these expenses could be Delivered Duty Paid (DDP), in which the overseas seller bears all expenses, or Delivered at Place (US Port uncleared) (DAP), in which the US buyer bears the responsibility for tariffs and customs duties.

Our US how-to guide provides detailed information on exporting goods to the USA, trade agreements with the USA, export controls, regulations, importer of record obligations, documentation, and compliance requirements.

ICS Global Services Limited

UK Safety and Security Declarations

Tue, 28 Jan 2025 12:33:37 GMT

Requirements for safety and security declarations when importing products from the European Union.

New Requirement

A safety and security statement, sometimes referred to as an "entry summary declaration" or "ENS," will be required for any items imported into the United Kingdom from the European Union as of January 31, 2025. Companies have been urged to begin filing Safety and Security Declarations before this deadline if they are prepared to do so.

What is a safety and security declaration?

Border officials utilise a Safety and Security Declaration (SSD) to assess the possible risk that items crossing their border pose to their jurisdiction. It has nothing to do with taxes and duties. Declarations come in two varieties: exit summary declarations (EXS) and entry summary declarations (ENS).

Companies that currently import from non-EU nations or export from the UK to the EU are already obliged to provide safety and security declarations.

Completing a safety and security statement

Twenty necessary fields will need to be filled out for every declaration. Additionally, there will be eight conditional fields that must be filled out only under specific conditions. The remaining nine fields can be left empty or filled in.

Legal Requirement

HM Revenue and Customs state that “the legal requirement to submit a declaration lies with the carrier. This is the operator of the active means of transport on, or in, which the goods are brought into the customs territory. It is the carrier’s responsibility to make sure that the declaration is submitted within the legal time limits, and it must only be done by a representative or third party with the carrier’s knowledge and consent.”

If you would like to receive more information regarding Safety and Security Declarations, please let us know by sending an e-mail to info@icsglobalservices.co.uk

ICS Global Services Limited

Import Checks on EU Food and Animal Products

Fri, 19 Apr 2024 09:18:35 GMT

Checks on EU food imports delayed again?

UK Government Response, April 19th

In response to the headlines today, the Government issued the following update via the Defra Press Office regarding the upcoming border checks:

There has been reporting this morning (19 April) claiming that health and safety checks for EU imports won’t be “turned on” as planned from April 30, 2024. This is not the case; as has been previously outlined, we will be commencing checks on April 30.

Please see the following link for the detailed response: https://deframedia.blog.gov.uk/2024/04/19/coverage-about-upcoming-border-checks/

Government Statement

A UK government spokesperson said:

"Checks are commencing from 30 April and, as we have always said, the medium and high-risk goods posing the greatest biosecurity risk are being prioritised as we build up to full check rates and high levels of compliance. Taking a pragmatic approach to introducing our new border checks minimises disruption, protects our biosecurity and benefits everyone – especially traders.

There has been extensive engagement with businesses over the past year – with our approach welcomed by several trade associations and port authorities. We will continue to work with and support businesses throughout this process to maintain the smooth flow of imported goods.

We are confident we have sufficient capacity and capability across all points of entry to handle the volume and type of expected checks. It is important to remember the cost of our border checks is negligible compared to the impact of a major disease outbreak on our economy and farmers."

Post-Brexit Border Controls

As new post-Brexit border controls kick in on April 30th, the UK government has reportedly informed port health officials that it will not “turn on” health and safety checks for EU imports.

According to the Financial Times, a presentation created by the Department for Environment, Food and Rural Affairs (Defra) emphasised the possibility of "significant disruption" if the new regulations were put into place. It stated unequivocally that the systems will not be completed on schedule.

Several trade associations reportedly requested that the checks' implementation be postponed until at least autumn.

Five times already, the border restrictions have been postponed due to concerns that they may generate chaos and increase the inflation of petrol prices.

The UK Government stated in a press release dated January 31, 2024:

Controls introduced on April 30, 2024

The new checks at the non-West Coast border on medium-risk EU-origin goods will be introduced.
All goods to which import health controls apply will be required to enter via a point of entry that has the relevant Border Control Post or in the case of plants or plant products, a Control Point designation for those goods.
Health certificates and routine checks at the border will no longer be required for low-risk animal products for imported from non-EU countries, with the exception of intelligence-led interventions on low-risk animal products.
The requirements for import controls on certain low-risk plants and plant products from non-EU countries will start to be removed, where supported by risk assessments. Health certificates and routine checks at the border will not be required for such products.
Medium-risk animal products will be subject to reduced levels of intervention at the border, with identity and physical check levels being lower than now for imports from non-EU countries.
The introduction of Common Health Entry Documents (CHEDs) for all live animal, High-Risk Food and Feed of Non-Animal Origin (HRFNAO) and animal product imports from the EU is required to support the introduction of identity and physical checks from the end of April 2024. CHEDs will replace the Import Notifications (IMPs) currently required for live animal, HRFNAO and animal product imports from the EU. There is currently no HRFNAO of EU origin listed, so this requirement refers to where HRFNAO from outside the EU has been placed on the EU market and has not been subject to any further processing.

If you would like to receive more information on EU imports, please let us know by sending an e-mail to info@icsglobalservices.co.uk

ICS Global Services Limited

CDS Exporter Subscription

Thu, 25 Jan 2024 11:33:58 GMT

UK Exporters are urged by HMRC to enrol in the Customs Declaration Service (CDS).

Customs Declaration Service

The Customs Declaration Service (CDS), which offers businesses a more streamlined, user-friendly system with more capability, is replacing the Customs Handling of Import and Export Freight (CHIEF) service. Since its launch in 2018, CDS has been used to file import declarations for products coming into the UK. HMRC has announced that it is now implementing a "new phased approach," requiring "selected high-volume declarants" to switch to CDS for exports by November 30, 2023, and mandating CDS use by March 30, 2024, for all other enterprises.

Learn more about CDS >>

UK Government Announcement

The government has advised all exporters to use the new Customs Declaration Service (CDS), which will be necessary for export declarations beginning on March 31, 2024. In CDS, exporters may need to complete up to 65 data elements for their exports, depending on the type of declaration and situation.

HMRC will send an email to all export declarants who haven't enrolled yet with the information and instructions needed to sign up for the service.

On March 30, 2024, Customs Handling of Import and Export Freight (CHIEF), the legacy service that is currently in operation, will come to an end. For importers who migrated to the CDS last year, the system is already no longer in operation.

Procedure for CDS Exporter Subscriptions

Declarants must ensure they have the following details before they can subscribe:

The company's Economic Operators Registration and Identification number using their current Government Gateway user ID and password (EORI number).
Their national insurance number, their Unique Taxpayer Reference (UTR), the date the business was established, and, in the case of a lone trader, the business address listed in HMRC records.
If declarants lack any of the aforementioned data, they will need to obtain it on their own or, in the case of an EORI number, apply for it.

CDS Support

If you would like to receive more information on how we could help you, please let us know by sending an e-mail to info@icsglobalservices.co.uk , and we will contact you shortly.

ICS Global Services Limited

The Border Target Operating Model (BTOM)

Tue, 02 Jan 2024 14:50:23 GMT

The final Border Target Operating Model sets out a new approach to security controls, and sanitary and phytosanitary controls.

What is the Border Target Operating Model (BTOM)?

The UK government published a draft ‘Border Target Operating Model’ in April 2023, which is applicable to imports from all countries into Great Britain, including the EU. The Border Target Operating Model highlights the UK government’s approach to safety and security controls and sanitary and phytosanitary controls. The safety and security controls relate to all imports, whereas the sanitary and phytosanitary (SPS) controls relate to imports of live animals, animal products, plants and plant products.

The Border Target Operating Model outlines the need for effective border controls and the need to support businesses with import processes that are as simple as possible. The new controls are seen as essential in maintaining UK security and biosecurity and will better protect the UK population and environment from invasive pests and diseases, protect public health, deliver food that is safe to eat whilst maintaining security of supply for consumers, and disrupt criminal activity before it can harm UK communities.

Border Target Operating Model - Final Plans

The Border Target Operating Model contains the UK government’s final plans for a new approach to importing goods into Great Britain, that will be progressively introduced from the end of January 2024.

The government has stated that the Border Target Operating Model sets out a new approach to security controls (applying to all imports), and sanitary and phytosanitary controls (applying to imports of live animals, animal products, plants and plants products) at the border. It sets out how controls will be simplified and digitised, and their ambition for the UK’s new Single Trade Window.

BTOM Implementation Timelines

The UK government have stated that they will implement the Border Target Operating Model through three major milestones:

31 January 2024

The introduction of health certification on imports of medium risk animal products, plants, plant products and high-risk food and feed of nonanimal origin from the EU. The removal of pre notification requirements for low-risk plant and plant products from the EU.

30 April 2024

The introduction of documentary and risk-based identity and physical checks on medium risk animal products, plants, plant products and high-risk food and feed of non-animal origin from the EU. Existing inspections of high-risk plants/plant products from the EU will move from destination to Border Control Posts. The UK government will also begin to simplify imports from non-EU countries. This will include the removal of health certification and routine checks on low-risk animal products, plants, plant products from non-EU countries as well as reduction in physical and identity check levels on medium-risk animal products from non-EU countries.

31 October 2024

The requirement for Safety and Security declarations for imports into Great Britain from the EU or from other territories where the waiver applies will come into force from 31 October 2024 as set out in the original Target Operating Model. Alongside this, the UK government will introduce a reduced dataset for imports and use of the UK Single Trade Window will remove duplication where possible across different pre-arrival datasets – such as pre-lodged customs declarations.

Support with the Border Target Operating Model

These post-Brexit checks on goods entering Great Britain will commence at the end of January 2024. For further advice and guidance regarding the Border Target Operating Model, please contact our company on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

ICS Global Services Limited

Delayed Post-Brexit Border Controls

Tue, 29 Aug 2023 16:31:48 GMT

The UK government has delayed post-Brexit border checks 5 times.

Delayed UK Border Controls

The UK government has again delayed the commencement date for post-Brexit border controls on live animals, animal products, plants and plants products until 31 January 2024. The original checks at the UK borders were supposed to come into force in 2021 but have been delayed five times. The UK decision to delay these checks has potentially resulted in border control gaps, which could be exploited.

The European Union (EU) has been applying a full import control regime on animal and plant products from Great Britain since the end of the Brexit transition period on 1 January 2021.

The government state that these delayed controls will keep the UK safe by defending against plant and animal diseases from abroad, protecting our vital agricultural industry and food supply chains , and assuring our trade partners of the quality of our exports.

UK Government Press Release

The UK Government press release states:

The Border Target Operating Model for trade in goods, published today, 29th August 2023, sets out when new controls will be introduced to better protect the UK against biosecurity threats and create a world-class border system.

Delivering on the 2025 Border Strategy to create the most effective border in the world, the model introduces a new global regime for security and biosecurity controls, including bringing in controls on imports from the EU for the first time and using Brexit freedoms to simplify import controls on goods from across the globe. Many businesses will already be familiar with similar requirements already in place for exporting to the EU.

These controls will keep the UK safe by defending against plant and animal diseases from abroad, protecting our vital agricultural industry and food supply chains, and assuring our trade partners of the quality of our exports. It will also protect against illegal imports, including firearms and drugs.

The Border Target Operating Model makes smarter use of data and technology to ensure a more efficient trading experience for businesses. By taking an intelligent, risk-based approach, it removes duplication and reduces the volume of data and paperwork required from businesses when importing goods. This will save businesses around £520m per year compared to the original import model that would have been introduced in 2022.

The model has been developed following extensive engagement with the border industry and businesses across the UK, and in collaboration with the Scottish and Welsh Devolved Administrations. Having listened to the views of industry, the Government has agreed to a delay of three months for the introduction of remaining sanitary and phytosanitary controls, as well as full customs controls for non-qualifying Northern Ireland goods, which will now be introduced from January 2024. To give stakeholders additional time to prepare for the new checks, further controls have a revised timetable. These include checks on medium risk animal products, plants, plant products and high risk food (and feed) of non-animal origin from the EU, implemented in April 2024, and safety and Security declarations for EU imports, implemented in October 2024.

The Government has also worked with industry to test new technologies in a border setting, including distributed ledgers for sharing data, smart seals and GPS trackers. Pilot testing found these technologies could simplify processes across the supply chain, transforming the UK border through reduced costs and administrative burdens, making importing and exporting easier and cheaper for businesses.

In addition to the Border Target Operating Model, the Single Trade Window is another flagship border development which makes smarter use of data and technology. It will simplify and streamline import and export trade processes and provide a single gateway through which businesses can supply trade data to the government. Under this system, information will only need to be submitted by traders once and in one place, removing complexity and duplication from the system.

Further assistance with food imports or exports

We can provide further advice and guidance regarding importing and exporting food. For more information, please contact our company on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

ICS Global Services

New Phased Approach for CDS Export Declarations

Wed, 23 Aug 2023 16:15:57 GMT

HM Revenue and Customs have issued an update on the implementation of the Customs Declaration Service (CDS) for Exports.

Phased Approach for CDS Exports

HM Revenue and Customs (HMRC) have announced today a new phased approach for businesses moving export declarations to the Customs Declaration Service (CDS). HMRC have based their decision on feedback from the industry.

HMRC have confirm the following phases:

CDS Export - Phase One

HMRC and its software developers will support selected high-volume declarants to move to CDS for exports by Thursday 30 November 2023.

CDS Export - Phase Two

The second stage of this approach will see all other businesses move to CDS for exports by Saturday 30 March 2024.

Support for Export Declarations

HMRC state that this new approach will enable HMRC and delivery partners to build on the existing IT testing, as well as undertake additional performance analysis while businesses with the existing IT functionality start to migrate. It will also enable HMRC and their delivery partners to better support export declarants to make a smooth migration to CDS .

Replacing CHIEF

CDS is replacing the Customs Handling of Import and Export Freight ( CHIEF ) service and provides businesses with a more user-friendly, streamlined system which offers greater functionality. CDS has been running since 2018 and is already being used for making import declarations when moving goods into the UK.

Further assistance with CDS Export Declarations

We can provide further advice and guidance regarding CDS Export Declarations. For more information, please contact our company on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

ICS Global Services

Developing Countries Trading Scheme (DCTS)

Fri, 28 Jul 2023 11:46:41 GMT

The UK’s Generalised Scheme of Preferences (GSP) has been replaced by the Developing Countries Trading Scheme ( DCTS ), which entered into force on 19 June 2023.

What is the Generalised Scheme of Preferences (GSP)?

The Generalized System of Preferences, or GSP was introduced in 1971 to develop a trading environment for developing countries. The objective was to help developing countries by enabling them to exploit duty-free and quota free access into the markets of developed countries. The first developed nations to grant GSP preferences were Armenia, Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey, United Kingdom and the United States of America.

EU Generalised System of Preferences (GSP)

The European Union (EU) GSP scheme allows products originating in certain developing countries preferential access to the markets of the EU. The EU preferential treatment is given in the form of reduced or zero rates of Customs Import Duties. The GSP scheme is designed to benefit certain developing countries by granting them important access to all countries within the EU.

The European Union (EU) GSP scheme has three tiers of trade preferences, which are based on a beneficiary country’s level of development.

General GSP

Beneficiary countries can benefit from duty suspension for non-sensitive products and duty reductions for sensitive products across approximately 66 per cent of all EU tariff lines.

GSP+

The GSP+ is an incentive arrangement for Sustainable Development and Good Governance that aids developing countries that have ratified 27 international conventions on human rights, labour rights, environmental protection and climate change, and good governance.

Everything But Arms (EBA)

The EBA arrangement allows duty-free and quota-free access for all products originating in Least Developed Countries (LDCs). Products, such as arms and ammunition are excluded.

Obtaining EU Preferential Treatment on Imports

The importation into the EU must be accompanied by documentary evidence of origin, such as a Movement Certificate EUR.1, an invoice declaration or a statement on origin. This documentary evidence verifies that the goods meet the criteria commonly known as preferential rules of origin.

The UK’s own Generalised Scheme of Preferences

The UK’s own Generalised Scheme of Preferences has been in place since Brexit and largely replicated those tariffs reduced or removed by the European Union (EU) GSP scheme. As with the EU scheme, the UK scheme requires the UK importer to have documentary evidence of origin provided by the exporter. In many cases the exporter would have to furnish a Form A Certificate with an origin declaration. The UK Generalised Scheme of Preferences provided continuity of trade access for 70 developing countries during the transition period following Brexit.

The Developing Countries Trading Scheme (DCTS)

The Developing Countries Trading Scheme (DCTS) came into force on 19 June 2023 and has now replaced the UK’s Generalised Scheme of Preferences (GSP).

The Department for Business and Trade has stated that following the end of the transition period and the resumption of an independent trade policy, the UK has an opportunity to develop a new scheme. The new scheme will be an opportunity for the United Kingdom to grow free and fair trade with developing countries, boosting the economy and supporting jobs in those countries, as well as in ours.

The Department for Business and Trade has stated that the DCTS is a simpler and more generous preferential trading scheme which has been designed to boost trade with developing countries in order to support their development. The DCTS cuts tariffs, removes conditions and simplifies trading rules for developing countries and benefits UK businesses and consumers by reducing the import cost of thousands of products from around the globe.

The DCTS applies to 65 countries that fall under one of the following categories:

Least developed countries (LDCs) as defined by the United Nations
Low income and lower middle-income countries as defined by the World Bank

Claiming DCTS Duty Preference

The Department for Business and Trade has stated that an importer can follow 4 steps to claim a preference under the DCTS. A preference could be reduced or 0% tariffs, relaxed rules of origin or generous product specific rules (PSRs) under the DCTS:

1. Determine the tariff that applies to your product based on your country.

2. Understand the rules of origin for your product.

3. Identify applicable standards and regulatory requirements.

4. Claim preferences under the DCTS.

As importers did with GSP, they must submit the relevant proof of origin and customs forms to claim preferences under the DCTS.

Further assistance with The Developing Countries Trading Scheme (DCTS)

We can provide further advice and guidance regarding the Developing Countries Trading Scheme (DCTS) to ensure that your company can claim duty preference on qualifying imports. For more information, please contact our company on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

ICS Global Services

Advance Valuation Ruling Service

Thu, 27 Jul 2023 17:26:26 GMT

HMRC launches the Advance Valuation Ruling Service to give importers legal certainty that their chosen customs valuation method is correct.

New Advance Valuation Ruling Service (AVRS)

HM Revenue and Customs (HMRC) launched their new Advance Valuation Ruling Service ( AVRS ) in April 2023. HMRC believe the new service gives importers legal certainty that their chosen customs valuation method is correct.

Customs Valuation

When importing goods into the UK, importers must work out the value of their goods to use when working out Customs Duty and import VAT. HM Revenue and Customs (HMRC) call this value the customs value. The customs value of goods is a key element in determining the amount of Customs Duty and taxes that will be payable. Import customs duties can be designated in either specific or ad valorem terms or as a mix of the two. The valuation used for most imports for customs purposes is the Transaction Value, which is the price actually paid or payable for the goods. The Transaction Value includes the invoice price of the goods plus the cost of transport and insurance. It also includes any other payments made or to be made for the imported goods.

What are the Valuation Methods?

There are six methods to determine the value of goods:

Method 1: Transaction Value - Based on price paid or payable by the buyer to the seller.

Method 2: Transaction Value of identical goods - Based on the transaction value of identical goods.

Method 3: Transaction Value of similar goods - Based on the price paid for goods which are similar.

Method 4: Deductive Method - Based on the selling price in the UK of the goods.

Method 5: Computed Method - Based on the costs of production of the imported goods.

Method 6: Fall-back Method - Based on adapting methods 1 to 5 flexibly (unusual circumstances).

Customs Valuation Definition

Customs valuation is a customs procedure applied to determine the customs value of imported goods. The import customs declaration will contain additional information and these factors may influence the price paid. For example, the import customs declaration would show if the buyer and seller are related. In which case Transfer Pricing may influence the price paid for the goods and the duties payable.

Customs value used to calculate VAT

HM Customs and Revenue state that importers must base their valuation of imported goods for VAT on the customs value for duty. Importers must do this even if there’s no duty payable. Importers must add the following to the customs value to arrive at the value for Import VAT :

all incidental expenses such as commission, packing, transport and insurance costs incurred up to the goods’ first destination in the UK
all such incidental expenses where they result from transport to a further place of destination in the UK if that place is known at the time of importation
any Customs Duty or levy payable on importation into the UK
any excise duty or other charges payable on importation into the UK (except the VAT itself)

Valuation Evidence and Record Keeping

HM Revenue and Customs state that importers must produce any documents and information about their imports that a customs officer needs. Importers may also need to let a customs officer inspect or take extracts from any relevant document.

You must keep these documents and information for at least 4 years.

HMRC Press Release

HMRC have stated the following in their press release:

Traders will apply online for an Advanced Valuation Ruling where HMRC will confirm the method used to calculate the value is correct. It is legally-binding for 3 years and the trader will use this information to calculate the value of their goods on their import declaration .

The system is part of the government’s vision to deliver a modern, digital customs service, providing traders with peace of mind and making it simpler to work out costings ahead of shipments.

Aidan Reilly, HMRC ’s Director of Customs Policy and Strategy, said:

AVRS will make a real difference to UK importers by stripping away uncertainty and reducing their administrative burden.

The new service legally guarantees the trader’s valuation method is correct making it quicker and easier to manage customs.

It will complement our existing tariff and origin services to give traders more certainty on the cost of importing their goods, making it easier for them to budget.

The AVRS brings the UK in line with other countries, including some Free Trade Agreement (FTA) partner countries, who already offer such a service.

The UK currently offers legally-binding decisions for:

Advance Tariff Rulings – these provide legal certainty on the correct commodity code , which can then be used to determine the correct duty and taxes.
Advance Origin Rulings – these provide certainty on the economic nationality of goods, when importing and exporting. For imports, this provides legal protection against any UK customs authority challenging the country of origin of the product. There are two types of origin: preferential (which feature in the UK’s trade agreements) and non-preferential.
Binding Tariff Rulings – these provide legal certainty on the correct commodity code for importing into the EU or Northern Ireland.
Binding Origin Rulings – these provide legal certainty on the economic nationality of goods when importing or exporting from Northern Ireland.

Using AVRS is not mandatory. After an application is made for AVRS , HMRC will confirm the application has been accepted within 30 days and the correct valuation method within 90 days.

Further assistance with import valuation methods

We can provide further advice and guidance regarding import valuation methods to ensure that your import customs declarations are correct. For more information, please contact our company on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

ICS Global Services

What Documents are Necessary for your Imports and Exports?

ians@icsglobalservices.co.uk (Ian Simmonds) — Mon, 02 May 2022 14:04:44 GMT

Your Global Shipping Documents.

Correct Import and Export Documents

Having the correct documentation is vital when importing or exporting, as inappropriate or overlooked documentation can lead to shipping delays, increased costs and business risks, such as cancelled international commercial activities. Even if you’re using a freight forwarder, your company will still be held liable, as the exporter of the goods, for late or incorrect documentation.

What are the main export / import documents required?

The necessary export / import documents vary from country to country, but in general they are:

Export Commercial Invoice

When it comes to shipping internationally, an Export Commercial Invoice is one of the most important documents. This document provides information for the customs authorities to identify the goods, which helps them determine duties and taxes. Completing the commercial invoice correctly will avoid shipping delays, holds by customs and ensure compliance with legal requirements. Your Export Commercial Invoice should include the following information:

The full name, address and contact details of the seller, buyer and the full delivery address.
Number and date of issue of the Commercial Export Invoice.
The harmonised system (HS) Tariff Code / Commodity Code .
A simple description of the products in accordance with the Customs description within the tariff.
A declaration of the country of origin of the goods.
Number and date of issue of the proforma invoice, purchase order or sales contract.
The price, method of payment, currency and any discounts or additional charges.
The quantity, weight and type of packages, gross and net weight of goods and number.
The Incoterms 2020 stating the delivery point and payment.
The mode of transport and route.
The correct value of the goods.

Export Packing List

A packing list is a formal document that shows an itemised list of the goods within a shipment. The export packing list provides the exporter, the international freight forwarder, and the importer with information about the shipment, the packing details, and the marks and numbers stated on the outside of the boxes, cartons, cases, etc. The information contained within the packing list should correspond with the Export Commercial Invoice.

Transport Insurance / Insurance Certificate

This document indicates the type and amount of insurance coverage in place for the shipment. The insurance covers the goods while in transit against loss or damage arising from risks associated with shipping by sea, air, land and inland waterways. The agreed Incoterms will enable agreement on who should arrange insurance cover for the goods whilst in transit.

Shipper’s Letter of Instruction

The shipper’s letter of instruction is a document in which the shipper stipulates the shipping requirements to the freight forwarder. The document states who should receive the shipping documents, who to contact for queries, who to contact for proof of export, and who issued the shipping documentation that supports the consignment of goods to the overseas customer. The shipper’s letter of instruction can also be used as the shipper’s export declaration, which is supplied to the freight forwarder to authorise them to issue transportation documents on the exporter’s behalf.

The shipper’s letter of instruction should help to avoid any miscommunication between the exporter and the freight forwarder.

Certificate of Origin

A certificate of origin confirms the origin of the goods being exported. It is often required when the country of origin needs to be known for import duty preference, import quotas, boycotts or when anti-dumping measures are in place.

GSP Form A

A Generalized System of Preferences Form A (certificate of origin) is required when a preferential duty rate is applicable. The form is required to verify the claim for reduced or duty-free entry upon import.

Certificate of Manufacturer

This document certifies that the goods being supplied have been produced by the stated manufacturer, are ready for shipment and satisfy the general product requirements.

Inspection Certificate

This document certifies that specified products are in good condition and that the shipment contains the correct quantity.

Export and Import Licenses

Export and Import licenses are not always required, unless specific products are subject to surveillance, quantitative restrictions or safeguard measures. Many countries maintain their own list of goods subject to export and import licensing. The terms of licensing vary depending on the type of goods and on the regulations concerned.

What are the main transport documents?

Transport documents are contracts for carriage of goods and are at the heart of international trade transactions. The documents vary depending on the method of carriage used.

Air Waybill 

Shipments by air require an Air Waybill and this accompanies goods shipped by an international air carrier.

Bill of Lading

Shipments by sea require a Bill of Lading and this is a contract between the owner of the goods and the ocean carrier. The overseas customer will need an original bill of lading (as proof of ownership) to take custody of the goods from the ocean carrier.  

CMR

CMR stands for "Convention relative au contrat de transport international de marchandises par route". The CMR confirms a contract of carriage between the shipper and the carrier for international transportation by road.

CIM

The CIM consignment note confirms the contractual specifications for goods moving by international rail freight transport.

How Can We Help?

When you are importing or exporting, we can help your business understand what documentation is required, potentially avoiding supply chain disruption and delays. We can help explain the necessary documentation your company should be using for international contracts, customs, shipping and payments. Thanks to our far-reaching experience across a wide range of industries, we are able to provide clear and relevant advice that can help steer your international trade business onto the right course.

For more information, please contact us on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services Limited

GB Delays New Food Import Controls for 2022

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 28 Apr 2022 13:24:43 GMT

Britain Abandons Final Stages of Post-Brexit Controls on Imported Foods

Cabinet Office Press Release

The UK Government stated on 28 April 2022 the following:

"The Government has concluded that it would be wrong to impose new administrative requirements on businesses who may pass-on the associated costs to consumers."

The remaining import controls on EU goods will no longer be introduced this year, the government has announced today.

Instead, traders will continue to move their goods from the European Union to Great Britain as they do now.

Russia’s illegal invasion of Ukraine, and the recent rise in global energy costs, have had a significant effect on supply chains that are still recovering from the pandemic.

The government has therefore concluded that it would be wrong to impose new administrative requirements on businesses who may pass-on the associated costs to consumers already facing pressures on their finances.

The change in approach is expected to save British importers at least £1 billion in annual costs.

The Government will now review how to implement these remaining controls in an improved way. The new Target Operating Model will be based on a better assessment of risk and will harness the power of data and technology. It will be published in the Autumn and the new controls regime will come into force at the end of 2023.

This process will build on existing work already taking place as part of the 2025 Border Strategy, including on the UK Single Trade Window – a new digital platform that will help traders to more easily move goods globally. Our goal is to create a seamless new ‘digital’ border, where technologies and real-time data will cut queues and smooth trade.

The controls introduced in January 2021 on the highest risk imports of animals, animal products, plants and plant products will continue to apply alongside the customs controls which have already been introduced.

List of Controls Not Being Introduced

Controls no longer being introduced for EU goods July 2022 are:

A requirement for Sanitary and Phytosanitary (SPS) checks currently at destination to be moved to a Border Control Post (BCP)
A requirement for safety and security declarations on EU imports
A requirement for health certification for further SPS imports
A requirement for SPS goods to be presented at a BCP
Prohibitions and restrictions on the import of chilled meats from the EU

Post-Brexit Controls on Imported Foods

During 2022, the UK government was going to introduce the final stages of post-Brexit controls on imported foods coming into Great Britain. The UK government had announced the timetable in a press release at the end of last year.

Under the timetable:

The requirements for pre-notification of Sanitary and Phytosanitary (SPS) goods, which were due to be introduced on 1 October 2021, were introduced on 1 January 2022.
The new requirements for Export Health Certificates, which were due to be introduced on 1 October 2021, will now be introduced on 1 July 2022. Now not being introduced in 2022.
Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be introduced on 1 July 2022. Now not being introduced in2022.

Import requirements from 1 January 2022

Traders were notified by Defra (Department for Environment, Food and Rural Affairs) that the following would apply, as from 1 January 2022:

From 1 January 2022, businesses importing products of animal origin, animal by-products and high risk foods not of animal origin (HRFNAO) must pre-notify consignments at least four hours in advance of arriving into Great Britain. The pre-notification must be made via the Import of products, animals, food and feed system (IPAFFS).

Port of Entry from 1 January 2022

As from 1 January and until 30 June 2022, consignments can enter Great Britain via any point of entry and not necessarily with a designated Border Control Post (BCP).

What are Sanitary and Phytosanitary (SPS) Measures?

These are measures in place to protect the health of humans, animals and plants and involve documentary and physical checks by border control and customs authorities.

What is Defra?

The Department for Environment, Food and Rural Affairs (Defra) is a UK government department responsible for regulations and policies covering the environment, rural issues and food. These responsibilities embrace the restrictions on bringing meat, dairy, fish and animal products, and fruit, vegetable, nuts and seeds into Great Britain. Please note that there are different rules for importing food or animal products into Northern Ireland.

What is IPAFFS?

The Import of products, animals, food and feed system (IPAFFS) is a web-based system used for applications and issuing of CHEDs (Common Health Entry Documents). Importers must use IPAFFS to notify government authorities before importing most consignments of animal products and products of non-animal origin. Please note that as from 1 January to 30 June 2022, importers are required to notify each product type on IPAFFS and not the full consignment in one notification. As from 1 July 2022, importers will need to submit a pre-notification for each export health certificate issued for the consignment.

Information needed for pre-notification on IPAFFS:

The type of animal product or goods being imported (POAO, ABP, HRFNAO)
Origin of the animal product or goods
Commodity code
Commodity type
Species of the commodity
Commodity weight (net kg)
Date of arrival into GB
Reason for importing consignment (internal market, transit, research, etc)
Consignment’s place of destination
Addresses and contact details for place of origin, importer and place of destination
Details of port of entry

What are CHEDs (Common Health Entry Documents)?

The Common Health Entry Document (CHED) must be used by operators/importers for the mandatory prior notification of consignments to the authority responsible for the Border Control Post (BCP). Notification is made by the submissio n of a CHED with part one completed. The signed original CHED must be submitted to Port Health along with relevant documents, if applicable. Part two of the CHED is completed by Port Health when all checks are completed and subsequently stamped by Port Health. The original CHED is returned to the importer/agent and must accompany the consignment to the first destination shown on the CHED.

What are Export Health Certificates?

The exporter needs an Export Health Certificate (EHC) to export animal products to Great Britain. An Export Health Certificate is an authorised document that confirms that foods or animal products exported meet the health and quality requirements of Great Britain. The EHC must be signed by a vet or other qualified person in the exporting country after they have inspected the goods.

Defra state the following:

Competent authorities in EU and non-EU countries must provide a health certificate to exporters of animals and animal products to Great Britain (England, Scotland and Wales), the Channel Islands and the Isle of Man.
Competent authorities should use the relevant model health certificate as a template to create the health certificate for exporters. The model health certificates cover all of the import requirements for animals and animal products in Great Britain, the Channel Islands and the Isle of Man.
Canada, New Zealand and the United S tates have bilateral model health certificates with Great Britain for some animals or animal products.

What are Phytosanitary Certificates?

Phytosanitary Certificates are provided by the exporter for the export of plants and plant products into Great Britain. Phytosanitary Certificates cover controlled plants, fruit, vegetables, cut flowers and regulated objects, such as farm machinery.

What is a Border Control Post (BCP)?

The Animal & Plant Health Agency (APHA) state that:

A Border Control Post is an inspection post designated and approved in line with GB legislation for carrying out checks on animals and animal products arriving from third countries at the GB border. These checks are carried out to protect animal and public health, and animal welfare.

Animals and animal products from countries outside the EU must be imported via an approved Border Control Post (BCP), where they undergo veterinary checks before they are allowed to enter Great Britain.

What are Port Health Checks?

HM Revenue and Customs state the following:

There are three levels of check carried out - documentary, identity and physical.

In the documentary check, the health certificates and any accompanying laboratory test results are checked for authenticity and cross-matched with the details of the commercial documents to ensure that they relate to the consignment.
The identity check involves the inspection of the consignment, checking the container seals and often the packaging of the goods to ensure that the goods match the information on the certification. Labelling and health marking will also be checked.
The physical inspection of the goods involves the inspe ction of the product. The packaging will be opened, and the product examined to ensure that it is safe to eat and that it is the same product as certified. Where appropriate, the inspector will make an organoleptic (sight, smell, taste) assessment of the product. Samples may also be taken for laboratory assessment.

What are Composite Products?

The Foo ds Standards Agency states that a composite product is defined in legislation as a ‘foodstuff intended for human consumption that contains both processed products of animal origin and products of plant origin.

Further assistance with Importing Food Products

I can provide further advice and guidance with all aspects of importing foods into Great Britain. For more information, please contact me on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

Latest update 29 August 2023 - See update.

Ian Simmonds

ICS Global Services

Cooking Oils from Ukraine and Russia

ians@icsglobalservices.co.uk (Ian Simmonds) — Tue, 19 Apr 2022 10:54:54 GMT

Ukraine and Russia are some of the biggest exporters of sunflower oil in the world.

Rapeseed

I really enjoyed meeting up with family this Easter and going for a sunny walk through fields of rapeseed. This got me thinking about the news and various business discussions I have had with food importers recently.

Firstly, there is the similarity between the flag of Ukraine and the blue sky and rapeseed crop in my photograph. The Ukrainian people are in our thoughts.

Secondly, many food producers and restaurant chains within the UK are having to deal with major cost increases for cooking oils. The Office for National Statistics has reported that the price of oils and fats for food has increased by 7.2% in March alone and is almost a quarter more expensive than a year ago. Ukraine and Russia are some of the biggest exporters of sunflower oil in the world. The conflict between the two countries is impacting the world market, with food retailers and suppliers reporting that supplies of sunflower oils are already running short.

Rapeseed Oil

The BBC has reported today that because of this, some food manufacturers have turned to alternative ingredients, including rapeseed oil, which is grown by British farmers. The increased demand has meant higher prices for these oils too. Rapeseed is either cold-pressed or refined and is often labelled vegetable oil.

So, will we be seeing more fields of yellow rapeseed across the British countryside? This could be great for honeybees, as rapeseed provides both nectar and pollen in early spring.

Ian Simmonds

ICS Global Services

New Food Import Controls into Great Britain for 2022

ians@icsglobalservices.co.uk (Ian Simmonds) — Sun, 17 Apr 2022 09:43:49 GMT

Final Stages of Post-Brexit Controls on Imported Foods

Post-Brexit Controls on Imported Foods

During 2022, the UK government will introduce the final stages of post-Brexit controls on imported foods coming into Great Britain. The UK government announced the timetable in a press release at the end of last year.

Under the timetable:

The requirements for pre-notification of Sanitary and Phytosanitary (SPS) goods, which were due to be introduced on 1 October 2021, were introduced on 1 January 2022.
The new requirements for Export Health Certificates, which were due to be introduced on 1 October 2021, will now be introduced on 1 July 2022.
Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be introduced on 1 July 2022.

Import requirements from 1 January 2022

Traders were notified by Defra (Department for Environment, Food and Rural Affairs) that the following would apply, as from 1 January 2022:

Port of Entry from 1 January 2022

As from 1 January and until 30 June 2022, consignments can enter Great Britain via any point of entry and not necessarily with a designated Border Control Post (BCP).

Import requirements from 1 July 2022

The UK government has announced that full EU to GB sanitary and phytosanitary (SPS) import controls will begin on 1 July 2022. These import controls will be introduced in three phases:

From 1 July 2022

Export Health Certificates will be needed for all meat and meat products, and for all remaining regulated animal by-products.

Requirements for Phytosanitary Certificates – Plants and Plant Products.

Port Health Checks for all certification, physical and identity will be introduced for:

All remaining regulated animal by-products (ABP)
All lower risk plants and plant products
All meat and meat products – Products of Animal Origin (POAO)
All remaining high-risk food not of animal origin

From 1 September 2022

Export Health Certificates will be needed for all dairy products.
Documentary, identity and physical checks will be introduced for dairy products.

From 1 November 2022

Export Health Certificates will be needed for all remaining products of animal origin, including composite products and fish products.
Documentary, identity and physical checks will be introduced for all remaining products of animal origin, including composite products and fish products.

What are Sanitary and Phytosanitary (SPS) Measures?

These are measures in place to protect the health of humans, animals and plants and involve documentary and physical checks by border control and customs authorities.

What is Defra?

What is IPAFFS?

Information needed for pre-notification on IPAFFS:

The type of animal product or goods being imported (POAO, ABP, HRFNAO)
Origin of the animal product or goods
Commodity code
Commodity type
Species of the commodity
Commodity weight (net kg)
Date of arrival into GB
Reason for importing consignment (internal market, transit, research, etc)
Consignment’s place of destination
Addresses and contact details for place of origin, importer and place of destination
Details of port of entry

What are CHEDs (Common Health Entry Documents)?

What are Export Health Certificates?

Defra state the following:

Competent authorities in EU and non-EU countries must provide a health certificate to exporters of animals and animal products to Great Britain (England, Scotland and Wales), the Channel Islands and the Isle of Man.
Competent authorities should use the relevant model health certificate as a template to create the health certificate for exporters. The model health certificates cover all of the import requirements for animals and animal products in Great Britain, the Channel Islands and the Isle of Man.
Canada, New Zealand and the United S tates have bilateral model health certificates with Great Britain for some animals or animal products.

What are Phytosanitary Certificates?

What is a Border Control Post (BCP)?

The Animal & Plant Health Agency (APHA) state that:

What are Port Health Checks?

HM Revenue and Customs state the following:

There are three levels of check carried out - documentary, identity and physical.

In the documentary check, the health certificates and any accompanying laboratory test results are checked for authenticity and cross-matched with the details of the commercial documents to ensure that they relate to the consignment.
The identity check involves the inspection of the consignment, checking the container seals and often the packaging of the goods to ensure that the goods match the information on the certification. Labelling and health marking will also be checked.
The physical inspection of the goods involves the inspe ction of the product. The packaging will be opened, and the product examined to ensure that it is safe to eat and that it is the same product as certified. Where appropriate, the inspector will make an organoleptic (sight, smell, taste) assessment of the product. Samples may also be taken for laboratory assessment.

What are Composite Products?

Further assistance with Importing Food Products

I can provide further advice and guidance with all aspects of importing foods into Great Britain. For more information, please contact me on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services

The New Plastic Packaging Tax

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 24 Mar 2022 12:09:56 GMT

Import, Export and Transport Considerations

The New Tax

The new UK Plastic Packaging Tax (PPT) will come into force on 1 April 2022 and will be charged at a rate of £200 per tonne. The legislation is structured to incentivise the use of recycled material in the production of plastic packaging.

This measure will impact UK plastic packaging manufactures and importers of plastic packaging.

The Tax Requirements

HMRC state that you need to register for the Plastic Packaging Tax if you’ve manufactured or imported 10 or more tonnes of finished plastic packaging components within the last 12 months, or will do so in the next 30 days. From 1 April 2022 to 30 March 2023, the 12 months threshold will be worked out differently.

Plastic Packaging Tax only applies to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic. Packaging should only contain recycled plastic where it is permitted under other regulations and food safety standards.

Considerations for Import, Export and Transport Teams

Transport Packaging

HMRC have stated that transport packaging used to import goods into the UK is exempt from Plastic Packaging Tax if it is used to both:

transport multiple sales units or grouped packaging
prevent damage during transportation

You should consider how this packaging is used, rather than the type of packaging it is, when determining if the exemption applies.

What is covered by the exemption?

Examples of items covered by this exemption (when used to prevent damage of multiple sales units or grouped packaging imported into the UK) include:

road, rail, ship or air containers used to import goods into the UK
pallet wrap
straps
plastic pallets

What is not covered by the exemption?

Examples of items not covered by this exemption, that are subject to the tax, include:

crates that act as primary or secondary packaging, and are used for transporting goods into the UK for delivery to a consumer or supplier (this includes items such as fruit and vegetables)
transport packaging:

a) used to transport goods within the UK

b) manufactured in the UK

c) imported into the UK as goods in their own right

d) used to import a single product into the UK

large containers used to import alcohol to be bottled

Exporting Finished Plastic Packaging

HMRC state that you can claim a credit or relief for finished plastic packaging which is exported from the UK if:

at the point you manufacture or import the finished plastic packaging, you intend to export the packaging yourself
you pay Plastic Packaging Tax when you manufacture or import the packaging and it is subsequently exported by you or someone else — you can then claim back the tax for up to 2 years from the date that you manufactured or imported the packaging

You cannot claim relief for transport packaging used to export goods from the UK.

Record Keeping

HMRC state that you must keep accounts showing how you’ve worked out each entry on your quarterly tax return. Where relevant, your accounts must include:

a breakdown of the weight of plastic packaging components finished or imported in each period
the weight of plastic packaging exported in the period on which the tax was deferred
a breakdown of the weight of any plastic packaging for which a credit is claimed if the packaging has been:
exported
converted into new packaging components
any adjustments or corrections made to previous accounting periods — you must include the date and the accounting period they relate to

You must keep accounts by reference to each ‘product line’ that you produce or import. A ‘product line’ is a group of plastic packaging components produced to the same specification.

If you would like more details, please call +44 (0) 118 932 8447 or email: info@icsglobalservices.co.uk

ICS Global Services Limited

Claiming Relief from Import Duties and Taxes

ians@icsglobalservices.co.uk (Ian Simmonds) — Tue, 22 Mar 2022 10:35:38 GMT

Duty Management and Inward Processing

Duty and Tax Management

An important commercial consideration for businesses importing goods is their supply chain costs, which include duties and taxes. Importers do not always take full advantage of import procedures that can reduce or eliminate duties and taxes altogether on imported goods. The incorrect classification of imported goods can result in duties being paid incorrectly or the advantages of preferential trade agreements not being realised.

Depending on what you intend to do with your imported goods, you may reduce or eliminate duty and import VAT payments.

Importing samples, professional equipment, exhibition goods and demonstration goods temporarily into the UK will not require any duty or VAT payments.
Many imported medical or scientific goods are not dutiable and many are zero rated for VAT.
You can claim import duty and VAT relief on goods for commercial research.
You may not need to pay duty on free circulation goods you have exported and then re-imported.

If you are importing goods for processing or repair prior to re-exporting them, then you can use Inward Processing to reduce or avoid import duty and VAT payments. Let's take a look at Inward Processing (IP) in more detail.

What is Inward Processing (IP)?

IP is a duty suspension procedure, which enables UK businesses to import goods for processing or repair and to re-export them without paying import duties and taxes. Also, under IP you can postpone paying any excise duty on the imported goods you are processing. If you decide to keep some or all the imported goods within the UK and place them into free circulation, then duties and taxes will be applicable. However, due to the processes conducted on your goods you may pay a reduced amount of duty and import VAT than was originally due on the imported goods.

For some business sectors, such as telecommunications, IP can be an essential consideration as they regularly receive products that require repair, servicing or calibration. The use of IP relieves these businesses of any customs duty payments and avoids potential VAT issues.

What is Free Circulation?

Goods are in free circulation when import formalities have been fulfilled and the goods have been cleared by customs, duties and taxes have been paid and the goods are without any customs restrictions.

What is the definition of Processing?

HMRC state that processing can be anything from simply sorting or repacking goods up to the most complicated manufacturing.

What is the definition of Repair?

HMRC state repair is when goods are restored to their original working condition, but do not improve their performance. If you want to claim relief on goods for repair, you need to expect the goods to be repairable. This means they cannot be things like minerals and chemicals. You can import or export goods for repair.

Who can apply for Inward Processing?

To use Inward Processing, you will need to apply and you will need:

to be established in the UK
an Economic Operator Registration and Identification (EORI) number
to check if you need a guarantee
to check if you need an import licence

Inward Processing Authorisations

HMRC have four types of inward processing you can apply to use:

full
retrospective
by declaration
authorisations covering Northern Ireland and the EU

Further assistance with Inward Processing

I can provide further advice and guidance with all aspects of Inward Processing, including how to reduce your duty payments. For more information, please contact me on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services

Authorised Economic Operator (AEO) Consultancy

ians@icsglobalservices.co.uk (Ian Simmonds) — Sat, 19 Mar 2022 10:29:54 GMT

AEO Consultancy Services

What is AEO Certification?

Many international trading companies are now insisting that all business partners within the international supply chain have Authorised Economic Operator (AEO) certification. AEO certification is globally recognised and demonstrates that your activities within the international supply chain are reliable, secure and fully compliant with customs control procedures.

Types of AEO

Within the UK, there are two types of AEO currently available with each having different criteria and benefits.

AEO-C Customs Simplifications

This focuses on management controls for customs compliance.

AEO-S Safety & Security

This focuses on security measures within the supply chain.

Mutual Recognition of AEO Scheme

The UK government has secured Mutual Recognition Agreements (MRAs) for their AEO scheme with various major trading partners, including:

EU
Japan
China
USA
Switzerland

AEO, what are the benefits?

Having AEO certification will benefit your business in many ways, such as:

When expanding into new markets you can benefit from having an approved supplier status
A competitive advantage in the marketplace
Fewer physical and document checks at borders by customs authorities
Preferential treatment from customs authorities and other business partners
Access to simplified customs procedures
Priority treatment of shipments, if selected for customs inspections
Simpler approval for special procedures such as CFSP, temporary storage and bonded warehousing
Duty deferment guarantee reduction
The option of a centralised clearance self-assessment

Who can apply for AEO?

Your business can apply for Authorised Economic Operator (AEO) if it is:

a legal entity
established in Great Britain or Northern Ireland
actively involved in customs operations and international trade
has an Economic Operator Registration and Identification (EORI) number

What is the AEO application process?

The application process can be complicated and time consuming, with the application preparation and submission typically taking between three to 12 months. In addition, customs may take up to 120 days to review your application and perform site visits.

Once your company achieves AEO certification, you will be reassessed every three years during an on-site visit by HMRC.

Learn more about Authorised Economic Operator (AEO) requirements and processes >>

AEO Consultancy

I provide tailored consultancy services to assist you through the complete AEO application process. I offer three strategic areas of support which have proved to be beneficial for my clients.

AEO Audit

I will spend a day within your business reviewing your current customs processes and completing a feasibility study. My audit will highlight inconsistencies in the company’s processes, showing where there might be opportunities for improvement. Additionally, my audit will identify exactly where your procedures are not compliant with AEO requirements.

AEO Project

Based on a review of your customs processes, I can define an approach and project plan to successfully implement business changes to ensure compliance with AEO standards. I will document detailed processes and procedures for a successful AEO application.

AEO Application

I can also assist with the end-to-end AEO application process. This includes assistance with the application forms, identifying the relevant supplementary evidence to be held, and ensuring your procedures are appropriately documented.

AEO Interim Manager / Executive / Contractor

Implementing business changes to ensure compliance with AEO requirements can often prove challenging for many businesses with limited resources. As a highly skilled Interim Executive / Manager, I provide a temporary solution when a business requires an international professional to bring an AEO project to completion.

I work as part of the management team but not as an employee of the business I contract with. Therefore, avoiding the costs of a permanent employee within your business, such as NI payments, employer tax, pension payments, etc. I operate through my own limited company, ICS Global Services Limited and invoice only for days worked. All invoices are based on the agreed fee per day spent working on the AEO assignment.

Initial AEO Discussion

If you would like an initial discussion to help you decide if AEO will benefit your company, please contact me on 0118 932 8447 or by e-mail: info@icsglobalservices.co.uk

ICS Global Services

The Trade Benefits of Preference Duty

Sun, 13 Mar 2022 17:45:09 GMT

Preferential rules of origin can be complicated

What is Preference?

To obtain access to foreign markets and promote international trade, preferential trade agreements are set up between partner countries. A large and growing number of countries participate in preferential trade agreements, resulting in businesses paying lower or zero preference rates of import customs duty on their goods. However, to be eligible for preference rates the goods must comply with relevant rules of origin.

Preferential rules of origin can be complicated, and importers and/or exporters need to understand how the rules apply to their products.

What are the main benefits of using Preference?

Imports

Businesses importing their products from foreign markets covered by Preferential Trade Agreements can receive the products at reduced or nil rates of duty. Therefore, the importer pays less for their products compared with sourcing them from a foreign market not covered by Preferential Trade Agreements.

Exports

Businesses can export their products to markets covered by Preferential Trade Agreements and their foreign customer can receive the products at a reduced or nil rate of duty. Therefore, the exporter has a market advantage over competitors supplying products from countries not covered by Preferential Trade Agreements.

Claiming Preference on Imports – Top level

The Importer will need to confirm if their imported products qualify for preferential duty rates by following these steps:

Step 1

Classify the products to be imported against the Customs Trade Tariff using the full 10-digit commodity code. Commodity codes are also known as HTS or tariff codes, in different countries. Please see my Blog for more details - Correctly Classifying Import and Export Goods.

Step 2

Once the products have been classified, check the commodity code against the Customs Trade Tariff to identify if any preferential rate of duty is appropriate.

Step 3

Identify the country the products are being sourced from and confirm within the Customs Trade Tariff if that country is a beneficiary country under preference.

Step 4

Most importantly, confirm with the foreign supplier that products are of ‘Preference Origin’, that the products fully comply with the rules of preference origin and that the supplier (foreign exporter) can issue the correct preference document, such as a GSP Form A. See preference origin rules below.

Step 5

On import ensure that the correct preference document is presented to customs at the time of the import declaration / entry.

Claiming Preference on Exports – Top level

The Exporter will need to confirm if their products for export qualify for preferential duty rates by following these steps:

Step 1

Step 2

Identify if the export market is a beneficiary country under preference.

Step 3

The Exporter must ensure a full understanding of the preference origin rules covering the products to be exported.

Step 4

Most importantly, the Exporter must make sure to have documented evidence to support the issue of preference certificates or invoice declarations to cover the export.

Step 5

Issue a Country of Origin Form or make an invoice declaration, depending on the export destination and the regulations.

Preference Origin Rules

To be eligible for preference origin, the products must be manufactured and/or originate in a beneficiary or qualifying country. If the products do not meet these requirements, then import or export preference duty cannot be claimed, and full standard rate duty will apply.

All preferential origin goods must satisfy the relevant conditions, such as:

Be manufactured from raw materials or components which have been grown or produced in the beneficiary country.
The product underwent a certain amount of working or processing in the beneficiary country and can be considered as "originating".
Products have been sufficiently transformed in the beneficiary country, resulting in a change of tariff classification.
During manufacture of the product, the customs value of all the non-originating materials used did not exceed the threshold fixed by the origin rule for that product.
A combination of the above.

If you would like more details about preferential trade, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services Limited

What are the Challenges with Transfer Pricing?

Sun, 13 Mar 2022 17:05:11 GMT

What is Transfer Pricing?

Transfer Pricing is used by multinational enterprises to establish the pricing for goods and services transferred between their related companies situated in different countries. Multinational enterprises often use Transfer Pricing as a method to allocate profits into territories where tax rates are more favourable.

However, these transactions carried out between related companies must comply with the Arm’s Length Principle. Tax authorities normally look for conformity with the Organization for Economic Cooperation and Development (OECD) guidelines on the application of the arm’s length principle for cross-border transactions between related companies. Multinational enterprises need to demonstrate that the transfer prices applied in transactions between their related companies is equivalent to prices charged by independent companies in similar economic conditions.

Corporate Tax and the International Shipping Department Alignment Challenges

With related company transactions accounting for more than 60% of global trade in terms of value, multinational enterprises need to comply with both the OECD guidelines/principles on transfer pricing and the World Trade Organization (WTO) Valuation Agreement on imported product valuations.

What are the challenges?

Within multinationals, the objectives for the Corporate Tax Team and the objectives for the International Shipping Department can be contradictory and result in tensions.

The Corporate Tax Team is looking for the highest transfer price possible, as this reduces taxable profit.

The International Shipping Department is looking for the lowest Customs value possible, as this reduces duty and import tax payments.

In most cases the transfer pricing benefits will outweigh the Customs duty benefits. Nevertheless, multinationals need to ensure they remain compliant with the OECD guidelines and the WTO Valuation Agreement on import valuations.

The Corporate Tax Team may only review transfer pricing with Tax authorities once a year. Whilst the International Shipping Department is declaring an import valuation and duty / tax liability to Customs authorities on each customs entry, in some case many times a day.

The International Shipping Department is required (in numerous countries) to declare on the customs entry that the exporter and importer are related. Therefore, they must be prepared to demonstrate to Customs authorities that the declared valuation has not been influenced by the companies being related.

Customs value is confirmed at point of customs clearance.

Transfer value is confirmed retrospectively.

Tax authorities and Customs authorities set rules independently concerning the value of imported products.

Tax authorities normally look for conformity with the (OECD) Transfer Pricing Guidelines on the application of the arm's length principle for the valuation of cross-border transactions.
Customs authorities conform to the World Customs Organization (WTO) Valuation Agreement, formally known as Article VII of the General Agreement on Tariffs and Trade (GATT) Valuation Code. The Agreement identifies that Customs valuation for duties should be, as far as possible, based on the actual price of the goods to be valued.
Subsequently, the Tax authorities and Customs authorities have different approaches.
Tax authorities are focused on Transfer Pricing between related companies that may be superficially higher than they should be.
Customs authorities are focused on imported product prices that may be superficially lower than the market price.

Customs have 6 methods for calculating the value of imported goods and OECD Transfer Pricing Guidelines detail 5 transfer pricing methods that may be used to establish or test the arm’s length principle for the value of imported goods.

Customs valuation covers goods only.
Transfer Pricing covers goods, services and property.

Customs

There are 6 methods for calculating the value of imported goods where ad valorem duty applies to assess the amount of customs duty and import tax to pay (import tax is not applicable to all countries). Tariff classification and preferential origin are the other key elements necessary for establishing duty liability. The same value is often used for trade statistics.

Transaction Value. Many countries have reported that transaction value is used in 90 – 95% of all importations. This method is based on the price paid or payable by a buyer to a seller for the imported goods adjusted in accordance with specific rules.

The customs value of identical goods.
The customs value of similar goods
The deductive value.
The computer value.
The fall-back method.

Tax

The OECD Transfer Pricing Guidelines detail five transfer pricing methods that may be used to establish or test the arm’s length principle. The first three methods are frequently referred to as the traditional transactional methods whilst the latter two are referred to as the transactional profits’ methods.

Comparable uncontrolled price method
Resale price method
Cost plus method
Transactional net margin method
Transactional profit split method

Customs authorities continue to focus on the transaction value and whether the price has been influenced by the companies being related. Customs authorities will therefore examine transfer pricing data in this context and not in relation to the use of other WTO methods.

Comparison of the OECD Transfer Pricing Guidelines with WTO Valuation Agreement

Comparable Uncontrolled Price (CUP) - Value of identical goods method and value of similar goods method.
Resale Price Method - Deductive value method
Cost-plus Method - Computed value method
Transactional Net Margin and Profit Split Method - Fallback value method

Benefits of Alignment between Corporate Tax and the International Shipping Department

Corporate Tax and the International Shipping Department working together can develop a business model that meets the mutual needs of both tax and customs authorities regarding transfer pricing and Customs valuation.

Corporate Tax and the International Shipping Department should discuss any Advance Pricing Arrangements (APAs), so that they can ensure the transfer pricing method is mutually acceptable to the Customs and Tax authorities.

Corporate Tax and the International Shipping Department should work together to provide Customs authorities with transfer pricing analyses and data related to the imported goods to avoid penalties.

Corporate Tax and the International Shipping Department should exchange information to cover both tax and Customs issues.

Corporate Tax may need to make periodic adjustments to the transfer price paid or payable (sometimes referred to as a ‘year-end adjustment’ or a ‘true-up’ adjustment). The implications of these retroactive transfer pricing adjustments on the Customs valuation of goods imported will need to be discussed between Corporate Tax and the International Shipping Department. Why? Many countries have procedures which enable Customs authorities to consider upwards and downwards adjustments to the Customs value, following a transfer pricing adjustment. The upwards adjustments could result in additional duty being owed against imported goods and this duty must be paid. The downwards adjustments could result in a refund of duty.

Customs and Border Protection (CBP) state “It is now CBP’s position that subject to certain conditions, the transaction value method of appraisement will not be precluded when a related party sales price is subject to post-importation adjustments that are made pursuant to formal transfer pricing policies and specifically related (directly or indirectly) to the declared value of the merchandise. These adjustments, whether upward or downward, are to be taken into account in determining transaction value.”
Australia Customs and Border Protection state “Where a voluntary disclosure involves transfer pricing between related parties, any adjustments to goods must be submitted as soon as the data becomes available and should be submitted in line with your financial reporting obligations. Where a voluntary disclosure results in an overpayment of customs duty, a claim for a refund can be lodged”.
HM Revenue and Customs state "Situations may arise, whereby, for a variety of reasons, the price that you pay to the seller for the imported goods is revised or re-negotiated after the entry of the goods to free circulation. When this happens you must consider the customs valuation and Customs Duty implications". However, until a Brexit agreement is in place, UK companies looking at retroactive Transfer Pricing adjustments will need to be aware of EU rules concerning transfer pricing and Customs valuations.

The Business Strategy for Transfer Pricing

Developing and applying transfer pricing strategies to assist the company in achieving their international business objectives.
Produce a Transfer Pricing Study, as the information may be useful in demonstrating to Customs authorities that the price has not been influenced by the relationship.
Companies should also consider documenting all internal procedures concerning the international movements of goods between related companies within the group.
Produce a company Transfer Pricing Policy to cover all international movements of goods between related companies within the group. The policy should consider applicable customs valuation requirements.
Companies should audit their international movements of goods between related companies within the group to ensure that correct duties have been paid and refunds obtained.
Companies should contemplate obtaining advanced rulings from certain Customs authorities.
Report retroactive Transfer Pricing adjustments to Customs authorities.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services Limited

Correctly Classifying Import and Export Goods

ians@icsglobalservices.co.uk (Ian Simmonds) — Sun, 13 Mar 2022 16:01:50 GMT

Understanding Customs Classification of Imported & Exported Goods

Classifying Imported and Exported Goods Correctly

An essential and necessary part of successful importing and exporting is the correct classification of your products for customs clearance in accordance with the harmonised system used worldwide. The customs classification provides details of what the products are, what they are made of, how they are used and how they are packaged. In addition, the customs classification determines:

Customs duties and taxes
Import and export controls and limitations
Documentation requirements
Import or export licencing obligations
Applicable preferential duty rates
Security measures
Commercial policy measures

Incorrectly Classifying Goods with Customs

Classifying your goods correctly for import or export can be complicated and companies will require a good understanding of international trade regulations to get it right. The use of incorrect customs classifications can result in audits by customs authorities, customs clearance delays, seizure of the goods and / or sizeable financial penalties. You may also pay incorrect duties and taxes resulting in additional charges and fees.

Certain products can be liable to import or export controls and licencing, therefore making an incorrect customs classification will be seen as breaking the law. It is your responsibility to get your classification and licencing right, even if you use an agent or freight forwarder.

How to Classify your Goods

The World Customs Organization (WCO) developed the Harmonized Commodity Description and Coding System, known as the "Harmonized System" or "HS". The WCO have classified more than 5,000 commodity groups at a 6-digit code level. Over 200 countries use the uniform 6-digit classification, as a basis for their own Customs tariffs and trade statistics records.

There are Commodity Description Codes for over 98% of products, classifying products from a pin to an elephant. These codes assist in identifying what the product is for customs clearance purposes, so that correct duties and taxes can be charged, preferential trade agreements can be applied, and import or export restrictions can be identified.

What are Commodity Description Codes?

When moving your products between different countries you must classify them correctly using the Harmonized System. Conversely, most countries require products to be classified at a more elevated level than the 6-digit Harmonized System and the codes can go up to a 14-digit level to allow for tariff policies.

Different countries tend to use alternative terms to describe these extended codes and some of these terms have become interchangeable within international trade. Your company should follow the requirements of the country they are importing or exporting too.

Examples:

HS Code

The HS Code is the World Customs Organization (WCO) Harmonized System code, which is the universal first 6-digits of most classifications.

Harmonized Tariff Schedule Code (HTS)

The Harmonized Tariff Schedule Code (HTS) is a 7 to 10-digit code, which is more specific to importing into the United States.

USHTS or HTSUS

USHTS or HTSUS is the Harmonized Tariff Schedule of the United States, which is generally 10-digits in length.

Commodity Codes, Trade Tariff Commodity Codes and Tariff Codes

Commodity Codes (sometimes referred to as Trade Tariff Commodity Codes or Tariff Codes) are used within the United Kingdom and are generally 8 to 10-digits in length.

Commodity Codes

Commodity Codes are used within the European Union (EU) and include additional Combined Nomenclature (CN) and Integrated Tariff (TARIC) digits. Most EU commodity codes have 10-digits, but certain goods are classified using 14-digits. Additional 4-digit codes are used mainly when the goods nomenclature needs to be further detailed for specific EU purposes.

Structure of Tariff / Commodity Codes

Schedule B Numbers

The USA use Schedule B numbers for the classification of their domestic and foreign export commodities. Schedule B numbers are based on HS codes but contain additional 10-digit subdivisions to gather export data of particular U.S. interest. Schedule B numbers are administered by the U.S. Census Bureau.

Example: Customs Classification of Cheese

Roquefort Cheese would be classified for export from the European Union using the EU commodity code. The commercial invoice for the Roquefort Cheese exported from the EU to the UK would show an 8-digit commodity code from the EU TARIC, while the UK importer would use a 10-digit commodity code from the UK TARIFF.

Source: HM Revenue & Customs

In the UK the first 8-digits of the commodity code are used for the declared imports or exports and generally determine the rate of Customs Duty applicable. The 9 and 10 digit of the commodity code provides additional detail in relation to the goods being declared. Although most UK Customs Duty rates are set with the first 8-digits they can affect the duty due and measures applied to the goods.

Are Customs Classifications subject to change?

Updates are periodically made by customs authorities and these may impact the validity of the customs classification codes used for your products. In addition, changes to legislation can result in incorrect classification of your goods. The Harmonized System (HS) is also updated every 5 years by the World Customs Organisation. Therefore, it is important to keep up to date with these changes.

Latest Edition of the Harmonized System (HS)

On 1 January 2022, the World Customs Organization (WCO) published the latest edition of the Harmonized System. The WTO stated:

HS 2022, which is the seventh edition of the Harmonized System (HS) nomenclature used for the uniform classification of goods traded internationally all over the world, has been accepted by all Contracting Parties to the Harmonized System Convention. It shall come into force on 1 January 2022.

The HS serves as the basis for Customs tariffs and for the compilation of international trade statistics in 211 economies (of which 158 are Contracting Parties to the HS Convention). The new HS2022 edition makes some major changes to the Harmonized System with a total of 351 sets of amendments covering a wide range of goods moving across borders.

Classification Questions and Support

The processes and procedures for correctly classifying your goods can be complicated. If you require any assistance or have any questions regarding classifying your goods for import or export, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services Limited

www.icsglobalservices.co.uk

Delivered at Place Unloaded (DPU) Incoterms 2020

ians@icsglobalservices.co.uk (Ian Simmonds) — Mon, 28 Feb 2022 15:36:52 GMT

Delivered at Place Unloaded (DPU) Incoterms® 2020

What are Incoterms?

Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). Incoterms were first created by the ICC in 1936. The Incoterms rules are created and published by the ICC and are normally revised every 10 years, since 1980. The ICC describe the Incoterms 2020 rules as:

The Incoterms rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms rules are there to guide you. The Incoterms rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.

New DPU Incoterms Rule

The new DPU Incoterms rule was introduced within the Incoterms 2020 on 1 January 2020. DPU Incoterms replaces the previously named Delivered at Terminal (DAT) due to both buyers and sellers requiring delivery of goods somewhere other than a terminal, such as a Transport Hub inland from the port of arrival. The ICC state that changes were made to highlight that the place of destination could be any location and not only the terminal. Some within the industry welcomed the change from DAT to DPU because the destination terminal was often confused with the customs terminal.

Under DPU there are no restrictions on the named place, however it is very important that the buyer and seller should specify and agree upon a named place of destination. Once agreed, this should be clearly stated within the sales contract and shipping documents with the named place of destination inserted, for example: DPU (ICS Transport Hub, Southampton).

It should be noted that DPU is the only Incoterms rule that requires the seller to unload the goods at the place of destination to complete delivery of the goods. The seller should therefore be able to organise and provide unloading services at the named place of destination. The seller should consider using DPU Incoterms when there is a significant risk of damage during unloading the goods or when special unloading equipment is needed. If the seller wishes to avoid the responsibility for unloading the goods, the seller should agree to provide the goods using another Incoterms rule, such as Delivered at Place (DAP) or Delivered Duty Paid (DDP) .

The seller is also responsible for the export clearance of the goods and bears all costs and risks connected with delivery to the named place of destination. However, the buyer is responsible for the classification of products for customs clearance, the customs clearance, import formalities and payment of import duties and/or taxes.

Risk transfers from seller to buyer when the goods have been unloaded.

The seller’s choice of Incoterms® will be an integral part of their commercial transaction stated within the sales contract and must be applicable to the type of goods that will be shipped and the type of transportation that will be used.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Selling Goods Internationally on DDP Terms

ians@icsglobalservices.co.uk (Ian Simmonds) — Mon, 28 Feb 2022 15:27:33 GMT

DDP terms impose the maximum level of obligation on the seller.

The Implications of Selling on Delivered Duty Paid (DDP) Terms

Selling on DDP sales terms is a workable solution for domestic transactions or with only some transactions within the European Union, but for other international trade it can be particularly problematic. Under the terms DDP, the seller is responsible for door to door delivery, the payment of import duties and any applicable taxes. Under the eleven Incoterms® Rules, DDP terms impose the maximum level of obligation on the seller.

Insurance Obligations

The DDP risk transfer point or delivery point, is important in relation to marine cargo insurance underwriting and claims, because it establishes the seller’s liability for insurance cover. Under DDP terms, the seller has no obligation to the buyer to make a contract of insurance. The buyer also has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller with information they need for obtaining insurance.

As the seller will bear all risks of loss of or damage to the goods from the time they are dispatched until they are delivered to the overseas buyer at the delivery point, it is advisable that the seller obtains insurance cover for the goods whilst in transit.

Registered Importer of Record

Under DDP terms, the seller may be required to act as the registered Importer of Record in many countries. It is not always possible for a foreign business to become the Importer of Record and this may cause issues in some countries, such as the USA and South Africa. In addition, the EU requires the importer of goods to be registered with a relevant government authority (in the EU this registration is under the EORI system) and often the importer needs to have a physical presence in the country as well.

Import Customs Clearance

Under DDP terms, the seller will be responsible for preparing customs clearance documentation and each country has specific documentary requirements. The seller will be responsible for the costs related to customs clearance. These costs may include any storage or demurrage charges incurred due to delays during customs clearance, investigations by government agencies and service issues with the freight forwarders. These additional costs can very quickly impact profit margins on export sales.

Paying Customs Duty and Import Taxes

Under DDP terms, the seller will be responsible for paying customs duties and relevant taxes due at the time of import. Appointing a freight forwarder / customs agent to provide customs clearance services and to pay the import formalities (import taxes and duties) is a solution. However, these companies may require funds to be logged prior to shipping and/or charge for usage of their customs deferment account.

Import Tax Implications

There may be tax implications due to the import taxes being paid by the seller. The overseas buyer may be eligible for an import tax refund, but these tax payments may not be recoverable by the buyer within the overseas country due to the seller being the Importer of Record. In other cases, the seller may have paid the import tax, been unable to recover the tax and the overseas buyer obtains a tax refund. The seller not being able to offset the import tax paid has a true added cost to the price of the exported goods, which may not be accounted for within the selling price.

Domestic Tax Implications

The seller being engaged in business in a foreign country without a physical presence and distributing goods to the buyer within that foreign country, may be classified as having a permanent establishment. In this situation, the company could be subjected to direct as well as indirect taxes within that foreign country.

Import Permits and Import licences

Under DDP terms, the seller will be responsible for obtaining any import permits or import licences (if required) as the registered Importer of Record.

Bribery

Selling on DDP terms can expose the seller to greater legal risks, such as the severe legal consequences of a bribe being offered during the customs clearance process without the seller’s knowledge.

Conclusion

If the overseas buyer does require delivered terms within the sales contract, it would be a good business strategy to trade under a different Incoterms® rule. Using either Delivered at Place (DAP) or Delivered at Pace Unloaded (DPU) would allow the seller to deliver the goods and the overseas buyer would be the Importer of Record (the legal entity within the export market).

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

What is Transfer Pricing and the Arm's Length Principle?

Sat, 26 Feb 2022 11:12:04 GMT

Transfer Pricing and Related Companies

What is Transfer Pricing?

Corporate Tax and the International Shipping Department Alignment Challenges

What are the challenges?

Within multinationals, the objectives for the Corporate Tax Team and the objectives for the International Shipping Department can be contradictory and result in tensions.

The Corporate Tax Team is looking for the highest transfer price possible, as this reduces taxable profit.

The International Shipping Department is looking for the lowest Customs value possible, as this reduces duty and import tax payments.

The Corporate Tax Team may only review transfer pricing with Tax authorities once a year. Whilst the International Shipping Department is declaring an import valuation and duty / tax liability to Customs authorities on each customs entry, in some case many times a day.

The International Shipping Department is required (in numerous countries) to declare on the customs entry that the exporter and importer are related. Therefore, they must be prepared to demonstrate to Customs authorities that the declared valuation has not been influenced by the companies being related.

Customs value is confirmed at point of customs clearance.

Transfer value is confirmed retrospectively.

Tax authorities and Customs authorities set rules independently concerning the value of imported products.

Tax authorities normally look for conformity with the (OECD) Transfer Pricing Guidelines on the application of the arm's length principle for the valuation of cross-border transactions.

Customs authorities conform to the World Customs Organization (WTO) Valuation Agreement, formally known as Article VII of the General Agreement on Tariffs and Trade (GATT) Valuation Code. The Agreement identifies that Customs valuation for duties should be, as far as possible, based on the actual price of the goods to be valued.

Subsequently, the Tax authorities and Customs authorities have different approaches.

Tax authorities are focused on Transfer Pricing between related companies that may be superficially higher than they should be.

Customs authorities are focused on imported product prices that may be superficially lower than the market price.

Customs valuation covers goods only.

Transfer Pricing covers goods, services and property.

Customs

Transaction Value. Many countries have reported that transaction value is used in 90 – 95% of all importations. This method is based on the price paid or payable by a buyer to a seller for the imported goods adjusted in accordance with specific rules.
The customs value of identical goods.
The customs value of similar goods
The deductive value.
The computer value.
The fall-back method.

Tax

Comparable uncontrolled price method
Resale price method
Cost plus method
Transactional net margin method
Transactional profit split method

Comparison of the OECD Transfer Pricing Guidelines with WTO Valuation Agreement

Comparable Uncontrolled Price (CUP) - Value of identical goods method and value of similar goods method.
Resale Price Method - Deductive value method
Cost-plus Method - Computed value method
Transactional Net Margin and Profit Split Method - Fallback value method

Benefits of Alignment between Corporate Tax and the International Shipping Department

Corporate Tax and the International Shipping Department working together can develop a business model that meets the mutual needs of both tax and customs authorities regarding transfer pricing and Customs valuation.

Corporate Tax and the International Shipping Department should discuss any Advance Pricing Arrangements (APAs), so that they can ensure the transfer pricing method is mutually acceptable to the Customs and Tax authorities.

Corporate Tax and the International Shipping Department should work together to provide Customs authorities with transfer pricing analyses and data related to the imported goods to avoid penalties.

Corporate Tax and the International Shipping Department should exchange information to cover both tax and Customs issues.

Corporate Tax may need to make periodic adjustments to the transfer price paid or payable (sometimes referred to as a ‘year-end adjustment’ or a ‘true-up’ adjustment). The implications of these retroactive transfer pricing adjustments on the Customs valuation of goods imported will need to be discussed between Corporate Tax and the International Shipping Department.

Why?

Many countries have procedures which enable Customs authorities to consider upwards and downwards adjustments to the Customs value, following a transfer pricing adjustment. The upwards adjustments could result in additional duty being owed against imported goods and this duty must be paid. The downwards adjustments could result in a refund of duty.

US Customs and Border Protection (CBP) state “It is now CBP’s position that subject to certain conditions, the transaction value method of appraisement will not be precluded when a related party sales price is subject to post-importation adjustments that are made pursuant to formal transfer pricing policies and specifically related (directly or indirectly) to the declared value of the merchandise. These adjustments, whether upward or downward, are to be taken into account in determining transaction value.”

Australia Customs and Border Protection state “Where a voluntary disclosure involves transfer pricing between related parties, any adjustments to goods must be submitted as soon as the data becomes available and should be submitted in line with your financial reporting obligations. Where a voluntary disclosure results in an overpayment of customs duty, a claim for a refund can be lodged”.

HM Revenue and Customs state "Situations may arise, whereby, for a variety of reasons, the price that you pay to the seller for the imported goods is revised or re-negotiated after the entry of the goods to free circulation. When this happens you must consider the customs valuation and Customs Duty implications". However, until a Brexit agreement is in place, UK companies looking at retroactive Transfer Pricing adjustments will need to be aware of EU rules concerning transfer pricing and Customs valuations.

The Business Strategy for Transfer Pricing

Developing and applying transfer pricing strategies to assist the company in achieving their international business objectives.
Produce a Transfer Pricing Study, as the information may be useful in demonstrating to Customs authorities that the price has not been influenced by the relationship.
Companies should also consider documenting all internal procedures concerning the international movements of goods between related companies within the group.
Produce a company Transfer Pricing Policy to cover all international movements of goods between related companies within the group. The policy should consider applicable customs valuation requirements.
Companies should audit their international movements of goods between related companies within the group to ensure that correct duties have been paid and refunds obtained.
Companies should contemplate obtaining advanced rulings from certain Customs authorities.
Report retroactive Transfer Pricing adjustments to Customs authorities.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services Limited

Tariffs on EU-to-EU Distribution via Great Britain

ians@icsglobalservices.co.uk (Ian Simmonds) — Sun, 31 Jan 2021 09:46:37 GMT

EU to EU distribution via Great Britain is liable to a tariff on re-entry to the EU.

EU to EU Distribution via Great Britain

The EU-UK Trade and Cooperation Agreement (TCA) came into force on 24 December 2020 and provides zero tariffs and zero quotas between the European Union (EU) and Great Britain (GB). The agreement states that it will preserve the immense benefits of free trade for millions of people in the United Kingdom (UK) and across Europe. But does it?

“There appears to be some areas where the agreement does not provide zero tariffs on EU products moving between EU countries via GB.“

Many established supply chains across the EU utilise distribution centres within GB for cost-effective bulk storage of a wide range of products which can be ordered by customers within GB and the EU. There are now difficulties concerning this important route to market due to the rules of origin stated within the TCA. Under the current rules, products imported from the EU into GB qualify for zero tariffs. If the same goods are then supplied to a customer within the EU, full tariffs are due on re-importation back into the EU.

EU Customs Authorities state:

These goods have not been altered or processed and therefore they have not acquired UK origin. The EU-UK FTA tariff preferences cannot be claimed because the goods need to be of UK preferential Origin to avail of the 0% tariff. These goods are EU origin and therefore liable to a tariff on re-entry to the EU.

Example:

A manufacturer in Germany supplies EU qualifying products to a GB company and zero tariffs applies. The GB company places the products within their common stock warehouse and later they are purchased by a company in the Republic of Ireland. Under the TCA rules of origin for preferential trade, these goods when imported into Ireland are not covered by the agreement and full tariffs apply.

There are a range of solutions for this issue, however many EU and GB companies did not have time to prepare for these unreasonable origin rules. Implementing possible solutions, such as Transit, Inward Processing, Returns Goods Relief, Customs Warehousing or using supply chains that avoid GB will take time to put in place and may not be cost effective. Each of these solutions for moving products via GB have specific circumstances attached to them and these circumstances will determine the best movement type for the products.

Transit

Product movements between Ireland and other EU countries by road through GB can utilise the UK Landbridge using the Customs Transit Procedure. The Customs Transit procedure allows for the temporary suspension of UK customs and commercial policy measures that would be applicable at GB import and GB export.

Inward Processing

The inward processing procedure allows businesses to import goods for processing/manufacturing under UK customs supervision without the goods being subject to import duties. The UK duty liability is discharged when the goods are re-exported out of the UK.

The EU Customs Authorities state:

The amount of processing on the goods will determine if duties must be paid on re-export to the EU. These goods can only qualify for preferential origin under the EU-UK Trade and Cooperation Agreement (TCA) on re-export to the EU if the processing meets the requirements as specified in the Product Specific Rule (PSR) for the product in the EU-UK TCA. If UK preferential origin can be proven, preferential origin can be claimed on re-export to the EU under the TCA. The advantage of using Inward Processing is that the import duties due on import into the UK are suspended.

Returns Goods Relief

Businesses can re-import goods back into the EU without payment of Customs Duty and Value-Added Tax (VAT) if the EU Returned Goods Relief conditions are met. The goods must be re-imported in an unaltered state, apart from any work that may have been carried out to repair them, maintain them or restore them to good condition. In addition, the Importer must present the original proof of export from the EU to avoid any customs duties. If the EU return is via a different economic operator to the one who completed the export formalities, then Import VAT is chargeable.

This process currently does not have a provision to cover products of animal origin (POAO), which are subject to Sanitary and Phyto-Sanitary (SPS) requirements. Therefore, re-import into the EU from GB is treated as an import from a 3rd country, so full tariffs and full import controls may apply. The EU common agricultural policy sets out specific conditions for claiming relief from import duty.

Customs Warehousing

EU goods can be moved into GB using the transit procedure and kept in a customs warehouse in the UK, therefore keeping their EU preferential origin status. Businesses with adequate stock control systems can store EU and 3rd country stock without the need to physically segregate. The same is true of duty paid stock and duty unpaid stock, providing stock control systems are adequate.

The EU Customs Authorities state:

When EU originating goods are brought into the UK from an EU member state under a T2 transit procedure, remain under customs control in a customs warehouse and undergo no production/transformation while in the UK, the goods can be returned to the EU under another T2 Transit procedure provided that they have not been altered other than for preservation or splitting of consignments without replacing the packaging. By using a transit started in the EU, a customs warehousing authorisation in the UK followed by another transit from the UK to the EU, the Union status of the goods is maintained, and import/export tariffs are not incurred.

This process does not cover products of animal origin (POAO), which are subject to Sanitary and Phyto-Sanitary (SPS) requirements once they have been unloaded and placed in the customs warehouse. Therefore, the re-import of these products would require Export Health Certificates and may be subject to full tariffs and full import controls.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

GB Export Health Certificates for EU & NI

ians@icsglobalservices.co.uk (Ian Simmonds) — Sat, 23 Jan 2021 11:11:41 GMT

Briefing Note 02/2021 - Guidance updates for certification of POAO exports to the EU and movement to Northern Ireland.

GB Export Health Certificates (EHCs) for EU and Northern Ireland

The new EU-UK Trade and Cooperation Agreement was not finalised until Christmas Eve, two months after the original deadline for an agreement. This resulted in only a week to implement new export / import processes with the EU.

Not having clearly defined export / import processes with the EU caused unnecessary documentation issues resulting in long delays at the ports and some vehicles being sent back to the UK. Exporters of food products from Great Britain (GB) were especially impacted due to their Export Health Certificates (EHCs) not being compliant with EU import regulations. Food exporters and their Official Veterinarians complete and issued these certificates in compliance with the directives of the Department for Environment Food & Rural Affairs.

EHCs are required for exports of live animals or animal products exported from GB to the EU. This ensures the consignment complies with the quality and health standards of the EU. EHCs are signed by an Official Veterinarian following inspection of the consignment and they are commodity and destination specific.

Exporters must apply for an EHC if they are exporting or moving live animals or animal products from GB (England, Scotland and Wales) to or through the following destinations:

• The EU

• Non-EU countries

• Northern Ireland (NI)

Exporters will also need a Transit EHC to transit through an EU country.

On 19 January 2021, the Animal & Plant Health Agency (APHA) published Briefing Note 02/2021 called ‘Guidance updates for certification of POAO exports to the EU and movement to Northern Ireland.’ APHA is an Executive Agency of the Department for Environment, Food and Rural Affairs. The APHA document provided amendments in relation to the certification of Products of Animal Origin (POAO) for export to the EU or movement to Northern Ireland. Therefore, enabling food exporters to comply with EU import requirements 19 days after Brexit!

The amendments include:

• The agreed method for page numbering.

• The replacement of UK fan stamping by the EU requirement to stamp and sign all pages.

• The stamping and initialling of changes and deletions.

• Permitted paragraphs and sections may be crossed out by applying a ‘Z’ across paragraphs and sections.

• The use of 6-digit Commodity Codes rather than 8 or 10 digits.

• The creation of schedules for multiple commodities.

• There is no requirement to list the time of departure.

• New guidance on composite products.

• More than 5 commodities can be added in a schedule.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Brexit Solutions for UK Companies

ians@icsglobalservices.co.uk (Ian Simmonds) — Mon, 28 Dec 2020 13:07:11 GMT

Supporting companies with import and export solutions.

Brexit Solutions

Overview

We have been developing contingency plans to ensure our customers’ products are delivered correctly after 1 January 2021. Significant changes will occur once the UK has left the EU. All UK businesses will be required to provide Customs documentation for products exported to, or imported from the EU, even with the ‘EU Deal’ on Brexit.

ICS, as part of our customer services, will be supporting companies with the necessary Customs documentation to comply with the new regulations.

Northern Ireland

Products moving between Great Britain and Northern Ireland will need to comply with the Northern Ireland protocol agreed in October 2019. Products crossing the Irish Sea will need to demonstrate compliance with the new measures. This means that new Customs and regulatory paperwork, checks and processes will be required on goods entering Northern Ireland from Great Britain from 1 January 2021.

ICS has solutions in place to move products between Great Britain and Northern Ireland, or to bring products into Northern Ireland from outside the UK.

Republic of Ireland and Northern Ireland

The movement of products between the Republic of Ireland and Northern Ireland should not require any new Customs declarations, paperwork, duty tariffs, quotas or checks on rules of origin.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

XI EORI required for Northern Ireland

ians@icsglobalservices.co.uk (Ian Simmonds) — Sat, 07 Nov 2020 18:28:40 GMT

Moving goods to or from Northern Ireland

XI EORI required for Northern Ireland

The Government have confirmed that businesses moving goods to or from Northern Ireland (NI) will need a special EORI number with a ‘XI’ country prefix.

The Government have stated:

If you move goods to or from Northern Ireland

From 1 January 2021 you’ll need an EORI number that starts with XI to:

move goods between Northern Ireland and non-EU countries
make a declaration in Northern Ireland
get a customs decision in Northern Ireland

To get an EORI number that starts with XI, you must already have an EORI number that starts with GB. If you do not have one, apply for an EORI number that starts with GB as soon as possible.

If you already have an EORI number that starts with GB and HMRC thinks you need one that starts with XI, they’ll automatically send you one in mid-December 2020.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Intrastat declaration requirements for 2021

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 29 Oct 2020 15:53:34 GMT

Intrastat arrivals declarations will continue to be required during 2021.

Intrastat declaration requirements for 2021

On 14 October, the Government published the requirements for submitting Intrastat declarations after 1 January 2021.

The Government have stated:

From 1 January 2021, HMRC expected that information sourced direct from customs declarations would be used to compile trade statistics for international trade in goods between GB and the EU.

However, to give businesses more time to fully prepare for the new border controls for EU goods, customs import controls will be introduced in stages from 1 January 2021. As part of these staged controls, businesses importing non-controlled goods from the EU to GB can delay the submission of the customs declaration for up to 6 months.

For statistical purposes this means the data from customs declarations will be unavailable or significantly delayed and would leave the UK with significant gaps in the data available to compile accurate and timely trade in goods statistics for imports. To avoid this, monthly Intrastat arrivals declarations will continue to be required during 2021.

There will be no Intrastat requirement for the movement of goods exported from GB to the EU or goods imported from EU to GB, from 1 January 2022.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Importing and exporting wine from 1 January 2021

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 29 Oct 2020 12:15:45 GMT

New rules for wine importers, exporters, producers, retailers and distributors.

Importing and exporting wine from 1 January 2021

The UK Government has updated the rules for wine importers, exporters, producers, retailers and distributors, as from 1 January 2021.

The Government have stated:

There will be no change to the requirements for wine imported into the UK from a non-EU country from 1 January 2021 to 1 October 2021.
VI-1 certificates will not be required for EU wine imported into Great Britain (England, Scotland and Wales) from 1 January 2021 to 30 June 2021.
There will be no change to the marketing standards requirements for importing wine into Northern Ireland (NI) from the EU.
VI-1 certificates will not be required to move wine to GB from NI.
Companies can continue to use the name and address of an importer, or bottler in the case of bulk wine imports, based in the EU, GB or NI on the label for bottles of wine marketed in GB until 30 September 2022. From 1 October 2022, wine marketed in GB must be labelled with the name and address of an importer or bottler located within the UK.
Consignments of wine exported from GB to the EU will be subject to EU third country requirements for wine which include having an EU VI-1. There are some situations where companies do not need a VI-1 to export wine from GB to the EU.
There will be no change to marketing standards requirements for exporting wine from NI to the EU. Businesses in NI will not be required to provide VI-1 documents for exports to the EU.
Goods moving from GB into NI will also be required to meet EU import marketing standards requirements.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

UK has a major free trade agreement with Japan.

ians@icsglobalservices.co.uk (Ian Simmonds) — Fri, 11 Sep 2020 14:02:51 GMT

The UK has signed its first major post-Brexit Free Trade Agreement with Japan.

UK–Japan Trade Deal

The UK has signed its first major post-Brexit Free Trade Agreement with Japan.

Preferential Trade Deals and Brexit

The EU has approximately 40 free trade deals with more than 70 countries outside the EU. As a member of the EU, the UK has been trading with these countries under EU preferential trade agreements, without having to pay duties on most goods. The UK Government is negotiating trade deals with countries outside the EU to replicate these current EU trade deals. The new trade deals will ensure that UK businesses will still have the same tariff-free access to these countries. Otherwise, WTO (World Trade Organization) terms will apply and UK businesses will be paying extra duties on imports and exports with these countries.

What is a Free Trade Agreement (FTA)?

Preferential rules of origin can be complicated, and importers and/or exporters need to understand how the rules apply to their products.

The UK – Japan Trade Deal

The UK Government have stated the following:

UK and Japan agree historic free trade agreement

The UK has secured a free trade agreement with Japan, which is the UK’s first major trade deal as an independent trading nation and will increase trade with Japan by an estimated £15.2 billion.

The UK-Japan Comprehensive Economic Partnership Agreement was agreed in principle by International Trade Secretary Liz Truss and Japan’s Foreign Minister Motegi Toshimitsu on a video call this morning (Friday 11 September).

The deal is tailored to the UK economy and secures additional benefits beyond the EU-Japan trade deal, giving UK companies exporting to Japan a competitive advantage in a number of areas. It will help to create jobs and drive economic growth throughout the whole of the UK.

The deal is also an important step towards joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This will give UK businesses a gateway to the Asia-Pacific region and help to increase the resilience and diversity of our supply chains.

UK businesses will benefit from tariff-free trade on 99% of exports to Japan. Government analysis shows that a deal with Japan will deliver a £1.5 billion boost to the UK economy and increase UK workers’ wages by £800 million in the long run.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Postponed VAT Accounting and Import VAT

ians@icsglobalservices.co.uk (Ian Simmonds) — Wed, 09 Sep 2020 10:26:55 GMT

Import VAT: Postponed VAT Accounting

Import VAT: Postponed VAT Accounting

The Government announced, during the Budget, that on 1 January 2021 Postponed VAT Accounting (PVA) will be introduced on imports. Currently, imported goods from a non-EU country are liable for payment of import VAT at the same time as customs duty. However, importers can defer to the fifteenth of the following month the payment of the customs duty and import VAT by using a duty deferment account (if available to them).

The Government have stated:

The introduction of PVA will enable importers to account for and recover import VAT as input tax on the same periodic (usually quarterly) VAT return, rather than having to pay it upfront and recover it on a subsequent return using the C79 VAT certificate as evidence of entitlement.

These changes will not affect non-VAT registered importers and individuals who must continue to pay (or defer) import VAT on imported goods at the same time as the customs duty, as they do now.

The process will provide importers with a new cashflow benefit, as they will be able to postpone VAT at the time of import, as opposed to paying it immediately upon importation. Importing businesses should note that this new process does not only cover goods arriving from non-EU countries, but also goods coming from the EU after the 1 January 2021.

How will the PVA work?

The Government have stated:

All UK VAT registered Importers will be eligible to use PVA; no authorisation will be required. They will simply make the appropriate entry and provide their EORI and/or VAT registration number (VRN) on their customs declaration. This process (subject to customs clearance) will allow the goods to enter into free circulation without up-front payment of the import VAT. The customs declaration will generate an online Monthly Postponed Import VAT Statement (MPIVS) that will be the evidence required to account for and recover the import VAT as input tax on their next VAT return. (Note: The C79 will continue to be produced for those entries where any VAT is paid on importation).

Will there be a staged approach?

There will be a staged approach from 1 January 2021 until 30 June 2021. The Government have stated:

UK VAT registered Importers who import standard (non-controlled) goods into GB from the EU and who make an Entry in Declarants Records (EIDR) under the staged approach to import controls will be required to use PVA to account for the import VAT on those goods. Making the EIDR allows the VAT registered importer to defer submission of their supplementary declaration by up to 6 months from the point of import, and they will be required to use PVA irrespective of when they submit their supplementary declaration.

Where the importer does defer their supplementary declaration, they will not have an MPIVS when they complete their VAT return. They will therefore need to use the information on their EIDR or other commercial import records to estimate the amount of import VAT due and account for that tax on the VAT return relating to the month of import. (For example; the import VAT on goods imported in January 2021 will be accounted for on the VAT return that covers January 2021).

When the deferred declaration is subsequently submitted the actual amount of import VAT will be calculated and tax due to be accounted for will be recorded on the MPIVS for the month the declaration is submitted. This should be compared to the estimated amount and any adjustments required should be made on the next VAT return.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

The Border with the European Union

ians@icsglobalservices.co.uk (Ian Simmonds) — Sat, 29 Aug 2020 11:29:05 GMT

The UK Government have published the Border Operating Model.

The Border with the European Union

The UK Government have stated that on 1 January 2021 the transition period with the European Union (EU) will end and the United Kingdom (UK) will operate a full, external border as a sovereign nation. This means that controls will be placed on the movement of goods between Great Britain (GB) and the EU.

The UK Government have recognised the impact of coronavirus on UK businesses’ ability to prepare and therefore have announced that they will implement full border controls on imports coming into GB in three stages up until 1 July 2021.

Stage 1 – from 1 January 2021
Stage 2 – from 1 April 2021
Stage 3 – from 1 July 2021

The UK Government have published the Border Operating Model (BOM), which outlines the processes for moving goods between GB and the EU from 1 January 2021 onwards. This document provides all the detail around the border operating requirements in the event that the UK and the EU do not negotiate a UK/EU Free Trade Agreement.

Click here to read the full document.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Brexit Step-by-Step Process Guides for Import / Export

ians@icsglobalservices.co.uk (Ian Simmonds) — Sat, 22 Aug 2020 13:09:31 GMT

New Import and Export Guides

Brexit Import / Export Guides

The UK Government has now released their new Import and Export Guides for the end of the Transition Period. The guides have been designed to provide a step-by-step process and aim to provide clarity around what is required at the end of the year. When it comes to following the new import / export processes and completing your Customs declarations, we can provide you with assistance and support.

Click here to read the Import Guide

Click here to read the Export Guide

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

https://www.icsglobalservices.co.uk/services

What are Incoterms 2020, How are they used?

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 18 Jun 2020 10:58:47 GMT

Your choice of Incoterms® will be an integral part of your contract.

Incoterms® 2020

What are Incoterms?

Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). Incoterms® were first created by the ICC in 1936. The Incoterms® rules are created and published by the ICC and are normally revised every 10 years, since 1980. The ICC describe the Incoterms® 2020 rules as:

The Incoterms® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms® rules are there to guide you. The Incoterms® rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.

How are Incoterms used?

By the parties agreeing the relevant Incoterms for the international supply chain and then incorporating it into the contract, the buyer and seller will understand responsibilities in the event of loss and damage.

The seller and buyer can include Incoterms in their contract to cover who is responsible for every stage of the international supply chain, including customs clearance and insurance requirements. Incoterms also make it clear who pays for each different cost within the international supply chain.

The eleven Incoterms® 2020 grouped by means of transport

Incoterms are grouped by the means of transportation used to move the goods.

The seven Incoterms for any mode or modes of transport:

Ex Works (EXW)

Free Carrier (FCA)

Carriage Paid To (CPT)

Carriage and Insurance Paid To (CIP)

Delivered at Place (DAP)

Delivered at Place Unloaded (DPU)

Delivered Duty Paid (DDP)

The four Incoterms for sea and inland waterway transport:

Free Alongside Ship (FAS)

Free On Board (FOB)

Cost and Freight (CFR)

Cost Insurance and Freight (CIF)

Incoterms® 2020 Rules Groups

The eleven Incoterms 2020 are divided into four groups (E, F, C, D), with E and D at the opposite poles of the international supply chain. The rules are divided according to the costs, risks, obligations, transportation, as well as challenges related to import and export.

E Group – Departure. Includes only one Incoterms rule, EXW.
F Group – Main Carriage Unpaid. Includes FCA, FAS, and FOB Incoterms rules.
C Group – Main Carriage Paid. Includes CFR, CIF, CPT, and CIP Incoterms rules.
D Group – Arrival. Includes DAP, DPU, and DDP Incoterms rules.

Ten articles for each Incoterms® rule

Each Incoterms rule is covered by ten articles which clarify the responsibilities of both the seller and the buyer. The ICC have reorganised these as follows:

General obligations
Delivery/Taking delivery
Transfer of risks
Carriage
Insurance
Delivery/transport document
Export/import clearance
Checking/packaging/marking
Allocation of costs
Notices

Incoterms® 2020 Rules

The Incoterms® 2020 rules define the following main areas:

The obligations between the seller and the buyer for arranging carriage and/or insurance of the goods.
Who is responsible for obtaining the shipping documentation and export or import licences.
Where and when the seller delivers the goods to the buyer, subsequently confirming the transfer of risk between the seller and buyer.
When the seller is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.
When the buyer is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.
The Incoterms®2020, as per previous Incoterms®, do NOT handle the transfer of ownership or title of the goods sold.

Key Differences between Incoterms® 2010 and 2020

The ICC have enhanced Incoterms® 2020 to better assist the international trading community in selecting the correct Incoterms® rule for their sales contract. Therefore, ensuring more efficient export / import transactions.
Delivery At Terminal (DAT) in Incoterms® 2010 has been replaced by Delivered at Place Unloaded (DPU). Under the new DPU Incoterms®, the seller is required to unload the goods at the destination. This is the only Incoterms® rule which requires the seller to unload goods, therefore the seller needs to ensure they can organise unloading at the named place.
Incoterms® 2020 now include security-related requirements within the carriage obligations and costs.
Under the Incoterms®2020, Cost Insurance and Freight (CIF) keeps the same insurance requirements i.e. Clause C (Institute of Cargo Clauses), but under Carriage and Insurance Paid To (CIP) the insurance requirement has been increased to Clause A (Institute of Cargo Clauses). This is because CIF is mostly used with bulk commodity movements and CIP is mostly used for manufactured goods via multimodal solutions.

Your choice of Incoterms® will be an integral part of your commercial transaction stated within the contract and must be applicable to the type of goods that will be shipped and the type of transportation that will be used.

If you would like more details about Incoterms, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

DPU Incoterms 2020 Rule Explained

ians@icsglobalservices.co.uk (Ian Simmonds) — Wed, 20 May 2020 15:58:16 GMT

Delivered at Place Unloaded (DPU) Incoterms® 2020

What are Incoterms?

New DPU Incoterms Rule

The seller is also responsible for the export clearance of the goods and bears all costs and risks connected with delivery to the named place of destination. However, the buyer is responsible for the customs clearance, import formalities and payment of import duties and/or taxes.

Risk transfers from seller to buyer when the goods have been unloaded.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

www.icsglobalservices.co.uk

VAT Zero Rating for Personal Protective Equipment

ians@icsglobalservices.co.uk (Ian Simmonds) — Mon, 04 May 2020 15:32:26 GMT

The European Commission recently announced backing for member states to implement temporary VAT reliefs.

Under current UK VAT law, the standard rate of VAT (20%) applies to the sale of personal protective equipment (PPE). However, the European Commission recently announced backing for member states to implement temporary VAT reliefs to mitigate the impacts of the Covid-19 pandemic.

As from 1 May and until 31 July 2020, the UK Government has introduced a temporary zero rate of VAT on PPE purchased by care homes, businesses, charities and individuals to protect against Covid-19.

The UK Government has stated:

The policy objective of this relief is to relieve the burden of VAT on the price of purchasing PPE used for protection from coronavirus by front line workers.

This will particularly aid sectors that cannot recover VAT on such goods due to their VAT exempt status, such as care homes, but will benefit all consumers.

This temporary measure is being brought in alongside the previously announced removal of import duties on PPE. Please see our blog: UK Government Waives Import Taxes on Vital Medical Supplies.

If you require any further information or assistance with importing PPE, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Declarant / Importer of Record Service

Mon, 20 Apr 2020 13:49:16 GMT

We provide Importer Of Record (IOR) services for foreign importers

Many UK based technology companies and web marketplaces require products to be delivered on Delivered Duty Paid (DDP) Terms. Under the terms DDP, the foreign seller is responsible for door to door delivery, the payment of import duties and any applicable taxes. Under the eleven Incoterms® Rules, DDP terms impose the maximum level of obligation on the foreign seller.

Issues for Foreign Importers

In a straightforward import transaction, the consignee is usually the party paying import duties and taxes. Under DDP terms the consignee is not responsible for the payment of import duties and taxes, the foreign importer will be.

Generally, the import of products under DDP terms requires a Declarant / Importer of Record (IOR) located or established in the place of importation. In the EU the Declarant / IOR is required to have proper documentation confirming that they meet all the necessary criteria.

If you are a foreign importer into the UK, under DDP terms you are legally liable for payment of duties, taxes, fees and compliance with customs and other government agency regulations pertaining to your imports. However, not all foreign importers want to register their business within the UK, file paperwork, classify their goods with UK Customs, arrange the payment of duties and taxes or apply for VAT registration in the UK.

Many foreign importers are aware that they can file for VAT reclaim as a non-UK IOR. However, they are reluctant to file for this registration because they don’t want to charge VAT to their local UK customers.

Those non-UK IOR who do apply for VAT registration in the UK to benefit from any tax relief, often find VAT refunds a lengthy process. The UK tax authorities will investigate each import separately, whilst reviewing the entire document trail. The process can take anywhere between four and six months.

The UK government sets a high level of regulations, each enforced by a different government department. Some foreign importers find UK importing too confusing and so fail to develop additional international business, while others try to comply with the laws and regulations but find themselves in violation regardless and face fines, penalties or goods being forfeit.

What is an Importer of Record?

“Importer of Record” is a term used in customs law for the entity responsible for ensuring the imported products comply with local laws and regulations, filing a completed customs entry and paying the assessed import duties and other taxation for those products. In most countries in the EU (European Union), the Declarant / IOR needs to be established in the EU, meaning the importer needs to have an EU entity, established business or a physical presence, to take responsibility for customs procedures and declaring the import.

If a foreign company is importing into the EU and is not established in the EU, they can’t make a customs declaration for a shipment of products. The foreign company will require a third party that will need to act as the IOR. This third party could be a third-party service company, such as ICS Global Services Limited.

How can we help?

Shipping products between countries can be an extremely complex process with some products being highly regulated, which is why you need to use an experienced Importer of Record. Working as the IOR we are formally recognised as an official party within the international shipment transaction by the government.

We provide IOR services for foreign importers and take care of every phase of the importation from customs clearance to the payment of duties and taxes. As the IOR for your products we are responsible for all paperwork relating to import of your products, customs classification and we will arrange the payment of duties and taxes.

By working with ICS Global Services Limited, we will enable your business to supply products to UK customers whilst meeting import and trade compliance requirements. We act as importers on behalf of your overseas business.

ICS Global Services Limited do not take ownership of your products and do not resell them, but we perform services and distribute products for your business. Title to the products (at all times) remains with your overseas business, as the owners. However, as we are acting as the ‘Importer of Record’ on UK import declarations and paying the import VAT to HMRC, we will receive the import VAT certificate (C79).

Reclaiming Import VAT

As from 15th July 2019, ICS Global Services Limited cannot reclaim the import VAT. Only the owner of the goods can reclaim VAT, meaning overseas companies will need to register for VAT or changes to the ownership of goods having to be made before they enter the UK. The correct procedure is for the owner to be the IOR and reclaim the import VAT. We can assist you in identifying alternative approaches to lessen the tax burden.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

UK Government Waives Import Taxes on Vital Medical Supplies

ians@icsglobalservices.co.uk (Ian Simmonds) — Mon, 06 Apr 2020 11:09:35 GMT

HMRC has published new guidance about the import relief on GOV.UK. Only organisations supplying the NHS can utilise this relief.

Goods such as ventilators, coronavirus testing kits and protective clothing arriving from outside the EU are no longer subject to customs duty or import VAT. This will reduce red tape to ensure frontline health workers get vital equipment quickly and removes barriers to those who want to donate supplies to the NHS.

NHS suppliers will no longer have to pay customs duty and import VAT, the removal of tariffs on these vital supplies will reduce the import price by up to 12 per cent.

Goods imported into the UK for donation or onward sale to the NHS are also eligible for this relief and can be imported free of import duty and import VAT. Importers will need to pay import duties and VAT if they loan, hire out or transfer their goods to organisations or individuals not affected by coronavirus outbreak.

International Trade Secretary, Liz Truss said:

We are removing tariffs and barriers on essential medical supplies imported into the UK to ensure our front-line workers have everything they need to treat people suffering from Covid-19.

As I agreed with my G20 trade minister counterparts, we will work together to keep trade flowing and ensure the supply of essential goods and services.

HM Revenue & Customs have published the following explanatory notes:

Under the current rules, importers require a duty deferment account with HMRC backed by a guarantee. Importers of these critical goods would need to increase the level of their guarantee to cover any additional duty due.
This new approach, in place until 31 July 2020, will allow companies to import goods critical for our fight against coronavirus at a faster rate and reduce costs significantly.
The relief can be claimed from HMRC immediately by state organisations, including state bodies, public bodies and other bodies governed by public law who are supplying the NHS. Other approved organisations wanting to supply the NHS can also apply to HMRC.
HMRC has published new guidance about the import relief on GOV.UK. Only organisations supplying the NHS can utilise this relief.
All imports will continue to arrive through the same channels and face the same checks as before, so there is minimal chance of fraud. Companies benefiting from the relief also need to first be approved by HMRC.
The EU’s disaster relief regulation can be used in relation to COVID-19. This allows certain items that are needed to deal with C-19 to be imported free of VAT and customs duties.

ICS Global Services Limited

Outsourcing International Supply Chain Management

Mon, 30 Mar 2020 17:05:59 GMT

Fourth-Party Logistics (4PL)
Services

Outsourcing International Supply Chain Management with ICS Logistics Limited

Several of our ICS Global Services clients requested Fourth-Party Logistics (4PL) solutions to manage the complexities of their company’s logistical operations. To support our valued partnership with these clients we established a sister company, ICS Logistics Limited.

Outsourcing your international supply chain management by contracting with ICS Logistics Limited will not only save money and provide a higher level of service, but it also frees up your internal resources to focus on the company’s core business.

Being a Fourth-Party Logistics (4PL) provider, we have a broad role within our customers’ international supply chains. We assume many of the same roles as third-party logistics (3PL) providers, but we have a much broader responsibility and accountability in helping our customers reach their strategic goals.

If your company is dealing with an increasingly complex supply chain and struggling to meet customer expectations, then we may be the best solution for you. We have a passion for helping businesses with limited resources to manage their import and export activities. Functioning as a 4PL, we become a true partner with our customers, working to create lean, cost-effective international supply chains.

We are a non-asset based business with no contractual obligations to any freight forwarding companies. It is our company policy not to receive any margin or revenue from our clients’ international transportation spend. This enables us to remain neutral within the shipping market and to obtain the best cost-effective solution for our clients.

The 4PL Service Advantages

The primary advantage of our 4PL services is that we are a strategic partner focused on providing the highest level of services for the best value, as opposed to Third-Party Logistics Providers (3PL) who may be more transaction focused. As a 4PL we provide a single point of contact for your international supply chain. With a 3PL, there may be some aspects that you still have to manage. We take over those processes for you, acting as the intermediary for 3PLs, carriers, warehouse vendors, cargo consolidation, clearance agents and other participants in your international supply chains.

Businesses have looked to 3PLs to fill essential roles within the international supply chain and this works well for many businesses. However, the relationship between the client and the 3PL is not always successful. There are many reasons that the 3PL relationship does not always work. This is normally because the client does not have the internal resources or expertise to manage their international supply chain processes, which would enable effective 3PL services solutions. In addition, many 3PLs are task or functional operations without trade process facilitators or international commerce specialists. 3PLs are essentially not international supply chain service companies, their primary focus is freight or warehousing.

We take the 3PL service solution one step further to optimise efficiency, reduce international supply chain costs and improve service performance. As a 4PL, we fill the service vacuum created by 3PLs by understanding that international supply chain management is a key business process and needs to be managed efficiently. We manage the end-to-end international supply chain process to meet the client’s needs, regardless of what carriers, freight forwarders or warehouses are used. As a 4PL we even manage the 3PLs selected by our clients and achieve optimise efficiencies by developing agreed Service Level Agreements (SLAs) with the 3PLs.

We provide our clients with outsourced resources and expertise to manage their international supply chain processes and create a seamless comprehensive fulfilment experience. We provide our clients with valuable insights into where processes and transit times can be improved, whilst identifying cost reductions. We are more than just service providers, our integration in your business allows us to better understand our client’s long-term vision and goals.

Our aim is to optimise efficiency, reduce international supply chain costs and improve service performance.

Solutions

As a 4PL, we support your business by offering a full range of logistics support as well as customised end-to-end import / export solutions:

Freight Management
Order Management
Cargo Consolidation
Warehousing
Import Documentation
Import Customs Clearance
Import Licensing
Export Documentation
Export Customs Clearance
Export Licensing
Invoice Auditing

4PL Benefits

Focus on core business

By outsourcing the international supply chain activities to our company with its in-depth expertise and experience, this allows our clients to focus on other critical operations within their business.

Back-Office

We have the resources to reduce back office activities, therefore releasing staff and increasing resources to focus on other business matters which in turn increases productivity. We can also manage the international logistics contracts and KPIs on behalf of our clients.

Waste

Working with clients in proactive partnership, we highlight waste within the business as well as an explanation of where and why it occurs.

Clarity

We act as the single contact point between our clients and their contracted 3PLs functional operations. As a Fourth Party Logistics Provider (4PL) we oversee and manage the complexities of a company’s logistical operations.

Company Expansion

When growth is a company’s goal, we can make that aspiration a reality without disruption to daily operations. We have access and relationships within the supply chain industry to easily assist business’ during times of growth and expansion.

Business Processes

As international supply chain architects, we design and develop processes to support a growing company’s logistical needs and provide the seamless execution of the flow of goods.

Synergies

Synergies emerge because we are committed to achieving the same goal as our client. We keep our client’s interests at the forefront of our focus since the relationship between a 4PL provider and an international business is a valued partnership.

ICS Logistics Limited

www.icslogistics.co.uk

The Implications of Selling on DDP Terms

ians@icsglobalservices.co.uk (Ian Simmonds) — Wed, 12 Feb 2020 12:17:01 GMT

DDP terms impose the maximum level of obligation on the seller.

The Implications of Selling on Delivered Duty Paid (DDP) Terms

Selling on DDP sales terms is a workable solution for domestic transactions or with only some transactions within the European Union, but for other international trade it can be particularly problematic. Under the terms DDP, the seller is responsible for door-to-door delivery, the payment of import duties and any applicable taxes. Under the eleven Incoterms® Rules, DDP terms impose the maximum level of obligation on the seller.

Insurance Obligations

The DDP risk transfer point or delivery point is important in relation to marine cargo insurance underwriting and claims, because it establishes the seller’s liability for insurance cover. Under DDP terms, the seller has no obligation to the buyer to make a contract of insurance. The buyer also has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller with information they need for obtaining insurance.

Registered Importer of Record

Under DDP terms, the seller may be required to act as the registered Importer of Record in many countries. It is not always possible for a foreign business to become the Importer of Record, and this may cause issues in some countries, such as the USA and South Africa. In addition, the EU requires the importer of goods to be registered with a relevant government authority (in the EU this registration is under the EORI system) and often the importer needs to have a physical presence in the country as well.

Import Customs Clearance

Under DDP terms, the seller will be responsible for preparing customs clearance documentation and each country has specific documentary requirements . The seller will be responsible for the costs related to customs clearance. These costs may include any storage or demurrage charges incurred due to delays during customs clearance, investigations by government agencies and service issues with the freight forwarders. These additional costs can very quickly impact profit margins on export sales.

Paying Customs Duty and Import Taxes

Import Tax Implications

Domestic Tax Implications

Import Permits and Import licences

Under DDP terms, the seller will be responsible for obtaining any import permits or import licences (if required) as the registered Importer of Record.

Bribery

Conclusion

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Preferential Trade Deals and Brexit

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 06 Feb 2020 17:43:56 GMT

The UK Government has been attempting to replicate all the EU's trade deals with countries outside the EU.

Preferential Trade Deals and Brexit

The UK Government is preparing to negotiate a free trade deal with the EU to ensure that UK goods are not subject to duty tariffs and other trade barriers within the EU after the transition period ends on 31 December 2020.

However, the EU has approximately 40 free trade deals with more than 70 countries outside the EU. As a member of the EU, the UK was trading with these countries under EU preferential trade agreements, without having to pay duties on most goods.

The UK Government has been attempting to replicate all the EU's trade deals with countries outside the EU. Ensuring that UK businesses still have the same tariff-free access to these countries. Otherwise, WTO (World Trade Organization) terms will apply and UK businesses will be paying extra duties on imports and exports with these countries.

The UK Government has stated that it plans to build ambitious new preferential trade arrangements with the USA and other countries.

What is Preference?

Preferential rules of origin can be complicated, and importers and/or exporters need to understand how the rules apply to their products.

What are the main benefits of using Preference?

Imports

Exports

Claiming Preference on UK Imports – Top level

The UK importer will need to confirm if their imported products qualify for preferential duty rates by following these steps:

Step 1

Classify the products to be imported against the Customs Trade Tariff using the full 10-digit commodity code. Commodity codes are also known as HTS or tariff codes, in different countries.

Step 2

Once the products have been classified, check the commodity code against the Customs Trade Tariff to identify if any preferential rate of duty is appropriate.

Step 3

Identify the country the products are being sourced from and confirm within the Customs Trade Tariff if that country is a beneficiary country under preference.

Step 4

Step 5

On import ensure that the correct preference document is presented to customs at the time of the import declaration / entry.

Claiming Preference on UK Exports – Top level

The UK exporter will need confirm if their products for export out of the UK qualify for preferential duty rates by following these steps:

Step 1

Classify the products to be exported against the Customs Trade Tariff. Use the first four digits of the commodity code to check the preference origin rules, which are covered by country specific laws. These origin rules are contained within the EU regulations. These will ultimately be covered by UK regulations.

Step 2

Identify if the export market is a beneficiary country under preference.

Step 3

The UK exporter must ensure a full understanding of the preference origin rules covering the products to be exported. See preference origin rules below.

Step 4

Most importantly, the exporter must make sure to have documented evidence to support the issue of preference certificates or invoice declarations to cover the export.

Step 5

Issue the EUR1 Form or EUR1/EUR-MED Form (these EU forms could soon be replaced with new UK forms?) or make an invoice declaration, depending on the export destination and the regulations.

Currently, only Registered EU exporters may issue statements on origin for consignments with a value exceeding €6,000 and they must include their registered exporter (REX) number as the exporter reference number in the statement on origin. This should ultimately be covered by UK regulations?

Preferential Trade Agreements

The EU has both bilateral and unilateral preferential trade arrangements with unions of countries (trading blocs) and third countries. These would ultimately be replaced by UK arrangements.

Bilateral

Bilateral agreements are often very specific and targeting an individual policy area. The EU has many bilateral agreements in place. Some examples:

A bilateral preferential trade arrangement between the EU and Turkey which covers most agricultural, coal and steel products.
The EU and Japan's Economic Partnership Agreement removed tariffs and other trade barriers, which had made it difficult for EU exporters to compete. UK trade with Japan is worth just over 2% of total UK trade and an agreement will not be ready for Brexit.
The agreement between the EU and Canada (the EU-Canada Comprehensive Economic and Trade Agreement or CETA) has eliminated 98% of tariffs in bilateral trade.

Unilateral Preferential Trade Arrangements

These arrangements normally benefit only one nation and are imposed on one nation by another. A good example is the Generalised System of Preferences (GSP), which allows products from developing or Least Developed Countries (LDCs) to be imported into the European Union (EU) at a reduced or zero rate of duty. These GSP preferences are 'non-reciprocal', which means that GSP does not apply to exports from the EU to these same countries.

The UK and EU administer three GSP systems:

Standard GSP for low and lower-middle income countries, resulting in partial or full removal of customs duties.
An extension to the GSP system is GSP+, which includes developing countries that have proved their commitment to good governance and sustainable development. As a result, most duty rates are 'zero' under this part of the scheme.
Everything But Arms (EBA) is a special arrangement for least developed countries, providing them with duty-free, quota-free access for all products except arms and ammunition.

HM Revenue & Customs (HMRC) have stated:

The UK will continue to apply the EU Generalised Scheme of Preferences during an implementation period after the UK leaves the EU with a deal.

Preference Origin Rules

All preferential origin goods must satisfy the relevant conditions, such as:

Be manufactured from raw materials or components which have been grown or produced in the beneficiary country.
The product underwent a certain amount of working or processing in the beneficiary country and can be considered as "originating".
Products have been sufficiently transformed in beneficiary country, resulting in a change of tariff classification.
During manufacture of the product, the customs value of all the non-originating materials used did not exceed the threshold fixed by the origin rule for that product.
A combination of the above.
UK importers and exporters can apply to HMRC for Binding Origin Information (BOI), which is a written decision by customs confirming the origin of the product. This is valid for 3 years and is legally recognised within the UK. This should also continue to be recognised within the EU (subject to a UK / EU agreement).

Cumulative Origin Rules for EU Exports

Once again, the UK will need to replicate these rules after a UK / EU agreement.

The European Commission states the following:

Cumulation is a mechanism that allows you to consider non-originating materials used or processing carried out in another country as originating in your country or carried out in your country.

There are three types of cumulation:

1) Bilateral cumulation

Materials originating in the EU may be used as materials originating in your country. This cumulation applies to all EU preferential regimes.

How it works

If the rule attributed to your good is as that described in the sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in the EU in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in the EU.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in the EU refer to a later state of production or not.

2) Diagonal cumulation

Materials originating in a defined country (mentioned in the relevant provision on cumulation) may be used as materials originating in your country.

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in that country refer to a later state of production (i.e. fabric) or not.

3) Full cumulation

Processes carried out in the EU or a defined country (mentioned in the relevant provision on cumulation) may be considered as carried out in your country. Contrary to bilateral or diagonal cumulation, full cumulation permits you to consider materials that are not yet originating in the EU or your country. This implies that there are more materials imported from the EU or your country that you can use for cumulation purposes under this specific type of cumulation.

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials imported from that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials imported from that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials you imported from that country refer to a later state of production (i.e. fabric) or not.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Project: Export Business Strategies

ians@icsglobalservices.co.uk (Ian Simmonds) — Wed, 05 Feb 2020 08:24:50 GMT

Another successful interim assignment.

Completed another successful interim assignment with a telecommunications infrastructure manufacturer. Conducted an audit of the Client’s business operations, completed a comprehensive international business plan to assist with anticipated future export goals and identified business strategies for entering and expanding into new export markets.

The Client

The Client provides telecommunications infrastructure and cyber security services.

Project Scope

Provide an urgent solution for supplying products on Delivered Duty Paid (DDP) terms, as the Client has no legal entities in the new export markets.

Provide guidance to the Client concerning export licencing, customs, tax, insurance, government regulations and export / import requirements for the new proposed export supply chain solutions.

Highlight possible new requirements for the Client, if the UK leaves the EU without preferential trade agreements in place with the new export markets.

The Solution

Conducted a detailed audit of the company to determine how these new export requirements would impact their business operations. Documented the management challenges for exporting to their new export markets using DDP terms, the approaches required for exporting, the effective international distribution channels, the necessary export documentation and other important considerations that may impact their current business operations.

Issued a request for shipping quotations (RFQ) to various freight forwarders specifying the individual legs of the shipments and the shipment details, including dimensions, chargeable weight and a description of the goods. The quotations received were documented within the landed cost calculations, allowing the Client to ascertain whether or not they would be able to make a profit on their products or even if their business model was sustainable.

The Results

Identified a business strategy for entering and expanding into the new export markets. Highlighting the legal requirements, documentation requirements, product registration / conformity obligations and tax regulations. The strategy embraced alternative processes to complete customs declarations and pay taxes / duties without registering their company within the export countries.

Completed a comprehensive international business plan to assist with anticipated future export goals, assembled facts and identified constraints.

Created a detailed Export Operational Manual, which set forth specific requirements, documentation processes and end-to-end procedures for supplying the new export markets.

Recommendation

Selling on DDP sales terms may work with domestic transactions or with only some transactions within the European Union, but for other international trade it can be particularly problematic. Under the terms DDP, the Client is responsible for door to door delivery, the payment of import duties and any applicable taxes. Within the eleven Incoterm rules, DDP terms impose the maximum level of obligation on the Client. If the Client’s overseas customers still require delivered terms moving forward, it would be a good business strategy to trade under different Incoterms® Rules. Using either Delivered at Place (DAP) or Delivered at Pace Unloaded (DPU) would allow the Client to deliver the goods and ensure that their customer would always be the Importer of Record.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Brexit and Preferential Trade Deals

Sun, 19 Jan 2020 17:48:17 GMT

The UK Government has been attempting to replicate all the EU's trade deals with countries outside the EU.

Brexit and Preferential Trade Deals

As we approach Brexit, the UK Government is preparing to negotiate a free trade deal with the EU to ensure that UK goods are not subject to duty tariffs and other trade barriers within the EU after the transition period ends on 31 December 2020.

However, the EU has approximately 40 free trade deals with more than 70 countries outside the EU. As a member of the EU, the UK currently trades with these countries under EU preferential trade agreements, without having to pay duties on most goods.

With Brexit on 31 January 2020 approaching fast, the UK Government has been attempting to replicate all the EU's trade deals with countries outside the EU. Ensuring that UK businesses still have the same tariff-free access to these countries. Otherwise, WTO (World Trade Organization) terms will apply and UK businesses will be paying extra duties on imports and exports with these countries.

Once the UK leaves the EU, the UK Government has stated that it plans to build ambitious new preferential trade arrangements with the USA and other countries.

What is Preference?

Preferential rules of origin can be complicated, and importers and/or exporters need to understand how the rules apply to their products.

What are the main benefits of using Preference?

Imports

Exports

Claiming Preference on UK Imports – Top level

The UK importer will need to confirm if their imported products qualify for preferential duty rates by following these steps:

Step 1

Classify the products to be imported against the Customs Trade Tariff using the full 10-digit commodity code. Commodity codes are also known as HTS or tariff codes, in different countries. Please see our Blog for more details on commodity codes: Brexit and Customs Clearance

Step 2

Once the products have been classified, check the commodity code against the Customs Trade Tariff to identify if any preferential rate of duty is appropriate.

Step 3

Identify the country the products are being sourced from and confirm within the Customs Trade Tariff if that country is a beneficiary country under preference.

Step 4

Step 5

On import ensure that the correct preference document is presented to customs at the time of the import declaration / entry.

Claiming Preference on UK Exports – Top level

The UK exporter will need confirm if their products for export out of the UK qualify for preferential duty rates by following these steps:

Step 1

Step 2

Identify if the export market is a beneficiary country under preference.

Step 3

The UK exporter must ensure a full understanding of the preference origin rules covering the products to be exported. See preference origin rules below.

Step 4

Most importantly, the exporter must make sure to have documented evidence to support the issue of preference certificates or invoice declarations to cover the export.

Step 5

Issue the EUR1 Form or EUR1/EUR-MED Form (these EU forms could be replaced with new UK forms after Brexit?) or make an invoice declaration, depending on the export destination and the regulations.

Preferential Trade Agreements

The EU has both bilateral and unilateral preferential trade arrangements with unions of countries (trading blocs) and third countries. These would be replaced by UK arrangements following Brexit.

Bilateral

Bilateral agreements are often very specific and targeting an individual policy area. The EU has many bilateral agreements in place. Some examples:

A bilateral preferential trade arrangement between the EU and Turkey which covers most agricultural, coal and steel products.

The EU and Japan's Economic Partnership Agreement removed tariffs and other trade barriers, which had made it difficult for EU exporters to compete. UK trade with Japan is worth just over 2% of total UK trade and an agreement will not be ready for Brexit.

The agreement between the EU and Canada (the EU-Canada Comprehensive Economic and Trade Agreement or CETA) has eliminated 98% of tariffs in bilateral trade.

Unilateral Preferential Trade Arrangements

The UK and EU administer three GSP systems:

Standard GSP for low and lower-middle income countries, resulting in partial or full removal of customs duties.
An extension to the GSP system is GSP+, which includes developing countries that have proved their commitment to good governance and sustainable development. As a result, most duty rates are 'zero' under this part of the scheme.
Everything But Arms (EBA) is a special arrangement for least developed countries, providing them with duty-free, quota-free access for all products except arms and ammunition.

HM Revenue & Customs (HMRC) have stated:

The UK will continue to apply the EU Generalised Scheme of Preferences during an implementation period after the UK leaves the EU with a deal.

Preference Origin Rules

All preferential origin goods must satisfy the relevant conditions, such as:

Be manufactured from raw materials or components which have been grown or produced in the beneficiary country.
The product underwent a certain amount of working or processing in the beneficiary country and can be considered as "originating".
Products have been sufficiently transformed in beneficiary country, resulting in a change of tariff classification.
During manufacture of the product, the customs value of all the non-originating materials used did not exceed the threshold fixed by the origin rule for that product.
A combination of the above.

UK importers and exporters can apply to HMRC for Binding Origin Information (BOI), which is a written decision by customs confirming the origin of the product. This is valid for 3 years and is legally recognised within the UK. This should also continue to be recognised within the EU (subject to a UK / EU agreement).

Cumulative Origin Rules for EU Exports

Once again, the UK will need to replicate these rules after Brexit.

The European Commission states the following:

Cumulation is a mechanism that allows you to consider non-originating materials used or processing carried out in another country as originating in your country or carried out in your country.

There are three types of cumulation:

1) Bilateral cumulation

Materials originating in the EU may be used as materials originating in your country. This cumulation applies to all EU preferential regimes.

How it works

If the rule attributed to your good is as that described in the sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in the EU in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in the EU.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in the EU refer to a later state of production or not.

2) Diagonal cumulation

Materials originating in a defined country (mentioned in the relevant provision on cumulation) may be used as materials originating in your country.

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in that country refer to a later state of production (i.e. fabric) or not.

3) Full cumulation

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials imported from that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials imported from that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials you imported from that country refer to a later state of production (i.e. fabric) or not.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Incoterms® 2020 Commence Today

ians@icsglobalservices.co.uk (Ian Simmonds) — Wed, 01 Jan 2020 10:01:10 GMT

Incoterms® 2020 Rules

What are Incoterms?

The eleven Incoterms® 2020

The seven Incoterms® for any mode or modes of transport:

Ex Works (EXW)
Free Carrier (FCA)
Carriage Paid To (CPT)
Carriage and Insurance Paid To (CIP)
Delivered at Place (DAP)
Delivered at Place Unloaded (DPU)
Delivered Duty Paid (DDP)

The four Incoterms® for sea and inland waterway transport:

Free Alongside Ship (FAS)
Free On Board (FOB)
Cost and Freight (CFR)
Cost Insurance and Freight (CIF)

Ten articles for each Incoterm

Each Incoterm is covered by ten articles which clarify the responsibilities of both the seller and the buyer. The ICC have reorganised these as follows:

General obligations
Delivery/Taking delivery
Transfer of risks
Carriage
Insurance
Delivery/transport document
Export/import clearance
Checking/packaging/marking
Allocation of costs
Notices

Incoterms® 2020 Rules

The new Incoterms® rules define the following main areas:

The obligations between the seller and the buyer for arranging carriage and/or insurance of the goods.

Who is responsible for obtaining the shipping documentation and export or import licences.

Where and when the seller delivers the goods to the buyer, subsequently confirming the transfer of risk between the seller and buyer.

When the seller is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.

When the buyer is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.

The Incoterms®2020, as per previous Incoterms®, do NOT handle the transfer of ownership or title of the goods sold.

Key Changes

The ICC have enhanced Incoterms® 2020 to better assist the international trading community in selecting the correct Incoterms® rule for their sales contract. Therefore, ensuring more efficient export / import transactions.

Delivery At Terminal (DAT) in Incoterms® 2010 has been replaced by Delivered at Place Unloaded (DPU). Under the new DPU Incoterms®, the seller is required to unload the goods at the destination. This is the only Incoterms® rule which requires the seller to unload goods, therefore the seller needs to ensure they can organise unloading at the named place.

Incoterms® 2020 now include security-related requirements within the carriage obligations and costs.

Under the new Incoterms®, Cost Insurance and Freight (CIF) keeps the same insurance requirements i.e. Clause C (Institute of Cargo Clauses), but under Carriage and Insurance Paid To (CIP) the insurance requirement has been increased to Clause A (Institute of Cargo Clauses). This is because CIF is mostly used with bulk commodity movements and CIP is mostly used for manufactured goods via multimodal solutions.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

International Shipping and Compliance News

ians@icsglobalservices.co.uk (Ian Simmonds) — Tue, 03 Dec 2019 08:42:03 GMT

Shipping and Compliance News highlights events that matter most to you and your business. These include news and updates on international shipping, freight forwarding, customs clearance, government regulations and international trade compliance.

Shipping

Year of the Rat Rate Increases

Ahead of the Chinese New Year holiday on 25 January, the ocean carriers are introducing a tranche of GRIs (General Rate Increase) and FAK (Freight All Kinds) increases. Carriers are currently seeing a strong demand for vessel space from Asia to North America and Europe, and the ‘laws of supply and demand’ are coming into play. Subsequently, the ocean carriers are expected to announce additional peak season surcharges (PSSs) across several routes from Asia.

Asia to Europe

The Shanghai Export Containerized Freight Index (SCFI) has shown increases in spot rates from Asia to Europe. The Europe (base port) rate for a 20ft container was $702 on 22 November and increased to $766 on 29 November, an increase of 9.11%.

CMA CGM has stated that ‘as from December 15th, 2019 (date of loading in the origin ports) until further notice (but not beyond December 31st, 2019) FAK Rates will apply from Asia to North Europe'. The base port to base port rates will be projected at:

20ft Container - USD $1,150

40ft Container - USD $2,200

40ft High Cube Container - USD $2,250

40ft Reefer Container - USD $2,200

Source: CMA CGM website.

Asia to USA

The Shanghai Export Containerized Freight Index (SCFI) has shown substantial increases in spot rates from Asia to the US west coast. The US west coast rate for a 40ft container was $1229 on 22 November and increased to $1405 on 29 November, an increase of 14.3%. There has also been an increase in the US east coast rate for the same period with the rate for a 40ft container moving from $2256 to $2684, an increase of 18.97%.

IMO 2020

Commercial cargo ships currently run on fossil fuels and these fuel oils are collectively known as bunker fuel. These fuels are very harmful to the environment, as they have a high content of sulphur.

On 1 January, the International Maritime Organization (IMO) is introducing new regulations which require all shipping companies to reduce their sulphur emissions. Most ocean carriers have decided to use Very Low Sulphur Fuel Oils, and many are looking to invest in Liquefied Natural Gas to power some vessels in the future.

As from 1 December, ocean carriers are beginning to charge low-sulphur fuel surcharges to recover the extra cost of bunkering ships with IMO compliant 0.5% sulphur fuel in readiness for 1 January. It is not clear if the ocean carriers can successfully pass on these additional costs to their customers.

Compliance

U.S. Tariffs on Chinese Goods

Due to high U.S. tariffs, China’s exports to the USA are still heavily impacted. As a result, it appears that U.S. importers have been looking to source products from Vietnam. According to IHS Markit, between January and September, Vietnam’s exports to the U.S. climbed by 34.8%. Another large beneficiary of the U.S. tariffs on China has been Taiwan with increased exports of communications equipment and machinery.

EU Dual-use Exports

A recent report from the Commission to the European Parliament and The Council dated 4 November shows that the main destination for EU dual-use exports in 2017 was the United States, followed by China.

The European Commission describe dual-use items as:

Dual-use items are goods, software and technology that can be used for both civilian and military applications. The EU controls the export, transit and brokering of dual-use items so the EU can contribute to international peace and security and prevent the proliferation of Weapons of Mass Destruction (WMD).

U.S. Customs Penalties

U.S. Customs and Border Protection (CBP) stated on 19 November that they had collected $3,320,425 for various customs violations from an importer of machinery that is used in the production of optical lenses. CBP have stated that the violations occurred when the importer provided the agency with false descriptions, tariff classification numbers and duty rates on import entries of certain machinery and parts.

It is important that companies and individuals remain compliant with the laws and regulations of the countries they are trading with in order to avoid the consequences of non-compliance. These consequences can include monetary fines, penalties and seizure of goods arriving at the port, while the worst-case scenario can result in prison time for individuals.

As former Deputy US Attorney General Paul McNulty said, “If you think compliance is expensive, try non-compliance.”

Incoterms 2020

The new Incoterms® 2020 take effect on 1 January 2020.

Article

Preference Duty: Financial Benefits & Trade Advantages

What is Preference?

What are the main benefits of using Preference?

Imports

Exports

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Incoterms 2020 Rules and Key Changes

Thu, 21 Nov 2019 08:34:01 GMT

Incoterms® 2020 Rules

What are Incoterms?

Incoterms® 2020 Rules

The new Incoterms® rules define the following main areas:

The obligations between the seller and the buyer for arranging carriage and/or insurance of the goods.

Who is responsible for obtaining the shipping documentation and export or import licences.

Where and when the seller delivers the goods to the buyer, subsequently confirming the transfer of risk between the seller and buyer.

When the seller is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.

When the buyer is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.

The Incoterms®2020, as per previous Incoterms®, do NOT handle the transfer of ownership or title of the goods sold.

Key Changes

The ICC have enhanced Incoterms® 2020 to better assist the international trading community in selecting the correct Incoterms® rule for their sales contract. Therefore, ensuring more efficient export / import transactions.

Delivery At Terminal (DAT) in Incoterms® 2010 has been replaced by Delivered at Place Unloaded (DPU). Under the new DPU Incoterms®, the seller is required to unload the goods at the destination. This is the only Incoterms® rule which requires the seller to unload goods, therefore the seller needs to ensure they can organise unloading at the named place.

Incoterms® 2020 now include security-related requirements within the carriage obligations and costs.

Under the new Incoterms®, Cost Insurance and Freight (CIF) keeps the same insurance requirements i.e. Clause C (Institute of Cargo Clauses), but under Carriage and Insurance Paid To (CIP) the insurance requirement has been increased to Clause A (Institute of Cargo Clauses). This is because CIF is mostly used with bulk commodity movements and CIP is mostly used for manufactured goods via multimodal solutions.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Preference Duty: Financial Benefits & Trade Advantages

Wed, 20 Nov 2019 08:17:09 GMT

Preferential rules of origin can be complicated

What is Preference?

Preferential rules of origin can be complicated, and importers and/or exporters need to understand how the rules apply to their products.

Brexit and EU Preferential Trade Agreements

The European Union (EU) has in place preferential trade arrangements with numerous individual nations and groups of nations. The UK Government has been requesting a continuation of all EU preferential trade arrangements with countries outside the EU (known as third countries) after Brexit. If the UK does leave the EU, the UK Government may review these existing EU agreements and develop bespoke UK preferential trade arrangements. The UK Government has stated that it plans to build ambitious new preferential trade arrangements, once the UK leaves the EU.

Until Brexit, the UK remains a member of the EU with full access to all EU preferential trade arrangements.

What are the main benefits of using Preference?

Imports

Exports

Claiming Preference on Imports – Top level

The Importer will need to confirm if their imported products qualify for preferential duty rates by following these steps:

Step 1

Step 2

Once the products have been classified, check the commodity code against the Customs Trade Tariff to identify if any preferential rate of duty is appropriate.

Step 3

Identify the country the products are being sourced from and confirm within the Customs Trade Tariff if that country is a beneficiary country under preference.

Step 4

Step 5

On import ensure that the correct preference document is presented to customs at the time of the import declaration / entry.

Claiming Preference on Exports – Top level

The Exporter will need confirm if their products for export out of the EU qualify for preferential duty rates by following these steps:

Step 1

Step 2

Identify if the export market is a beneficiary country under preference.

Step 3

The Exporter must ensure a full understanding of the preference origin rules covering the products to be exported. See preference origin rules below.

Step 4

Most importantly, the Exporter must make sure to have documented evidence to support the issue of preference certificates or invoice declarations to cover the export.

Step 5

Issue the EUR1 Form or EUR1/EUR-MED Form or make an invoice declaration, depending on the export destination and the regulations.

Preferential Trade Agreements

The EU has both bilateral and unilateral preferential trade arrangements with unions of countries (trading blocs) and third countries.

Bilateral

Bilateral agreements are often very specific and targeting an individual policy area. The EU has many bilateral agreements in place. Some examples:

A bilateral preferential trade arrangement between the EU and Turkey which covers most agricultural, coal and steel products.
The EU and Japan's Economic Partnership Agreement removed tariffs and other trade barriers, which had made it difficult for EU exporters to compete.
The agreement between the EU and Canada (the EU-Canada Comprehensive Economic and Trade Agreement or CETA) has eliminated 98% of tariffs in bilateral trade.

Unilateral Preferential Trade Arrangements

The UK and EU administer three GSP systems:

Standard GSP for low and lower-middle income countries, resulting in partial or full removal of customs duties.
An extension to the GSP system is GSP+, which includes developing countries that have proved their commitment to good governance and sustainable development. As a result, most duty rates are 'zero' under this part of the scheme.
Everything But Arms (EBA) is a special arrangement for least developed countries, providing them with duty-free, quota-free access for all products except arms and ammunition.

HM Revenue & Customs (HMRC) have stated:

The UK will continue to apply the EU Generalised Scheme of Preferences during an implementation period if the UK leaves the EU with a deal.

Preference Origin Rules

All preferential origin goods must satisfy the relevant conditions, such as:

Be manufactured from raw materials or components which have been grown or produced in the beneficiary country.
The product underwent a certain amount of working or processing in the beneficiary country and can be considered as "originating".
Products have been sufficiently transformed in beneficiary country, resulting in a change of tariff classification.
During manufacture of the product, the customs value of all the non-originating materials used did not exceed the threshold fixed by the origin rule for that product.
A combination of the above.

Importers and Exporters can apply to HMRC for Binding Origin Information (BOI), which is a written decision by customs confirming the origin of the product. This is valid for 3 years and is legally recognised within the EU.

Cumulative Origin Rules for EU Exports

The European Commission states the following:

Cumulation is a mechanism that allows you to consider non-originating materials used or processing carried out in another country as originating in your country or carried out in your country. There are three types of cumulation:

1) Bilateral cumulation

Materials originating in the EU may be used as materials originating in your country. This cumulation applies to all EU preferential regimes.

How it works

If the rule attributed to your good is as that described in the sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in the EU in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in the EU.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in the EU refer to a later state of production or not.

2) Diagonal cumulation

Materials originating in a defined country (mentioned in the relevant provision on cumulation) may be used as materials originating in your country.

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in that country refer to a later state of production (i.e. fabric) or not.

3) Full cumulation

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials imported from that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials imported from that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials you imported from that country refer to a later state of production (i.e. fabric) or not.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

International Supply Chain Consultancy Services

ians@icsglobalservices.co.uk (Ian Simmonds) — Fri, 15 Nov 2019 12:46:09 GMT

I will help you to navigate the often complex processes involved in global trade.

In 2004, I established ICS Global Services Limited.

ICS exists to provide international logistics and supply chain consultancy services to clients. An innovative and decisive business leader, I’m a great ‘international problem solver’. With an impressive track record of executing strategic objectives by leveraging international best practices and strong relationships, I’ve now turned to providing help and support to businesses that need it.

My Expertise

Thanks to my strong logistics, import, export and trade compliance background, I’m an obvious choice when it comes to issues regarding international trade. Passionate about my role and international trade, I established my own company to provide interim services, consultancy and third-party import and export services. Having worked as a senior executive for a number of FMCG blue-chip companies, I’m now bringing that expertise to businesses via my own company - ICS Global Services Limited .

Having completed a number of projects in the past that include import/export, customs clearance, duty management, trade compliance, bonded warehousing, international logistics, international freight, supply chain modelling, customs regulations, commodity classification and risk management, I’m uniquely suited to dealing with a huge assortment of problems.

Endorsements

"Working with Ian is a great experience as his level of knowledge of the industry and his work skills are some of the best I have had the pleasure of working with. Ian is always professional, with well thought out plans for moving the business forward and with his attention to detail we have implemented many new initiatives successfully."

"The world of logistics is becoming increasingly complex with a dizzy array of compliance issues that now associate themselves with all businesses. I have had an excellent experience working together with Ian Simmonds and anyone who needs to address issues particularly in compliance as it relates to logistics, would find Ian an extremely useful 'asset and tool"

"I worked with Ian for 3 years and relied on his knowledge and professionalism to help navigate difficult supply chain situations across the world. He makes good companies great."

"Following the submission of a detailed argument to challenge the U.S. government import requirements, a new, fully compliant end-to-end process was accepted. The new U.S. import process removed unnecessary documentation and administration, and resulted in earlier product release to the U.S. market. This was a very significant achievement. I would recommend him to anyone looking for reliable international logistics solutions."

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Preference Duty: Financial Benefits and Trade Advantages

Wed, 13 Nov 2019 08:39:39 GMT

Preferential rules of origin can be complicated

What is Preference?

Preferential rules of origin can be complicated, and importers and/or exporters need to understand how the rules apply to their products.

Brexit and EU Preferential Trade Agreements

Until Brexit, the UK remains a member of the EU with full access to all EU preferential trade arrangements.

What are the main benefits of using Preference?

Imports

Exports

Claiming Preference on Imports – Top level

The Importer will need to confirm if their imported products qualify for preferential duty rates by following these steps:

Step 1

Step 2

Once the products have been classified, check the commodity code against the Customs Trade Tariff to identify if any preferential rate of duty is appropriate.

Step 3

Identify the country the products are being sourced from and confirm within the Customs Trade Tariff if that country is a beneficiary country under preference.

Step 4

Step 5

On import ensure that the correct preference document is presented to customs at the time of the import declaration / entry.

Claiming Preference on Exports – Top level

The Exporter will need confirm if their products for export out of the EU qualify for preferential duty rates by following these steps:

Step 1

Step 2

Identify if the export market is a beneficiary country under preference.

Step 3

The Exporter must ensure a full understanding of the preference origin rules covering the products to be exported. See preference origin rules below.

Step 4

Most importantly, the Exporter must make sure to have documented evidence to support the issue of preference certificates or invoice declarations to cover the export.

Step 5

Issue the EUR1 Form or EUR1/EUR-MED Form or make an invoice declaration, depending on the export destination and the regulations.

Preferential Trade Agreements

The EU has both bilateral and unilateral preferential trade arrangements with unions of countries (trading blocs) and third countries.

Bilateral

Bilateral agreements are often very specific and targeting an individual policy area. The EU has many bilateral agreements in place. Some examples:

A bilateral preferential trade arrangement between the EU and Turkey which covers most agricultural, coal and steel products.
The EU and Japan's Economic Partnership Agreement removed tariffs and other trade barriers, which had made it difficult for EU exporters to compete.
The agreement between the EU and Canada (the EU-Canada Comprehensive Economic and Trade Agreement or CETA) has eliminated 98% of tariffs in bilateral trade.

Unilateral Preferential Trade Arrangements

The UK and EU administer three GSP systems:

Standard GSP for low and lower-middle income countries, resulting in partial or full removal of customs duties.
An extension to the GSP system is GSP+, which includes developing countries that have proved their commitment to good governance and sustainable development. As a result, most duty rates are 'zero' under this part of the scheme.
Everything But Arms (EBA) is a special arrangement for least developed countries, providing them with duty-free, quota-free access for all products except arms and ammunition.

HM Revenue & Customs (HMRC) have stated:

The UK will continue to apply the EU Generalised Scheme of Preferences during an implementation period if the UK leaves the EU with a deal.

Preference Origin Rules

All preferential origin goods must satisfy the relevant conditions, such as:

Be manufactured from raw materials or components which have been grown or produced in the beneficiary country.
The product underwent a certain amount of working or processing in the beneficiary country and can be considered as "originating".
Products have been sufficiently transformed in beneficiary country, resulting in a change of tariff classification.
During manufacture of the product, the customs value of all the non-originating materials used did not exceed the threshold fixed by the origin rule for that product.
A combination of the above.

Cumulative Origin Rules for EU Exports

The European Commission states the following:

1) Bilateral cumulation

Materials originating in the EU may be used as materials originating in your country. This cumulation applies to all EU preferential regimes.

How it works

If the rule attributed to your good is as that described in the sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in the EU in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in the EU.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in the EU refer to a later state of production or not.

2) Diagonal cumulation

Materials originating in a defined country (mentioned in the relevant provision on cumulation) may be used as materials originating in your country.

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials originating in that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials originating in that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials originating in that country refer to a later state of production (i.e. fabric) or not.

3) Full cumulation

How it works

If the rule attributed to your good is as that described in sufficiently transformed goods section.

The value-added rule: cumulation permits you not to account the value of the materials imported from that country in the percentage maximum threshold.
The change of tariff classification: because of cumulation you do not need to verify if there was change of tariff classification of the materials imported from that country.
Manufacture from certain products: because of cumulation you do not need to verify if the materials you imported from that country refer to a later state of production (i.e. fabric) or not.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Incoterms® 2020: The Key Changes

Wed, 30 Oct 2019 11:14:37 GMT

Incoterms® 2020 Rules

What are Incoterms?

Incoterms® 2020 Rules

The new Incoterms® rules define the following main areas:

The obligations between the seller and the buyer for arranging carriage and/or insurance of the goods.

Who is responsible for obtaining the shipping documentation and export or import licences.

Where and when the seller delivers the goods to the buyer, subsequently confirming the transfer of risk between the seller and buyer.

When the seller is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.

When the buyer is or is not responsible for costs, such as packing, loading, transport, security compliance, unloading and checking of goods shipped and/or delivered.

The Incoterms® 2020, as per previous Incoterms®, do NOT handle the transfer of ownership or title of the goods sold.

Key Changes

The ICC have enhanced Incoterms® 2020 to better assist the international trading community in selecting the correct Incoterms® rule for their sales contract. Therefore, ensuring more efficient export / import transactions.

In addition, Delivery At Terminal (DAT) in Incoterms® 2010 has been replaced by Delivered at Place Unloaded (DPU). Under the new DPU Incoterms®, the seller is required to unload the goods at the destination. This is the only Incoterms® rule which requires the seller to unload goods, therefore the seller needs to ensure they can organise unloading at the named place.

Incoterms® 2020 now also include security-related requirements within the carriage obligations and costs.

Under the new Incoterms®, Cost Insurance and Freight (CIF) keeps the same insurance requirements i.e. Clause C (Institute of Cargo Clauses), but under Carriage and Insurance Paid To (CIP) the insurance requirement has been increased to Clause A (Institute of Cargo Clauses). This is because CIF is mostly used with bulk commodity movements and CIP is mostly used for manufactured goods via multimodal solutions.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Brexit and UK Customs Clearance Requirements

ians@icsglobalservices.co.uk (Ian Simmonds) — Thu, 17 Oct 2019 15:28:26 GMT

Transitional Simplified Procedures

Customs has been communicating with UK businesses that currently import from the EU, advocating that after Brexit they should use Transitional Simplified Procedures to make customs clearance as easy as possible. Transitional Simplified Procedures will enable an importer to bring goods into the UK from the EU without having to make a full customs declaration in advance.

However, an importer will still need to submit a customs declaration after their goods have crossed the UK border. The customs procedure can be frustrating, difficult and costly, if you get it wrong.

For example, you will need the correct commodity codes of the items you are importing to determine any duty payable on your import.

What are commodity codes?

The World Customs Organization (WCO) has developed a multipurpose international product nomenclature known as the Harmonized Commodity Description and Coding System (HS Codes). The six-digit code is regulated by the WCO and that means the first six digits of the tariff are the same in most countries.

The EU use an eight-digit coding system comprising of the HS codes with further EU subdivisions, this is called the Combined Nomenclature (CN). The CN serves as the EU's common customs tariff and provides statistics for trade inside the EU (intra-EU trade statistics) and between the EU and the rest of the world.

The EU hold commodity codes in a database called the TARIC, or Tariff Intégré Communautaire. This integrated tariff comprises of the eight-digit code Combined Nomenclature, plus two additional digits (TARIC subheadings).

The Integrated Tariff of the UK is based on the Combined Nomenclature (CN) eight-digit coding system for classifying goods . The Integrated Tariff is formatted, with the first two digits of the tariff code representative of the name of the trade tariff chapter, digits three to eight apply to headings within the chapters and numbers nine and ten determine the duties.

Product example:

Code Description Classification type

64 Footwear Harmonized System (HS) Chapter

64 06 Parts of footwear Harmonized System (HS) Heading

6406 10 Shoe uppers Harmonized System (HS) Subheading

6406 10 10 Leather Combined Nomenclature (CN) Subheading

6406 10 10 10 Hand-made TARIC Subheading

Getting the commodity code wrong!

Incorrectly classifying a product can lead to incorrect duty payments, border delays, non-compliance penalties, seizure of the products and a denial of import privileges.

Unless you are incredibly well versed in customs clearance, you’ll probably be wanting some help and we can help.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

The ICC has launched new Incoterms® 2020 Rules

ians@icsglobalservices.co.uk (Ian Simmonds) — Tue, 10 Sep 2019 09:09:59 GMT

Incoterms® 2020

The International Chamber of Commerce (ICC) has launched Incoterms® 2020.

The ICC has stated:

More accessible and easier to use, Incoterms® 2020 includes more detailed explanatory notes with enhanced graphics to illustrate the responsibilities of importers and exporters for each Incoterms® rule. The introduction to Incoterms® 2020 also includes a more detailed explanation on how to choose the most appropriate Incoterms® rule for a given transaction, or how a sales contract interacts with ancillary contracts.

Incoterms® 2020 provides for demonstrated market need in relation to bills of landing (BL) with an on-board notation and the Free Carrier (FCA) Incoterms® rule.
Incoterms® 2020 aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP).
Incoterms® 2020 includes arrangements for carriage with own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
There is a change in the three-letter name for Delivered at Termnial (DAT) to DPU.
Incoterms® 2020 includes security-related requirements within carriage obligations and costs.

Incoterms® 2020 reflects the ever-changing nature of today’s international trade system. Over the course of the drafting process of Incoterms® 2020, several revisions were made to make sure that the Incoterms® rules clearly and accurately reflect present-day trade practices. Users of the Incoterms® rules will be able to adapt, prepare and train their businesses for 1 January 2020, when Incoterms® 2020 will come into effect.

What are Incoterms?

Incoterms® is a registered trademark of the ICC. Incoterms were first created by the ICC in 1936. The Incoterms rules are created and published by the ICC and are normally revised every 10 years, since 1980. The ICC describe the current Incoterms® 2010 rules as:

ICC’s Incoterms rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms rules are there to guide you. The Incoterms© rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.

How are they used?

You can include Incoterms in your contract to cover who is responsible for every stage of the international supply chain, including customs clearance and insurance requirements. Incoterms also make it clear who pays for each different cost within the international supply chain.

The choice of the Incoterm will be an integral part of the commercial transaction stated within the contract and must be applicable to the type of goods that will be shipped and the type of transportation that will be used.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Incoterms 2020 Rules Update and Explained

Mon, 15 Jul 2019 08:50:39 GMT

The International Chamber of Commerce (ICC) has announced the release of Incoterms® 2020 in early September 2019.

The International Chamber of Commerce (ICC) has announced the release of Incoterms® 2020 in early September 2019. The ICC has stated:

Incoterms® 2020 reflects the ever-changing nature of today’s international trade system. Over the course of the drafting process of Incoterms® 2020, several revisions were made to make sure that the Incoterms® rules clearly and accurately reflect present-day trade practices. From early September 2019, users of the Incoterms® rules will be able to adapt, prepare and train their businesses for 1 January 2020, when Incoterms® 2020 will come into effect.

What are Incoterms?

Incoterms® is a registered trademark of the ICC. Incoterms were first created by the ICC in 1936 and the latest set of Incoterms was published in 2010. The Incoterms rules are created and published by the ICC and are normally revised every 10 years, since 1980. The ICC describe the Incoterms® 2010 rules as:

How are they used?

The following is the International Chamber of Commerce (ICC) brief description of the current 11 rules from the Incoterms® 2010 edition:

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW Ex Works

“Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e. works, factory, warehouse, etc.). The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

FCA Free Carrier

“Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

CPT Carriage Paid To

“Carriage Paid To” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

CIP Carriage And Insurance Paid To

“Carriage and Insurance Paid to” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

‘The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.”

DAT Delivered At Terminal

“Delivered at Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. “Terminal” includes a place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

DAP Delivered At Place

“Delivered at Place” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

DDP Delivered Duty Paid

“Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS Free Alongside Ship

“Free Alongside Ship” means that the seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.

FOB Free On Board

“Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

CFR Cost and Freight

“Cost and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. the seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

CIF Cost, Insurance and Freight

“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

‘The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.”

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Brexit: Businesses should make reasonable preparations for no deal

Sat, 13 Jul 2019 18:04:06 GMT

Boris Johnson has said that he would be prepared to leave the EU without a deal.

The Institute of Directors (IoD) have produced figures that showed that the extension until October has had little impact on firms’ Brexit planning. The IoD figures show that the proportion of its members who had activated contingency plans increased slightly between January and April, from 18% to 23%. However, more than half of firms surveyed stated that they had not engaged in any contingency planning, and that only 4% were planning to use the extension period to review their next steps.

The IoD have said ‘Businesses cannot afford to put their faith in politicians to produce a Brexit resolution, and should be considering all reasonable preparations for no deal’.

Boris Johnson has said that he would be prepared to leave the EU without a deal. Mr Johnson also believes Britain can use a WTO rule known as ‘GATT 24 (Article 24)’ to maintain free trade with the EU, if the UK leave the EU without a deal on October 31.

Earlier this week WTO director General Roberto Azevedo told Prospect Magazine “If there is no agreement” on what the future plan would be “then Article 24 would not apply, and the standard WTO terms would”.

If the UK leaves the European Union without a deal, here is a top-level checklist for UK companies which only trade with the European Union.

1. You will need to register for a UK Economic Operator Registration and Identification (EORI) number. You will need an EORI number to continue to import or export goods with the EU after 31 October 2019.

2. You will be able to transport your goods into the UK from the EU without having to make a full customs declaration in advance, by using Transitional Simplified Procedures. This has been introduced by HM Revenue and Customs (HMRC) in an effort to reduce congestion at customs checkpoints, and will be reviewed after 3 to 6 months.

3. Decide if you want to hire an agent to make import and/or export declarations for you or if you want to make these declarations yourself.

4. You may need to supply additional information to your Freight Forwarders, so that they can make the safety and security declarations for your goods.

5. You will need to identify your products within the UK Trade Tariff to determine the applicable import duty rates.

6. Decide how you will pay duty on products imported from the EU (if duty applies). A duty deferment account allows you to pay your customs duty monthly by direct debit, rather than having to pay immediately each time you clear your goods through customs.

7. Decide if you should store your goods in a Customs Warehouse. Customs duty and import VAT payments are suspended whilst the goods are stored in an HMRC approved warehouse. Duties must be paid once the goods leave the Customs Warehouse, but not if the goods are exported or moved to another customs procedure.

8. Decide if your company should apply for Authorised Economic Operator (AEO) status. There has been a 26% rise in AEO applications in the UK. It’s not mandatory, but gives quicker access to some simplified customs procedures and, in some cases, the right to ‘fast-track’ your shipments through some customs and safety and security procedures. If your company applies for AEO, you will be subject to an audit of many aspects of your operations, including international supply chain security, warehouse security, company finances and compliance with customs procedures.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

USA threaten a full trade war against the European Union

Wed, 10 Jul 2019 14:44:55 GMT

US threaten tariffs against scotch whisky, salmon, hams and pork, and popular British cheeses, such as Cheddar and Stilton.

Last year, the US imposed steel and aluminium tariffs on imports from the European Union. The US administration justified the tariffs based on national security. The EU retaliated, imposing duties on US goods like motorcycles, orange juice and bourbon.

Now that there is a truce in the US-China trade war, the USA is proposing a full trade war against the European Union. The Trump administration is threatening to introduce new tariffs on EU products worth $4bn (£3.2bn). The US Trade Representative’s office (USTR) said it was adding 89 tariff sub-categories to its initial list, including a variety of metals, in response to public comments. This is in addition to the $21 billion worth of EU goods that were announced and recorded in US Federal Register Vol. 84, No. 71 on Friday, April 12, 2019.

Why are the US threatening tariffs on EU products?

The USA is threatening to impose billions of dollars tariffs in response to a long running dispute at the World Trade Organization over aircraft subsidies given to U.S. aircraft manufacturer Boeing and its European rival, Airbus. In 2004, the US filed a complaint to the WTO stating that the EU provided illegal subsidies to Airbus. The European Commission retorted with its own complaint about subsidies to Boeing.

British Products

The USTR released lists of products made in the European Union that it is considering for additional import duties. These include scotch whisky, salmon, hams and pork, and popular British cheeses, such as Cheddar and Stilton.

The inclusion of scotch whisky appears confusing, as the USTR signed a Wine and Distilled Spirits Continuity Agreement with the U.K. on January 31, 2019. The agreement covering wine and distilled spirits was to ensure there is no disruption in trade of these products between the United States and the UK when the UK leaves the European Union. See my blog ‘The U.S. is preparing for trade talks with the UK after Brexit’.

In 2018 the US became the first country to import over £1bn of Scotch whisky, an increase of 7.7% on the previous year, according to the Scotch Whisky Association.

US Comments

The Distilled Spirits Council of the United States (DISCUS) criticised the move and claimed increased tariffs would harm US businesses. If imposed, the tariffs could make the cost of buying Scotch and Irish whisky more expensive for US consumers.

Brexit Deliberations

Does the USA now believe the U.K. will not leave the EU on October 31st?

If the UK does leave, will British goods be removed from the new US tariffs against the EU?

We do know that the US will drive a hard bargain in any future trade negotiation with the UK and/or EU.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Incoterms® 2020 New Edition Unveiled

Fri, 07 Jun 2019 09:58:03 GMT

The newest edition is set to be unveiled in the second half of 2019

The International Chamber of Commerce (ICC) has announced the preparation and publication of Incoterms® 2020. The newest edition is set to be unveiled in the second half of 2019 for entry into force on 1 January 2020. The Incoterms rules are created and published by the ICC and are normally revised every 10 years, since 1980.

What are Incoterms?

Incoterms® is a registered trademark of the ICC. Incoterms were first created by the ICC in 1936 and the latest set of Incoterms was published in 2010. The ICC describe the Incoterms® 2010 rules as:

How are they used?

The following is the International Chamber of Commerce (ICC) brief description of the current 11 rules from the Incoterms® 2010 edition:

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW Ex Works

FCA Free Carrier

CPT Carriage Paid To

CIP Carriage And Insurance Paid To

DAT Delivered At Terminal

DAP Delivered At Place

DDP Delivered Duty Paid

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS Free Alongside Ship

FOB Free On Board

CFR Cost and Freight

CIF Cost, Insurance and Freight

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

ICS Global Services Launches Brand New Website

ians@icsglobalservices.co.uk (Ian Simmonds) — Fri, 31 May 2019 13:55:26 GMT

ICS Global Services - Brand New Website

New Website

I am delighted to announce the launch of my brand new company website. The new website has been designed to highlight the international solutions that I provide to clients, as well as detail the key services and expertise that I can bring to any project.

As something of an ‘international problem solver’, I’ve now turned to helping provide international trade support for businesses that need it. International trade is often a complicated and difficult process, with a large number of government bureaus to navigate - that’s where I come in, and I hope this clean, sleek new website showcases that.

Please take a look at the website, where you’ll find everything you need to know about myself, and the specialist services that I offer businesses.

Ian Simmonds

ICS Global Services Limited

Preparation for new Incoterms® 2020 rules

Mon, 06 May 2019 13:20:01 GMT

What are Incoterms?

How are they used?

The following is the International Chamber of Commerce (ICC) brief description of the current 11 rules from the Incoterms® 2010 edition:

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW Ex Works

FCA Free Carrier

CPT Carriage Paid To

CIP Carriage And Insurance Paid To

DAT Delivered At Terminal

DAP Delivered At Place

DDP Delivered Duty Paid

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS Free Alongside Ship

FOB Free On Board

CFR Cost and Freight

CIF Cost, Insurance and Freight

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

FDA and CBP bolster their collaboration in the USA

Sun, 07 Apr 2019 14:45:34 GMT

On April 4, the U.S. Food and Drug Administration (FDA) and the U.S. Customs and Border Protection (CBP) leaders signed an agreement to maximise inspection and detection capabilities.

Importing FDA-regulated products can be complex for importers, as they must have compliance with the FDA's import regulations and processes as a core business competency.

The FDA state:

"All imported shipments of FDA-regulated products are reviewed by FDA and must comply with the same standards as domestic products. FDA determines whether products are admissible into U.S. commerce and may refuse entry to any that violate or appear to violate any provisions of the Food Drug and Cosmetic Act (FD&C Act)."

We can assist you with your FDA-regulated imports.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

FDA News Release April 4, 2019

FDA and CBP bolster collaboration to protect public health and safety

The U.S. Food and Drug Administration and the U.S. Customs and Border Protection (CBP) leaders signed an agreement today to maximize inspection and detection capabilities in order to prevent illegal and harmful products entering the U.S. through the nation’s International Mail Facilities (IMFs) and Ports of Entry that pose a threat to public health. Through this joint effort, each agency will work toward enhancing knowledge-transfer to increase efficiency, reduce duplication of efforts and facilitate mission responsibilities. Collaboration on shared laboratory space, scientific equipment and facilities, along with intellectual, historical and institutional knowledge will optimize the resources at each agency’s disposal.

“Today’s letter of intent demonstrates the FDA’s ongoing work with CBP and our other federal partners, to ensure that FDA-regulated products imported into the U.S. are safe and otherwise comply with federal law,” said FDA Commissioner Scott Gottlieb, M.D. “Thousands of illicit and dangerous products come from overseas each day, such as unapproved fentanyl products, counterfeit prescription drugs or fake over-the-counter products that look legitimate. In recent years, we’ve committed new resources and have been granted new authorities by Congress to target these violative products and stop them before they’re able to enter our country. When bad actors try to circumvent the safety of our supply chains by breaking federal law, we’ll take all appropriate action necessary to ensure these potential risks do not harm the American public.”

“CBP and FDA have a long history of working jointly to protect the public from illegal or harmful products entering the U.S.,” said U.S. Customs and Border Protection Commissioner Kevin K. McAleenan. “Information and resource sharing between agencies allows us to be more effective and more efficient in confronting threats. We are eager to see the results of this expanded partnership. I would also like to congratulate FDA Commissioner Scott Gottlieb for his accomplishments during his tenure and thank him for strengthening the CBP and FDA collaboration. We look forward to continuing these efforts with our colleagues at the FDA.”

Most mail arrives in an IMF without advanced or specific identifying information. The FDA uses advanced screening technology to assess the contents of these packages and to increase efficiency of the agency’s overall investigational capabilities.

The FDA and CBP will expand how information is shared between the agencies to identify trends which can target future entries. This may include general data points on frequent countries of origin, as well as specific products and volumes of packages at each location.

An additional focus of this effort will be coordinating shared space as well as increased scientific presence at high-risk/high-volume IMF locations, helping to facilitate and support real-time entry decisions and increased data sharing. Additionally, the FDA and CBP will enhance coordination around efforts to identify violative packages and develop new targeting and enforcement strategies at Ports of Entry.

In Fiscal Year 2018, FDA staff posted at the IMFs around the country examined packages from more than 180 countries. Approximately 90 percent of the packages reviewed by the FDA contained products that should not have been entering the country.

There are currently nine IMF locations across the U.S., with one location in Florida, Hawaii, Illinois, New Jersey, New York, Puerto Rico, U.S. Virgin Islands respectively and two locations in California. CBP provides security and facilitation operations at 328 Ports of Entry throughout the country.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

Brexit: Import Customs Declarations

Sun, 07 Apr 2019 14:29:39 GMT

If the UK leaves the EU Customs Union, UK companies which only trade with the European Union will need to follow new processes and complete new forms, such as customs declarations. Completing import customs declarations can be complex and companies will be liable for any mistakes in the paperwork. Errors with import documentation can lead to:

Imports being detained by UK Customs
The overpayment of customs duties and import VAT
Supply chain delays
Civil or criminal penalties

We can assist you with your shipping documentation and import declarations.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

No-deal Brexit: UK Issues Draft Tariff

Thu, 14 Mar 2019 09:46:57 GMT

The UK government has published draft tariffs in preparation for a no-deal Brexit. Companies with products currently in transit could face increased charges, if the tariffs take effect 29 March.

Full document: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/7855...

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

http://www.icsglobalservices.co.uk/

Brexit: Import / Export Checklist for UK Businesses

Sat, 09 Mar 2019 09:38:40 GMT

If the UK leaves the European Union without a deal, here is a top-level checklist for UK companies which only trade with the European Union.

3. Decide if you want to hire an agent to make import and/or export declarations for you or if you want to make these declarations yourself.

4. You may need to supply additional information to your Freight Forwarders, so that they can make the safety and security declarations for your goods.

5. You will need to identify your products within the UK Trade Tariff to determine the applicable import duty rates.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

U.S. is preparing for trade talks with the UK after Brexit

Sat, 02 Mar 2019 09:38:40 GMT

The US aim in negotiations with the UK is to address both tariff and non-tariff barriers and to achieve free, fair, and reciprocal trade.

The UK is currently prohibited from negotiating trade deals with other countries until after it leaves the EU. However, the U.S. is starting to prepare for trade talks with the UK after Brexit.

As stated in U.S. Federal Register on Friday, November 16, 2018, the U.S. has been seeking comments in order to develop their negotiating positions:

Request for Comments on Negotiating Objectives for a U.S.-United Kingdom Trade Agreement

On October 16, 2018, the United States Trade Representative notified Congress of the Administration’s intention to enter into negotiations with the United Kingdom (UK) for a U.S.-UK Trade Agreement after the UK has exited the European Union on March 29, 2019. The Office of the United States Trade Representative (USTR) is seeking public comments on a proposed U.S.-UK Trade Agreement, including U.S. interests and priorities, in order to develop U.S. negotiating positions.

The USTR aim in negotiations with the UK is to address both tariff and non-tariff barriers and to achieve free, fair, and reciprocal trade.

Response

It is understood that more than 100 comments have been submitted by lobby groups to the USTR to help the U.S. prepare for trade talks. As a result, there will be some challenges for the U.K. due to what the lobby groups are looking to achieve, for example:

The meat lobby wants to sell growth hormone-fed beef into the U.K. market. Growth hormone-fed beef is currently banned in the E.U. and the UK.

Farming groups are demanding any deal should relax current E.U. / U.K. rules governing genetically modified crops, antibiotics in meats, pesticides and herbicides.

Drugs companies want changes to the NHS drugs approval process to allow the purchase of more U.S. drugs.

Mutual recognition agreements

There have been some recent agreements between the USTR and the UK, but these are "mutual recognition agreements" and not free trade agreements. The USTR have stated the following:

USTR Signs Wine and Distilled Spirits Continuity Agreements with the U.K.

Washington, D.C. – On January 31, 2019, Ambassador Gregg Doud, USTR Chief Agricultural Negotiator, and Ambassador Kim Darroch, United Kingdom (UK) Ambassador to the United States, signed two agreements covering wine and distilled spirits today to ensure there is no disruption in trade of these products between the United States and the UK when the UK leaves the European Union (EU). Currently the United States has agreements on wine and distilled spirits with the European Union which cover trade with the UK by virtue of its membership in the EU.

The U.S.-UK agreement on trade in wine, which includes commitments regarding winemaking practices and labeling requirements, will ensure market continuity for bilateral wine trade. The UK was the fourth largest export market for U.S. wine products in 2017, with a value of $227 million.

The U.S.-UK agreement on the mutual recognition of certain distilled spirits/spirits drinks will continue the recognition of the names Scotch whisky, Irish whisky, Tennessee whisky, Bourbon whisky, and Bourbon in bilateral trade following the UK’s exit from the EU. The UK was the top export market for U.S. distilled spirits in 2017, totaling $187 million.

USTR Signs Mutual Recognition Agreements with the United Kingdom

Washington, D.C. – On February 14, 2019, Deputy U.S. Trade Representative C.J. Mahoney and Ambassador Kim Darroch, United Kingdom (UK) Ambassador to the United States, signed two mutual recognition agreements (MRAs) covering telecom equipment, electro-magnetic compatibility (EMC) for information and communications technology products, pharmaceutical good manufacturing practice (GMP) inspections, and marine equipment. These MRAs with the UK replicate substantive provisions of existing MRAs between the United States and the European Union for these sectors and will ensure that U.S.-UK trade in these product sectors is not disrupted when the UK leaves the European Union. U.S. exports to the UK of products covered by these agreements exceeded $5 billion in 2018.

As part of the U.S.-UK Trade and Investment Working Group, the United States and the United Kingdom are working to ensure commercial continuity for UK and U.S. businesses, workers, and consumers as the UK leaves the EU.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

European Multinationals and U.S. Iran Sanctions

Sat, 23 Feb 2019 16:28:46 GMT

The USA has withdrawn from the Joint Comprehensive Plan of Action (JPCOA) and reinstated U.S. sanctions against Iran. The EU has emphasised its continued commitment to the JPCOA and the existing EU Blocking Regulation was updated to include the reinstated U.S. sanctions against Iran. The UK government states “it fully supports expanding a UK trade relationship with Iran and encourages UK businesses to take advantage of the commercial opportunities”.

So why have many European multinationals announced they are leaving the Iranian market?

The U.S. Sanctions

The U.S. has placed extraterritorial sanctions against Iran. These extraterritorial sanctions are also known as secondary sanctions or as a secondary boycott. Extraterritorial sanctions are designed to restrict the economic activity of governments, businesses, and nationals of third countries. As a result, many governments consider these sanctions a violation of their sovereignty and international law.

U.S. Sanctions are overseen and enforced by two government agencies:

Office of Foreign Asset Control (OFAC) , which is a division of the Department of the Treasury and enforces economic and trade sanctions.
Bureau of Industry and Security (BIS) , which is a division of the Department of Commerce and oversees export controls of commercial products, dual-use items, software, and technology through the Export Administration Regulations (EAR).

The Long Arm of the U.S. Economic Sanctions

It is not difficult to understand the impact of U.S. economic sanctions on U.S. based companies and their foreign subsidiaries. Having their headquarters in the USA and being a U.S. multinational company, they are compelled to comply with U.S. law and the sanctions against Iran.

But what about a non-U.S. multinational company with its headquarters in Europe? These European multinationals are not compelled to comply with U.S. laws or U.S. sanctions against Iran, or are they?

The U.S. economic sanctions regime can reach non-U.S. multinationals, due to:

U.S. persons (so-called ‘green card’ holders) being employed, notably if they are ‘decision makers’ within the company.
The use of the U.S. financial system. This can include the use of U.S. dollar accounts in countries outside the USA, as OFAC is claiming jurisdiction over any transaction in U.S. dollars.
The supply of U.S. manufactured products covered by the U.S. Export Administration Regulations.
The use of U.S. software.
The use of U.S. technology.
Having long supply and sales chains that reach back into the United States.

European multinationals need to review their business activities to ensure they are not facing U.S. sanction risks when dealing with Iran. There are five main areas for consideration:

U.S. Market

Depending on the sanctionable activity, non-U.S. multinationals could be deprived of access to the U.S. market.

Finance

Depending on the sanctionable activity, OFAC could place restrictions on access to the U.S. financial system. Most non-U.S. multinationals use the U.S. financial system and without access to any U.S. Banks and U.S. currency, it could be impossible for them to operate their international business.

Product

Iran is also subject to a U.S. comprehensive export / re-export ban under the U.S. Export Administration Regulations (EAR). Non-U.S. multinationals therefore cannot sell certain U.S. manufactured products, software or technology to Iran. The rules also extend to non-U.S.-made items which have 10% or more controlled U.S. content by value. Product of certain U.S. origin technology, wherever located, are also covered by these regulations.

Customer

When non-U.S. multinationals sell goods and/or services to a customer in Iran, no persons connected with the transaction or service can appear on OFAC's Specially Designated Nationals and Blocked Persons List (SDN list).

Employees

Within non-U.S. multinationals, no U.S. persons can be involved in the business transaction with Iran, as the extraterritorial sanctions apply to U.S. citizens. The U.S. define a “U.S. person” as any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.

Managing the Risk

Non-U.S. multinationals should conduct a comprehensive risk assessment of their Iran-related business.
Non-U.S. multinationals should implement a trade compliance program that restricts their exposure to U.S. extraterritorial sanctions.
Non-U.S. multinationals should conduct trade compliance training and auditing.
Non-U.S. multinationals should conduct screening of customers/persons/entities against U.S. sanction lists.
Non-U.S. multinationals should have a robust and adequate internal sanctions and anti-money laundering policy.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

Transfer Pricing, What are the Challenges?

Sun, 17 Feb 2019 11:44:25 GMT

What is Transfer Pricing?

Corporate Tax and the International Shipping Department Alignment Challenges

What are the challenges?

Within multinationals, the objectives for the Corporate Tax Team and the objectives for the International Shipping Department can be contradictory and result in tensions.

The Corporate Tax Team is looking for the highest transfer price possible, as this reduces taxable profit.

The International Shipping Department is looking for the lowest Customs value possible, as this reduces duty and import tax payments.

Customs value is confirmed at point of customs clearance.

Transfer value is confirmed retrospectively.

Tax authorities and Customs authorities set rules independently concerning the value of imported products.

Tax authorities normally look for conformity with the (OECD) Transfer Pricing Guidelines on the application of the arm's length principle for the valuation of cross-border transactions.
Customs authorities conform to the World Customs Organization (WTO) Valuation Agreement, formally known as Article VII of the General Agreement on Tariffs and Trade (GATT) Valuation Code. The Agreement identifies that Customs valuation for duties should be, as far as possible, based on the actual price of the goods to be valued.
Subsequently, the Tax authorities and Customs authorities have different approaches.
Tax authorities are focused on Transfer Pricing between related companies that may be superficially higher than they should be.
Customs authorities are focused on imported product prices that may be superficially lower than the market price.

Customs valuation covers goods only.
Transfer Pricing covers goods, services and property.

Customs

The customs value of identical goods.
The customs value of similar goods
The deductive value.
The computer value.
The fall-back method.

Tax

Comparable uncontrolled price method
Resale price method
Cost plus method
Transactional net margin method
Transactional profit split method

Comparison of the OECD Transfer Pricing Guidelines with WTO Valuation Agreement

Comparable Uncontrolled Price (CUP) - Value of identical goods method and value of similar goods method.
Resale Price Method - Deductive value method
Cost-plus Method - Computed value method
Transactional Net Margin and Profit Split Method - Fallback value method

Benefits of Alignment between Corporate Tax and the International Shipping Department

Corporate Tax and the International Shipping Department should work together to provide Customs authorities with transfer pricing analyses and data related to the imported goods to avoid penalties.

Corporate Tax and the International Shipping Department should exchange information to cover both tax and Customs issues.

Customs and Border Protection (CBP) state “It is now CBP’s position that subject to certain conditions, the transaction value method of appraisement will not be precluded when a related party sales price is subject to post-importation adjustments that are made pursuant to formal transfer pricing policies and specifically related (directly or indirectly) to the declared value of the merchandise. These adjustments, whether upward or downward, are to be taken into account in determining transaction value.”
Australia Customs and Border Protection state “Where a voluntary disclosure involves transfer pricing between related parties, any adjustments to goods must be submitted as soon as the data becomes available and should be submitted in line with your financial reporting obligations. Where a voluntary disclosure results in an overpayment of customs duty, a claim for a refund can be lodged”.
HM Revenue and Customs state "Situations may arise, whereby, for a variety of reasons, the price that you pay to the seller for the imported goods is revised or re-negotiated after the entry of the goods to free circulation. When this happens you must consider the customs valuation and Customs Duty implications". However, until a Brexit agreement is in place, UK companies looking at retroactive Transfer Pricing adjustments will need to be aware of EU rules concerning transfer pricing and Customs valuations.

The Business Strategy for Transfer Pricing

Developing and applying transfer pricing strategies to assist the company in achieving their international business objectives.
Produce a Transfer Pricing Study, as the information may be useful in demonstrating to Customs authorities that the price has not been influenced by the relationship.
Companies should also consider documenting all internal procedures concerning the international movements of goods between related companies within the group.
Produce a company Transfer Pricing Policy to cover all international movements of goods between related companies within the group. The policy should consider applicable customs valuation requirements.
Companies should audit their international movements of goods between related companies within the group to ensure that correct duties have been paid and refunds obtained.
Companies should contemplate obtaining advanced rulings from certain Customs authorities.
Report retroactive Transfer Pricing adjustments to Customs authorities.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Ian Simmonds

ICS Global Services Limited

Sat, 02 Feb 2019 16:11:31 GMT

Engaging in Import and Export can be problematic for companies.

Companies find the field of import / export too complex and confusing. Subsequently, they fail to exploit international business opportunities and create multiple new streams of income and profit for their businesses.
Companies engage in import / export with the intention of being fully compliant with applicable laws and regulations, but due to misunderstandings find themselves in violation of the regulations and facing fines or penalties.
Companies fail to maximize the full profit potential of importing products, due to not having full visibility and control of the costs within the end-to-end international supply chain.
Companies may win export business, but not fully understand the overseas customer’s requirements or the terms and conditions of selling into that export market. This often results in reduced profit, as the export sales price agreed with the overseas customer was not fully inclusive of all costs.

Having over 35 years’ experience of international business and trade compliance, we have helped companies build successful and profitable import / export activities, whilst ensuring that they maximize compliance with laws and regulations. Depending on your business requirements, we have 5 different solutions to assist your company:

As Consultants we can identify business strategies to maximize your international business opportunities.
As an Interim Executive we can provide a short-term heavyweight to provide skills and knowledge not otherwise in place, and deliver significant business benefits from the outset.
By providing Outsourcing when a business has limited resources to manage import / export activities, we become your Import / Export Department. Therefore, freeing up internal resources and permitting the business to focus on their core activities.
Acting as an Import / Export Sales Agency, we assist UK businesses in transporting and selling their products into international markets. We equally assist overseas companies in transporting and selling their products into the UK market.
Focused Import / Export Training, which provides companies with the necessary skills to increase international business, develop new sales opportunities and substantially improve overall profits. Our in-house training is tailored, flexible, convenient and cost-effective.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Brexit Preparations and Considerations

Sat, 02 Feb 2019 16:07:13 GMT

Some considerations for organisations if the UK leave the EU without a deal on 29 March 2019.

Register for a UK Economic Operator Registration and Identification (EORI) number. You’ll need an EORI number to continue to import or export goods with the EU after 29 March 2019, if the UK leaves the EU without a deal.

Decide if you want to hire an agent to make import and/or export declarations for you or if you want to make these declarations yourself.

Will you need to supply additional information to your Freight Forwarders , so that they can make the safety and security declarations for your goods?

The UK Trade Tariff sets out important information about the movement of goods, including duty rates for imports. If the UK leaves the EU on 29 March 2019 without a deal, how will this affect your trade tariffs?

Should your company apply for Authorised Economic Operator (AEO) status? There has been a 26% rise in AEO applications in the UK. It’s not mandatory, but gives quicker access to some simplified customs procedures and, in some cases, the right to ‘fast-track’ your shipments through some customs and safety and security procedures.

If your company applies for AEO, you will be subject to an audit of many aspects of your operations, including international supply chain security, warehouse security, company finances and compliance with customs procedures.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

Understanding Import / Export Compliance

Thu, 31 Jan 2019 11:49:12 GMT

International business can be problematic for companies.

Engaging in international business can be problematic for companies, due to the high level of regulations set and enforced by different Government Agencies.

Companies find the field of import / export too complex and confusing. Subsequently, they fail to exploit international business opportunities and create multiple new streams of income and profit for their businesses.
Companies engage in import / export with the intention of being fully compliant with applicable laws and regulations, but due to misunderstandings find themselves in violation of the regulations and facing fines or penalties.
Companies fail to maximise the full profit potential of importing products, due to not having full visibility and control of the costs within the end-to-end international supply chain.
Companies may win export business, but not fully understand the overseas customer’s requirements or the terms and conditions of selling into that export market. This often results in reduced profit, as the export sales price agreed with the overseas customer was not fully inclusive of all costs.

Having over 35 years’ experience of international business and trade compliance, we have helped companies build successful and profitable import / export activities, whilst ensuring that they maximise compliance with laws and regulations. Depending on your business requirements, we have 5 different solutions to assist your company: -

As Consultants we can identify business strategies to maximise your international business opportunities.
As an Interim Executive we can provide a short-term heavyweight to provide skills and knowledge not otherwise in place, and deliver significant business benefits from the outset.
By providing Outsourcing when a business has limited resources to manage import / export activities, we become your Import / Export Department. Therefore, freeing up internal resources and permitting the business to focus on their core activities.
Acting as an Import / Export Sales Agency, we assist UK businesses in transporting and selling their products into international markets. We equally assist overseas companies in transporting and selling their products into the UK market.
Focused Import / Export Training, which provides companies with the necessary skills to increase international business, develop new sales opportunities and substantially improve overall profits. Our in-house training is tailored, flexible, convenient and cost-effective.