H.M.Paperwork - Filling out the Forms!

Most of the information in this section has been taken from "The International Freight Guide" with the kind permission of the British International Freight Association.

Bill of Lading
Airway Bill
CMR Note
Standard Shipping Note
Certificates of Origin
ATA Carnet
Movement Certificates
The Role of Customs and International Trade
Customs Entry and Customs Procedure Codes
Community Transit & the Single Market Effect
EDI - Customs, Trade & the Future

THE CUSTOMS ENTRY & CUSTOMS PROCEDURE CODES

All imports and exports in the EU are declared via the single administrative document or SAD. These may often be made on the official printed form, or via a plain paper version, either of which may be produced on a computer system, with Customs' prior approval. The SAD is potentially an eight-part document, but for almost all purposes only parts of the document are used. For example, on export only copies 1 and 2 are required, unless the sender requires a copy, in which case copy 3 is also produced. If the SAD is used for community transit purposes, copies 4 and 5 are required. Finally for import, copies 6 and 7 are for Customs and copy 8 is for the person preparing the entry.

Details on how to complete the SAD are to be found in the Customs Tariff - Volume 3, together with codes and copies required for each purpose.

Increasing use of computers has meant that most forwarders use a direct link to the Customs' computer known as CHIEF (Customs Handling Import Export Freight). This means that often goods can be cleared with the actual papers being handed in later to Customs. Of course, if special documents are required, or customs inspection is necessary, the computer holds clearance until the relative steps have been taken.

"Paperless" declarations are currently being considered, and may arrive in the future. The difficulty is that EU law requires that a formal paper declaration be made and while many controls are now routinely carried out by computer systems, there remains the need to either produce, or be able to produce, a paper declaration.

CUSTOMS PROCEDURE CODES

Box 37 of the SAD requires that a customs procedure code (CPC) be input to allow Customs to determine the circumstances of import or export. This is possibly one of the most critical boxes on the SAD as it informs Customs of the reason for shipment. For example, the goods may have been temporarily imported or exported previously, and special controls may be necessary because of that previous activity.

It is essential that importers and exporters advise their forwarder clearly as to why the goods are being shipped, or the reason for their import or export, in order for this box to be correctly completed.

Some of the more common CPCs are listed below, although readers should be aware that there are a considerable number of CPCs available at both import and export. Full details are available in the Customs Tariff Volume 3.

Some of the most common import CPCs are:

• Home use (import) basic declaration 400000
• Inwards processing relief - drawback 410000
• Inwards processing relief - suspension 510000
• British returned goods 400063

Some of the most common export CPCs are:

• Basic declaration (export) 100001
• Outward processing relief 210001
• Re-export of IPR drawback goods 314101
• Re-export of IPR suspension goods 315118

Let us now look at just two CPCs in a little more detail:

Inwards processing relief (IPR) is a scheme which allows goods to be imported to the EU, processed in some way, and then re-exported, avoiding the need to pay duty on them. An application has to be made to Customs prior to importation for IPR approval and this can be a simplified method for just a single shipment, or a more detailed application where regular trade is anticipated. By advising Customs in advance that the goods are intended to be re-exported, they are able to satisfy themselves about the type of cargo being imported. When the goods are finally re-exported, Customs are informed in advance of shipment, and can be sure that the same goods, albeit re-processed, are then exported. Research suggests that many shippers do not take full advantage of this type of cost-saving opportunity.

Outwards processing relief (OPR) offers a similar opportunity for goods which are to be exported, for processing outside the EU, and then returned. By gaining Customs' approval to operate OPR either as a standing authority, or shipment by shipment, the exporter can ensure that when re-import takes place, duty is only payable on the cost of process, and not the whole product. Like IPR, the goods must always be presented to Customs before shipment to allow accurate identification.

More information on CPCs may be also be found in the relevant Public Notice (PN) available from Customs. These provide shippers and forwarders with detailed information about the factors needed to ensure compliance with the different regimes. Details of all PNs may be found in the Customs Tariff - Volume 1.

CUSTOMS AT IMPORT

On, or just prior to, arrival, the airline or shipping company, etc. makes available to Customs and the port/airport authority details of all the cargo arriving for clearance. This information is usually also available to the forwarder, who will have previously been advised by the sending forwarder overseas. Confirmation from the carrier then confirms the actual arrival.

The importer will usually have been contacted in advance, and an agreement made as to how and by whom the clearance is to be effected. This will include details of where the goods are to be delivered, whether special CPCs apply and the provisions of funds for duty and VAT and any special documents required.

The most common documents and other needs required to allow import are:

• original of the suppliers' invoice/s;
• copy of any packing list/s;
• original bill of lading or other transport document;
• details of any special customs procedures required;
• form C 105 if duty is payable and the value exceeds £4,000;
• documents to support reduced or preferential duty rates, e.g. certificate of origin;
• instructions about any special procedures or handling required;
• details of delivery address and any difficulty which may be encountered;
• day and time delivery required;
• funding for any duty and tax to be paid.

Calculating duty is a complex operation. Essentially, the duty calculation will consist of the invoice value, plus freight charges to the EU frontier, plus insurance premium and any uplifts on such values as required by Customs. There are also special rules when royalties or tools and dyes, etc. are provided or payable by the importer. Customs is basically looking to find a "fair market value" for the goods when valued at the EU frontier. The rate of duty may then be taken from the tariff, allowing for any special preferences, quotas or other reduced duty rates involved.

Calculating VAT is slightly different to duty in that VAT is payable on any actual money turned over in the transaction. Hence all the factors allowed for in duty calculation apply with the exception of any "uplift", which is a fictitious amount to bring the value up to a "fair market price". Additionally, the value for VAT is the value not at the EU frontier but at the place of first destination, hence the value for duty (less the uplift) has to have costs to the first inland delivery point, or other final destination if known at time of importation, added before the VAT is calculated. Both calculations for duty and VAT are very difficult to generalise, and readers are recommended to refer to the relevant Customs Public Notice and Customs tariff in force at the time of entry.The forwarder then prepares an entry by computer, and submits this to Customs via the local community computer system. Checks are made automatically to ensure that the cargo reported as arriving matches the detail declared on the SAD. This ensures that the inventory controls are able to control both handling and release of cargo.

The Customs' computer then allocates the clearance required; it may be for example, that the goods are released immediately, or that documents must be submitted before release, or finally that both documents and goods must be checked before release. The timescale for each of these may vary from a few hours to a day or so, depending on what exactly is required.

Payments to Customs must be made using "guaranteed means". This requires either a banker's cheque, payable directly to Customs, cash, or, more commonly, deferment. The deferment system requires a forwarder or importer to estimate the amount of tax likely to be paid in any one month, then arrange for their bank to issue a guarantee to Customs for twice the estimated amount. This is because amounts deferred are charged by direct debit on the fifteenth of the month following import, to the bank account of the deferment holder.On release by the customs system, the goods may be collected and, providing funds for duty and VAT are paid, delivery made.

Not all goods are cleared on arrival. Many will simply be transferred to the importer's own customs warehouse where they derive the benefit of storing the goods, and only paying duty and VAT when the goods are finally removed from the warehouse.

Electronic clearance requests, and clearance documents, must be presented promptly, to ensure that the goods are not delayed, and thereby avoid rent and demurrage costs.

CUSTOMS AT EXPORT

At export, documents and information must be generated by the exporter in order that an export entry may be presented to Customs in the UK, and shipment details sent to the buyer at destination.

Like imports, a substantial number of export declarations are made via the CHIEF computer system. However, the percentage declared manually is traditionally much higher on export than import. UK Customs is actively encouraging both forwarders and exporters to reverse this trend and use computers far more.

The most common documents required for export/export customs are:

• copy commercial invoices to allow cargo identification and customs entry;
• copy packing lists;
• shipping instructions in order that the shipper's requirements are completed;
• copy letter of credit, if applicable;
• dangerous cargo or other special handling instructions;
• certificates of origin or other preference certificates such as the EUR1;
• instructions relating to insurance;
• details of any previous customs controls on the goods being shipped.

A pre-advice will be sent to the consignee via the forwarder's representative at destination, but, at the same time, an export declaration will be prepared on a SAD if the goods are manually declared, or on the computer.

Where no special customs controls apply, which require presentation to Customs at or before shipment, the goods may be declared up to 14 days after shipment. This is achieved by providing Customs with basic information at the time of movement, then finalising that declaration after despatch. Known as the simplified clearance procedure (SCP), it relies on the forwarder gaining Customs' approval, and then allocating each shipment a unique number known as an export consignment identifier (ECI). The ECI is made up of the forwarder's customs registration number (CRN) and a unique number for the shipment. This unique number is recorded by Customs at shipment, then the forwarder "matches" the number with the full shipment data, up to 14 days after despatch. This data is usually achieved by providing a schedule of the details, rather than a SAD for each consignment.

Export declarations are normally presented at the place of export, but may, with Customs' permission, be declared at the exporter's premises, or any Customs-approved inland depot.

Proof of origin is often a major problem with exporting - the level of duty paid at destination may depend on where the goods originated. For destinations where no special preference applies, this is usually achieved by a simple statement on the invoice. However, where special arrangements for reduced rates of duty are available, they may demand a separate proof of evidence in either the form of a certificate of origin, EUR1 certificate, or other preference certificate.

Certificates of origin are obtained from a chamber of commerce; they are completed usually by the exporter or his forwarder, then presented to the chamber of commerce for signature and stamping.

The EUR1 is issued by the exporter and then stamped by Customs at the point of shipment. Major shippers may alternatively apply for a preauthenticated supply. The EUR1 is one of the most common forms of origin proof used by the EU, as agreements rely on it as evidence of compliance with the agreement. Other preference certificates will include the Generalised System of Preference origin certificate (GSP) and various statements on documents, especially where low-value shipments are involved. Most exporters use information from Croner's Reference Book for Exporters, or their forwarder to ascertain which documents are required.

It is important to remember that customs and export shipment documents must be presented promptly. This will ensure that the goods are not delayed, and thereby incur penal storage charges both at point of shipment and, perhaps more importantly, at destination.

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