Importing: the basics

Importing goods from outside the UK can help you find new or lower-priced supplies. Before you start importing, you need to understand your legal and financial obligations, and have the right skills and resources to deal with payments, logistics, negotiations and contracts.

Guide

8 min read

1. Importing overview

Importing is when a business buys products or raw materials from a supplier in another country. The business may then sell that product to customers in the UK, or use the raw materials to manufacture their own products.

A primary benefit of importing is being able to access a much wider choice of goods which may not be available here. You might be able to find lower-priced supplies, giving you a competitive edge, or new supplies that allow you to sell a completely different product.

However, importing involves more complexities than dealing with domestic suppliers, including managing long-distance relationships, the costs and logistics of international transport, customs clearance, and import taxes and duties.

2. Outline your plan for importing

Set goals: Before you begin, be clear about what you are trying to achieve - for example finding a cheaper source of supplies overseas, or importing products that aren't yet available here to sell to your customers.

Complement business strategy: Importing should complement your overall business strategy, for example, hitting the appropriate balance between importing low cost goods as part of a cost-control strategy and maintaining your reputation for quality.

Budget for research: You will need some budget and resources for researching and managing overseas suppliers which can be time-consuming and expensive, particularly if you need to visit them.

Minimise storage: Make sure you have planned how you are going to use the imports in advance, to minimise the length of time you store goods and to maximise cashflow. For example, put in place production capacity for processing imported components, or a marketing plan and sales resources for selling your imports to your customers.

3. Apply for an EORI number

If you are based in Scotland and importing goods from any other country outside Great Britain, including Northern Ireland, Isle of Man, Channel Islands, and other countries within or outside the EU, you will need an Economic Operators Registration and Identification (EORI) number. This is used by authorities such as Customs to track shipments. You may need more than one EORI number depending where you are receiving goods from, e.g. Northern Ireland. The Trader Support Service can provide more advice on this.

4. Research tax, duties, licences and certificates

The financial and legal obligations for businesses vary according to the country they are importing from and what is being imported. Brexit has changed rules around imports from the EU and these are still being implemented.

The UK government has a self-assessment tool to help map out what you need to do before buying goods and before they arrive at the border.

  • Actions before buying any goods: this includes any licences, certificates needed, or other restrictions around the products you’re importing; how much VAT, Import duty and Excise duty to pay; and whether you need to register for VAT.

  • Actions before any goods arrive at the UK border: this covers what information and documents you need and which declarations you need to submit.

Before working through the steps in the tool, have answers to the following.

  • Why you are importing: whether you’re bringing items into the UK permanently (e.g. to be sold, processed, or used in your business) or just temporarily before being sent out of the UK again.

  • Where the goods have come from: otherwise known as “country of origin” where the items were mainly manufactured, grown or modified, this may be different from the country where the goods are being shipped or bought from.

  • How you’re bringing the goods in: there are different considerations if they are coming in your own small vehicle or luggage, through the post, in shipment, etc.

  • When the goods will arrive at the UK border: the guidance you will be given will reflect the regulations that apply at that time.

  • Who is involved: you need to know who will submit the import declaration - whether it is you, or an organisation like an agent.

  • What type of goods you’re bringing in: you’ll need to know the name or commodity code for the goods. A commodity code is a 10-digit reference number that is internationally recognised and is used to calculate the relevant duties and taxes. To find this, you’ll need to know what the product is used for, the materials used and how it’s produced, as well as how it’s packaged.

5. Understand the paperwork

When bringing goods into the UK the paperwork is important, as failing to follow the process correctly - or not paying the correct taxes and duties - can result in delays to goods reaching you, penalties, or the goods being seized.

The UK government has a step-by-step guide to help which covers key areas including:

  • checking rules for labelling

  • claiming VAT or Customs Duty refunds

  • reporting any underpayments of import VAT or Customs Duty

There is also a guide for making an import declaration which covers:

  • how to check if you can make the customs process quicker

  • registering restricted goods

  • licences and certification for certain goods

  • arranging for certain categories of goods to be inspected e.g. plants

  • submitting the declaration

  • arranging for goods to be released if they’re held at the border

6. Choose your approach to importing

Many first time or small scale importers prefer to keep things relatively simple and low risk. Importing can be fairly straightforward if you deal with experienced suppliers who handle most of the paperwork and logistics, and obtain help from an import agent. While handling more of the process yourself can be more profitable, e.g. managing UK customs clearance and onwards delivery to your premises, you need to balance this with the time and risks involved when you lack experience.

  • If you deal with experienced exporters, it's usually possible to negotiate a contract where they take responsibility for delivering the goods to the UK - or even to your own premises. Of course, the supplier will build these costs into the price.

  • You can also negotiate contracts in pounds sterling, rather than the supplier's currency so you don’t have to handle foreign exchange. Again, the supplier will build extra costs into their price.

  • It may be best to use a third party to handle certain responsibilities. For example, you can use an import agent or broker to handle UK customs clearance, and a freight forwarder to handle onward delivery to your premises, or use fast parcel operators. The UK government offers advice on how to appoint a third party.

Whatever your chosen approach, you may need new administrative systems to track deliveries and payments and manage the paperwork, as well as training and extra staff to handle additional workload. You should take time to understand the benefits, risks and costs of different types of international payment such as bank wire transfers, credit cards, or letters of credit (a form of loan which acts as an assurance of payment).

7. Checklist

You can use these points to help you decide whether you are ready to start importing or discover what else you need to do to prepare.

Planning and strategy

  • Are you committed to importing? Have all the key people in your business agreed?
  • Do you have a well-defined import strategy?
  • How much time and money are you prepared to invest in starting to import?
  • Do you know what suppliers, in which countries, you will consider? Have you planned how you will research and select them?
  • Do you understand your own strengths and weaknesses? What will be your objectives in negotiating import contracts?
  • Have you planned how you will store, process and/or sell the imports? Do you have the resources you need?

Product specifics

  • Do the goods you plan to import need an import licence?
  • Do the goods need to meet any UK standards or legal requirements?
  • What requirements are there for the goods to fit in with your production processes or customer demands?

Skills and administration

  • Do you understand international payment methods and can you handle them?
  • Do you understand international delivery contract terms - ie Incoterms? Have you got the right legal advice?
  • Do you have the skills to handle import tasks like customs clearance and delivery, or have you built relationships with third parties to do this for you?
  • How do you plan to develop your importing skills? Have you organised any training?
  • Have you set up administration systems to handle importing, eg tracking deliveries and payments?
  • Do you have the personnel resources to handle the additional work? Which individuals will be responsible for each task?

Finances

  • Have you identified all the costs of importing, including transport, insurance and import duties and taxes?
  • Do you have enough working capital to finance imports or will you need to negotiate credit from suppliers or arrange a trade finance package with your bank?

Read more about the regulations, documentation and duties involved with importing in Starting to import.

8. Manage suppliers and contracts

Importing goods from overseas suppliers involves all the same issues as purchasing from suppliers in the UK. It’s important to find good suppliers, make sure they offer what you want and negotiate the right deal. If your finances are limited, you may prefer to deal with suppliers who offer credit. On the other hand, agreeing to pay promptly could help you negotiate a competitive price.

The relationships can become more complicated because of the distances involved and different languages, business cultures and legal environments. Key checks include:

  • the supplier is able to export the goods from their own country and has any relevant licences or certificates

  • the supplier and any subcontractors are creditworthy and can meet your quality standards

  • any goods will suit your production processes and satisfy customer demands

  • whether imported goods meet UK legal requirements or require an import licence

To draw up a contract you will need to agree what payment is required, when and in what currency, and what payment method will be used. You will also need to decide your specific roles and responsibilities for:

  • clearing goods through UK customs

  • the transport and insurance, including from the UK port to your premises

  • paying duties and taxes

  • what happens if goods are delayed, damaged, or lost while being delivered.

To help these discussions and reduce the risk of misunderstandings between exporters and importers when drawing up contracts, the International Chamber of Commerce (ICC) IncotermsⓇ - a set of 11 international commercial terms made up of three letters - are a form of shorthand used globally to ensure that all parties can properly assign, agree and log the main responsibilities, costs, and risks. For example, the term “EXW: Ex Works” means that the buyer has responsibility for transport costs and the risk of transporting the goods to the destination.

The Department for Business and Trade has a summary of Incoterms and the pros and cons of each approach for the various parties. The full set is available on the International Chamber of Commerce website.

You may want to take advice from a lawyer with experience of international trade.

Resolving problems, such as incomplete deliveries - even when the supplier is responsible or you use an agent - can be more complicated and take time. It’s important to think ahead and work out contingencies. For example, you might hold extra stocks so that you don't run out even if a delivery is late or contains faulty goods.

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