Import from China to UK – Logistics & Landed Costs
- Asking your supplier to provide you with the correct HS Code
- Asking your forwarding agent
- Searching for your product on https://www.gov.uk/trade-tariff/ or
Calling the HMRC Tariff classification helpline on helpline on (0) 1702 366077
Finding out the Rate of DutyOnce you know the classification of your product, you can check its corresponding duty rate on the HMRC Website here. As discussed above, while the customs duty remains the same for most EU member countries, the VAT Rate varies and for the UK, VAT is charged at 20% at the time of writing this article.
Calculating VATWhen calculating VAT, I often see people using the wrong formula. VAT is chargeable on the total of CIF Value of the Goods + the customs duty. For example, if the value of your goods is $100,000 & the rate of duty is 10%, your VAT would be charged on $100,000 + (10% of $100,000). So the total VAT payable would be 20% of $1,10,000, i.e. $22,000.
Do you need a VAT Number to Import into the UK?Another questions I see a lot is if you need to have a VAT Number to import into the UK. The short answer is that you do not need to register for a VAT number in the UK, if your turnover is less than £82,000 at the time of writing this post. You do not need to register for a VAT number in the UK, if your turnover is less than £82,000 More Details here. However, it is important to note that you can only reclaim import VAT as input tax if you are VAT registered. Also if you are a Non-UK based business, selling in the UK, the Threshold does not apply and you need to register from the onset. The third main component broadly refers to the “Destination Charges”. These include the following:
- Forwarding Agent Charges: This is the agency fee charged by your forwarder for managing the customs clearing process & often for arranging domestic logistics, for allowing use of their deferment account, etc.
- Domestic Trucking/Haulage Costs: Your forwarder will either use the Liner’s haulage or Merchant haulage (private haulage companies) depending on what is cheaper. In majority of the cases, liner haulage tends to be cheaper & more convenient as when using merchant haulage additional charges like the LOLO (Lift-on Lift-Off) are added to the trucking costs.
- Destination Charges: These are charges charged by the shipping line & port for services like loading/unloading of container & handling of the container upon arrival. The biggest component of these is the THC (Terminal Handling Charge).
- Special Requirements: If you have special requirements, for e.g. getting a Side Loader in order to unload your container, these would normally cost extra & it is important you let your forwarder know of any such requirements well in advance. Having a container in your backyard and not being able to unload it is a nightmare.
- Customs Inspections: This is something that catches a lot of new importers by surprise.
- Anti-Dumping Duties: Anti-Dumping duties are charged by governments in order to protect domestic industries in cases where they feel that the exporting country has a specific advantage for a given product due to rebates given by the local government. A lot of governments around the world have imposed anti-dumping duties on various Chinese products & normally these duties are so high that it pretty much makes it impossible to import a given product from China profitably. Therefore, it is very important that you check in advance that no anti-dumping duties are applicable on your product.
How to Apply for an EORI Number?You need to complete a fairly simple application form called the C220 if you are VAT Registered or C220A if you are not VAT Registered. Download form C220 here. Download form C220A here. It will ask you for your trading details and details of the shipment in question. The form can be emailed to the EORI team at HMRC at [email protected] and they will process and issue this within 48-72 hours (sometimes longer). I would recommend doing this a week or two before goods are due into the UK. Once you have received your EORI number, you can then hand over the EORI details to your forwarding agent who will use it to clear your goods through customs upon their arrival. You can find more details about EORI on this link It is possible to defer payment of duties & VAT by up to 30 days on average by getting a Deferment Account Number (DAN) with the HMRC in the UK. This not only helps speed up the clearance of your shipment, but is also handy in improving cash-flow. For more details on how you can defer payment of duties & VAT, please check out this link from the HMRC. I often get a lot of questions along the lines of “Can I go to the port or airport and pick up the goods myself” instead of using a forwarder. The technical answer to this question is “Yes you can”, however this is not something I would recommend. There is quite a bit of paperwork involved in the clearance process and there are multiple parties involved. Therefore, in most cases, it is simply not efficient or cost-effective to go through this process yourself and it is advisable to let forwarders/customs clearing agents manage the process.
china, costs, import, landed, logistics