Customs and excise advice

UK customs duty is a tax on goods imported into the UK, while excise duty is an indirect tax applied to alcohol, tobacco and certain fuels applicable to imports and domestic production.

In the post-Brexit era, doing business in Europe is more complex than ever. Whether you are importing or exporting components or finished goods, staying on top of your customs declarations and duty costs is important. Failure to do so could impact your tax risk rating and bottom line.

In response to an increased number of customs declarations and the revenues at stake for the UK Government, HMRC has been steadily increasing the post-importation compliance audits it carries out on both small and large businesses.

With many third parties, such as freight companies, completing customs declarations on behalf of the businesses they support, companies must have a robust governance framework. This should ensure customs declarations are correct and the risk of non-compliance has been managed effectively throughout the supply chain.

The customs declaration service (CDS) for UK imports

Since October 2022, under HMRC’s customs declaration service rules, importers must declare the following:

If the buyer and seller are part of the same group of companies or controlled directly or indirectly by the same person
If customs values are provisional, for example, a retrospective transfer price adjustment takes place post importation
There are conditions attached to the sale price, for example, if the seller is entitled to share part of the profit once sold to the end customer

Businesses must make sure their customs values are set according to UK customs law and valuation rules.

For related party transactions, businesses need to consider whether their import values are at arm’s length. This is not only required at an operating margin level but also on a product-by-product basis.

Our help and support for customs and excise

S&W are experts in customs and excise advisory, helping businesses with a range of support for their imports and exports.

Ad-hoc consultancy, helpline and retainer arrangements

We offer advice and assistance in all areas of customs and excise, with best practice methods to improve business performance. Alongside our standard consultancy services, we can provide a helpline or retainer arrangement, helping when you need it.

Support with HMRC audits

There has been a marked increase in HMRC customs compliance audits in recent years. We can support your organisation throughout the process, helping relieve the pressure:

Advising how to respond to HMRC letters or drafting responses
Reviewing your current processes to identify areas of risk
Assisting with voluntary disclosures to HMRC where beneficial
Building a robust defence for any unintentional contraventions
Designing and implementing controls and other measures to address compliance gaps
Providing awareness training to operational staff and management

Customs health checks

We use official HMRC data to review and provide a report on a business’s key customs and excise issues:

Tariff classification – Having the correct codes in place is critical. Codes drive the duty rate and determine where licences are needed and if there are import quotas or restrictions
Valuation – The customs value determines the amount of duty to be paid and forms the basis of your tax liability. HMRC is increasingly auditing customs values, especially for related party transactions
Preferential origin compliance – Preferential trade arrangements can relieve customs duties, but strict rules must be met and the right evidence retained. Each agreement’s origin rules are unique and typically differ product-by-product

A customs health check can ensure the right amount of duty is paid and minimise any risk of tax assessments and penalties.

Customs and excise training classes and workshops

We offer bespoke training programmes covering all areas of customs compliance for management and operational staff. We also provide half and full-day workshops, followed up with a high-level traffic light report outlining our observations and recommendations. Our workshops are often a good starting point for assessing any issues.

Supply chain optimisation

Business decisions regarding supply chains are sometimes made without full knowledge of the potential consequences. We can review your goods flows from a combined indirect tax perspective (VAT, customs and environmental taxes) to explore all possible scenarios. This can mitigate potentially detrimental results and unlock cost savings opportunities.

Excise duty

Excise duty must be paid on goods such as alcohol, tobacco and certain types of fuel. The legislation is complex, and HMRC can suspend or revoke business-critical authorisations. On 1 August 2023, the excise duty rates for alcohol changed, along with how producers, sellers and importers must account for different types of alcohol. We’re experts in ensuring processes are compliant and can help to reduce excise duty costs. We can help you analyse how reforms affect your business and make sure you are not overpaying or underpaying excise duties.

Customs declaration service (CDS)

We can check that your customs broker has correctly declared your imports and exports. This includes reviewing customs declaration data directly from HMRC’s customs declaration service. We customise the output based on your needs and help you identify potential duty cost savings as well as rectify possible declaration errors.

Authorised economic operator (AEO) certification and renewal

Authorised economic operator certification offers certain benefits to UK traders, including reciprocal trusted trader status with other customs authorities (such as the EU and US). S&W can help with the application process, including HMRC’s validation visit, which is key to a successful application. Once certified, we can help your business prepare for HMRC’s recurring renewal audits, providing fresh eyes and insights on what HMRC will typically focus on.

Customs special procedure applications

Customs special procedures, such as customs warehousing and inward processing, can improve your business’s cashflow by reducing or minimising the amount of customs duty paid. We can assist your business:

Advising on the types of procedures available and their suitability for your business
Looking at benchmarking requirements
Assisting with preparations to operate the procedure
Helping you gain HMRC authorisations

Why choose S&W’s customs and excise service?

Our experienced team specialises in designing customs and excise compliance governance frameworks, identifying related cost savings, and mitigating risks in international supply chains.

In addition to our consulting expertise, we have practical in-house experience from working in different industry sectors, both in the UK and EU. Our hands-on, operational insight is invaluable for delivering high quality, pragmatic advice.

We also work closely with our colleagues across professional services teams to provide a complete range of tax and advisory services for your business.

For more information about how our customs and excise expertise could benefit your business, speak to us today.

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Frequently asked questions about customs and excise

What is a customs broker?

Generally, a customs broker is a third party who submits customs declarations on behalf of an importer or exporter. This could be a freight forwarder, a fast parcel operator, or a party not involved with transporting goods but merely submitting the customs declarations.

It’s important to remember that in the UK, a customs broker is not a legally regulated profession. As such, there is no legal requirement to have qualifications or experience in undertaking customs services. Consequently, customs brokers are not necessarily experienced in advising importers and exporters on more complex customs matters such as duty reliefs, preferential origin and customs valuation.

What is excise tax?

Certain products, such as tobacco, alcohol and some energy products, attract additional taxes because they are perceived as harmful to people and the environment. These goods are subject to excise duty, payable when they are made available for consumption in the UK.

Excise duty is not the same as customs duty, and some products are subject to both excise duty and customs duty, such as imported wine.

Excise duty costs can be mitigated. It will not be payable if it can be evidenced that the goods have been exported instead of released for consumption in the UK.

On what commodities is export duty levied?

Some countries apply customs duty to exports, but the UK does not. There are UK export restrictions on certain products and export controls in place for designated persons and countries, but there is no such thing as UK export duty.

Any references to UK export duty most likely refer to goods exported from the UK incurring customs duties in the destination country. For example, goods sent from the UK to the EU can become liable for EU customs duty because they fail to meet the preferential origin rules in the EU-UK Trade and Cooperation Agreement.

What is countervailing duty (CVD) in excise duty?

Countervailing duty is an additional duty applicable under certain circumstances to imported goods. It aims to create a level playing field for domestic producers of the same or similar goods. CVD is applied differently in different customs jurisdictions. For example, in India, CVD is applied to imported excise goods to level the playing field for those produced in India.

In the UK, HMRC applies CVD on goods that have received government subsidies in the originating or exporting country. This can include alcohol, tobacco, biodiesel, fertilisers, steel and aluminium. For customs purposes, CVD is treated in the same way as anti-dumping duty (ADD). It’s possible to have both countervailing duty and ADD applied to a product.

Are import duty and customs duty the same?

Import duty is often used as an all-encompassing phrase to refer to all indirect taxes applicable to imported goods (import VAT, customs duty, excise duty and retaliatory duties).

In some cases, import duty equates to customs duty and does not include those duties listed above. To avoid confusion, it is best to be specific about the terminology.

Customs duty applies to all goods imported into the UK unless one of the following applies:

An exception applies, such as a duty relief or tariff suspension
The goods originate in a country that has a trade agreement with the UK
The goods originate in one of the defined developing countries covered by the UK’s Developing Countries Trading Scheme