When engaging in international trade with non-EU countries, businesses often encounter Customs and Excise fees that need to be paid in order to import goods. Customs duty is a mandatory charge imposed on imported items by the receiving country’s customs authority.
This fee is calculated based on the value, quantity, and classification of the goods and is intended to protect domestic industries and regulate international trade. By levying customs duty, governments aim to create a level playing field for local businesses and generate revenue for the country.
In addition to customs duty, certain imported goods are also subject to Excise duty. Excise duty is an inland tax imposed on specific products such as alcohol, tobacco, and fuel. This tax is levied to control the consumption and sale of these goods within the country, discourage excessive use, and promote public health and safety.
When importing excisable items, businesses must pay both customs duty and excise duty, adding to the overall cost of bringing these goods into the country. These fees are crucial for regulating the importation of specific products and ensuring compliance with local laws and regulations. But what happens if your business cant pay the Customs and Excise fees.
How to proceed if you are unable to pay Customs and Excise duties
If you find yourself unable to pay Customs and Excise fees for imported goods, there are several steps you can take to address the situation. First, it’s essential to communicate with the relevant authorities promptly. Contact the customs department or agency responsible for handling the fees and explain your financial constraints. They may be able to provide you with information on potential alternatives or assistance programs available to alleviate the immediate burden.
In some cases, you may be able to negotiate a payment plan or defer the payment to a later date. Discussing your situation with the customs authorities can help you explore these options and potentially come to a mutually agreeable solution. It’s important to be proactive and transparent in your communication to demonstrate your willingness to comply with the regulations and work towards resolving the issue.
Additionally, consider seeking professional advice from a customs broker or a trade consultant who can provide guidance on managing customs and excise fees. They can help you navigate the process, assess potential alternatives, and ensure compliance with legal obligations.
Remember, addressing the inability to pay customs and excise fees promptly is crucial to avoid potential penalties, delays in customs clearance, and legal complications. Being proactive, transparent, and seeking assistance can help you find viable solutions and minimize the impact on your business.
How are customs fees calculated?
When calculating customs fees in the UK, several factors come into play. Here are the key elements involved in determining the amount of customs fees:
- Value of the goods: Customs fees in the UK are primarily calculated based on the customs value of the imported goods. The customs value includes the cost of the goods, shipping and insurance costs, and any applicable royalties or license fees.
- Tariff classification: Goods are classified using the UK Trade Tariff, which assigns a unique commodity code to each product category. The customs fees depend on the specific commodity code assigned to the goods, as different products have different duty rates.
- Duty rates: The UK applies various duty rates based on the commodity code. Duty rates can be ad-valorem (a percentage of the goods’ value) or specific (a fixed amount per unit or weight). The applicable duty rate is multiplied by the customs value of the goods to calculate the customs duty.
- Additional charges: Along with customs duty, Value Added Tax (VAT) is also typically payable on imported goods based on the customs value and the applicable VAT rate. Other charges such as excise duty, handling fees, and administrative charges may also apply for specific goods or circumstances.
- Preferential treatment: The UK has trade agreements that may provide preferential treatment, such as reduced or zero duty rates, for goods imported from certain countries. Preferential treatment depends on the specific agreement and the rules of origin criteria that need to be met.
It’s important to note that customs fees calculation can be complex, and it is advisable to consult the UK government’s official resources, such as HMRC website, or seek professional assistance to ensure accurate calculations for specific goods and trade scenarios.
What happens when my business can’t pay the required customs and excise duty?
You must additionally pay the additional expenses associated with holding your goods in a storage facility while customs and excise duties are unpaid. If the products can’t enter the UK, you’ll ultimately have to pay more to ship them back to their country of origin in the hopes that your supplier would reimburse you, or you might even have to have the products legally destroyed.
What can you do, then, to avoid a disaster at customs and guarantee that you can distribute your imported goods in the UK as intended?
Control cash flow
By effectively controlling your cash flow, you may avoid issues with suppliers and HMRC while also paying all of your payments on time. You can address any gaps that arise thanks to cash flow projections that accurately predict your financial demands over time
Seek professional help
The assistance of licenced insolvency practitioners (IPs) enables you to do a comprehensive “health check” on your company to ensure that you are not approaching insolvency. IPs can help you choose the appropriate course of action, which may involve applying for HMRC’s Duty Deferment Scheme, which allows for a 30-day payment deferral.
By securing additional business finance, you could be able to pay your customs and excise duties. Businesses today have a variety of financing options that provide an alternative to traditional banks, some of which can be approved for reasonably rapidly. These include financial options based on the worth of your tangible assets as well as your sales ledger, but the best option will depend on the nature of your company.
If your company is insolvent on paper and you owe a lot of money, you might be able to start a process that prevents the company from going out of business. One procedure that can be helpful is company administration; it provides a moratorium period during which your best options can be determined without concern for legal action.
In conclusion, if you find yourself unable to pay Customs and Excise fees for imported goods in your business, it is crucial to take proactive steps to address the situation. Promptly communicate with the relevant authorities, explore potential payment alternatives or assistance programs, and seek professional advice from customs brokers or trade consultants.
By taking these actions, you can navigate the process more effectively, find viable solutions, and minimize the impact on your business operations. To further explore options and seek expert guidance, I encourage you to complete an online enquiry form.
Reach out to customs experts or trade consultants who can provide personalized assistance based on your specific circumstances and help you overcome the challenges associated with Customs and Excise fees for imported goods.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.