Many UK based technology companies and web marketplaces require products to be delivered on Delivered Duty Paid (DDP) Terms. Under the terms DDP, the foreign seller is responsible for door to door delivery, the payment of import duties and any applicable taxes. Under the eleven Incoterms® Rules, DDP terms impose the maximum level of obligation on the foreign seller.
Issues for Foreign Importers
In a straightforward import transaction, the consignee is usually the party paying import duties and taxes. Under DDP terms the consignee is not responsible for the payment of import duties and taxes, the foreign importer will be.
Generally, the import of products under DDP terms requires a Declarant / Importer of Record (IOR) located or established in the place of importation. In the UK the Declarant / IOR is required to have proper documentation confirming that they meet all the necessary criteria.
If you are a foreign importer into the UK, under DDP terms you are legally liable for payment of duties, taxes, fees and compliance with customs and other government agency regulations pertaining to your imports. However, not all foreign importers want to register their business within the UK, file paperwork, classify their goods with UK Customs, arrange the payment of duties and taxes or apply for VAT registration in the UK.
Many foreign importers are aware that they can file for VAT reclaim as a non-UK IOR. However, they are reluctant to file for this registration because they don’t want to charge VAT to their local UK customers.
Those non-UK IOR who do apply for VAT registration in the UK to benefit from any tax relief, often find VAT refunds a lengthy process. The UK tax authorities will investigate each import separately, whilst reviewing the entire document trail. The process can take anywhere between four and six months.
The UK government sets a high level of regulations, each enforced by a different government department. Some foreign importers find UK importing too confusing and so fail to develop additional international business, while others try to comply with the laws and regulations but find themselves in violation regardless and face fines, penalties or goods being forfeit.
What is an Importer of Record?
“Importer of Record” is a term used in customs law for the entity responsible for ensuring the imported products comply with local laws and regulations, filing a completed customs entry and paying the assessed import duties and other taxation for those products. In the UK, the Declarant / IOR needs to be established in the UK, meaning the importer needs to have a UK entity, established business or a physical presence, to take responsibility for customs procedures and declaring the import.
If a foreign company is importing into the UK and is not established in the UK, they can’t make a customs declaration for a shipment of products. The foreign company will require a third party that will need to act as the IOR. This third party could be a third-party service company, such as GlobTrade.
How can we help?
Shipping products between countries can be an extremely complex process with some products being highly regulated, which is why you need to use an experienced Importer of Record. Working as the IOR we are formally recognised as an official party within the international shipment transaction by the government.
We provide IOR services for foreign importers and take care of every phase of the importation from customs clearance to the payment of duties and taxes. As the IOR for your products we are responsible for all paperwork relating to import of your products, customs classification and we will arrange the payment of duties and taxes.
By working with GlobTrade, we will enable your business to supply products to UK customers whilst meeting import and trade compliance requirements. We act as importers on behalf of your overseas business.
GlobTrade do not take ownership of your products and do not resell them, but we perform services and distribute products for your business. Title to the products (at all times) remains with your overseas business, as the owners. However, as we are acting as the ‘Importer of Record’ on UK import declarations and paying the import VAT to HMRC, we will receive the import VAT certificate (C79).
Reclaiming Import VAT
As from 15th July 2019, GlobTrade cannot reclaim the import VAT. Only the owner of the goods can reclaim VAT, meaning overseas companies will need to register for VAT or changes to the ownership of goods having to be made before they enter the UK. The correct procedure is for the owner to be the IOR and reclaim the import VAT. We can assist you in identifying alternative approaches to lessen the tax burden.
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