Customs clearance, should the freight forwarder do it

For many shippers and consignees the act of clearing goods through customs is just another headache. Another import/export cost to be borne with little regard for what it means. Freight forwarders hear it all the time. I just want to know when you are delivering? Customs clearance though is much more important. Should you let your freight forwarder do it? Not always and only once you have assessed the risk.

Customs clearance and freight forwarding

It’s a strange question but for many UK importers/exporters the difference is not apparent. In the USA customs brokerage is licensed with mandatory training requirements. In the UK you can set up without any training. Most freight forwarders offer customs clearance as part of the freight forwarding supply chain but it is very different. Customs clearance in the past was monitored at the port or airport but now it is a vital function of H.M.Revenue and Customs. The important part here is the word revenue and that they control this away from the port/airport. UK Borderforce checks are very different to revenue checks.

What does a freight forwarder do

A freight forwarder arranges the movement of goods from point A to point b. He follows the terms and conditions requested, usually Incoterms and may provide guidance on the movement of the goods.

What does a customs clearance agent do

A shipper/consignee may see the above as the most important element of the movement but arguably the customs clearance element is much more important. A good customs clearance agent ensures that correct procedures are followed during the transition of goods through border movements. Ensuring the correct duties & taxes are paid and that all licensing requirements are adhered to. In order for this to happen your customs broker should :

  • Be focused on the customs clearance element of the movement
  • Have excellent knowledge of your goods and your requirements, how the goods will be used.
  • Have updated and regular training on customs requirements
  • Maintain in depth knowledge of HS Codes and procedures

H.M.Revenue and Customs

Customs audits are regularly now completed after goods have arrived and take place at an importer/exports premises. It is important therefore that importers/exporters are aware that H.M.Revenue & Customs in the UK can go back up to 3 years and request taxes and fines be paid on incorrectly declared shipments. Under direct representation, whatever the incoterm, it is the UK trader who is liable and not the freight forwarder/customs broker.

Even if you have purchased goods under DDP terms you are still liable for the importation of those goods and any mis-declaration may leave you liable for any duty/VAT differences. If you leave this in the hands of a suppliers freight forwarder you are allowing a company you do not know to make a declaration on your behalf. Would you employ a supplier without vetting them? Essentially that is what you are doing.

How to find a good customs clearance agent

We are not saying do not employ a freight forwarder as a customs broker. There are some excellent freight forwarders in the market-place who have extremely robust import/export clearance trained staff. When employing a freight forwarder don’t forget to ask about their customs clearance requirements. If a freight forwarder offers to do your customs clearances and doesn’t ask you in detail about your cargo or ask you to complete a Direct Representation form then why? How has he got your best interests at heart if he doesn’t know your cargo customs requirements.

Ask yourself this. Is the customs clearance charge to cheap. Bear in mind the costs for training and software a customs clearance agent is providing. Is the freight forwarder or customs clearance agent quoting you an appropriate cost for the work involved. If they are to cheap then walk away. Customs clearance is to important to your import/export business to be handled on the cheap. It may end up costing you dearly in the long run if you choose the wrong one. H.M.Revenue and Customs are working hard to claw back underpaid duties and taxes and a good place to start at an audit is by saying we use the same customs clearance partner for all our clearances.

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