Importing as a small business: FAQs

Importing from Pakistan

I’m looking to import sandals from Pakistan: do I need to pay tax and import duty?

Business owner and forum user Ian says:

“Your best bet is to contact HMRC. You need to explain the details to them and they will advise you on the way it’s done.

1. You will need a EORI number. This is a number supplied by HMRC for companies who do not import regularly and are not registered for VAT.
2. You will be liable for VAT and Customs Duty. The duty percentage rate will be based on the HSA (Harmonised Tariff Code) which is a classification number on the type of goods you are importing, and is based on the full import price – cost and shipping
3. Unless your goods are being delivered door to door, you will need a shipping/freight agent to collect the goods at the airport/seaport, clear them from customs and deliver them to you. You can do this yourself, however if you have not imported before, you will be well advised to pay for a professional to do it. (They are not expensive and well worth the expense)
4. VAT, Duties and Customs Clearance fees (payable to a freight agent for services) will usually be paid on your behalf by the freight agent and you then pay them when they deliver to you. Ask when you contact them.
5. You will need all the documents (if sent to you), the shipment consignment number, the value of the goods and the HSA code – give these to the freight agent and they can then claim your goods for you. (They will explain this on the phone).

What is a pro forma? Is this a customs declaration of content or a declaration that you are not planning to resell the goods therefore not having to pay vat?

Ian continues:

“A proforma invoice is an invoice sent by the supplier which will show you the goods you are buying, the cost, the shipping and any other details of your arrangement. It has nothing to do with your VAT or duties and makes no difference if you are selling or eating the goods. You will however need it to get an EORI number from HMRC.

“As to the duty rate, again ask HMRC for a tariff code and they will also tell you the rate at which that commodity is charged.

“Be advised – even if you import goods for your own use, if the total value is over a certain amount (cost and shipping, this amount also depends on the commodity type). Customs WILL charge you VAT.

“As for collecting the goods yourself from customs and based on your questions here, my advise to you is simple – get a freight agent to sort this out for you. You can and will spend hours if not days running back and forth until you have all the correct papers etc – for the sake of saving a few pounds. Time is money and you will be wise to waste neither.”

Cheapest import method – USA to UK

I am looking to import cosmetics from the USA to the UK. I have never done this before and wonder if anybody knows the cheapest way to do it? Would it be cheapest to use the United States Postal Service (Economy (Surface) Parcel Post) or to have it sent by sea/air freight, or by courier? 

Business owner Jonny suggests:

“It really depends on the size/weight of your import.

“I have found the cheapest method is to use a freight agent to move at least a half-container by sea at a time.

“That is a lot of cosmetics though!

“Regardless – sea freight will be cheaper even with smaller consignments – I’d get in touch with a good freight agency and ask for help.”

Start-up owner Fiona continues:

“My supplier has just told me that if the order is under 300kg it is cheapest to use the United States Postal Service (Economy (Surface) Parcel Post). Over 300kg, then ocean freight is cheaper. Economy surface is supposed to take four-six weeks.

“I believe if I have it sent by economy surface, then the parcel(s) will be delivered to my door by the regular postman. Does anyone know how I then go about paying the VAT and customs duty?

Will I have to pay VAT if ordering via post?

Jonny continues:

“If you get something through USPS, you will have to pay VAT (+handling fee and sometimes duty) whatever happens. Royal Mail will usually send you a letter and you will have to pay before you get your hands on the goods.

“Customs always charge VAT on the whole amount, including freight, so bear this in mind!

“I try to request USPS from the suppliers. My parcels tend to be around 25kg on average. However some companies will only offer Fedex or UPS (UPS being the most expensive one) for instance. Fedex, UPS and DHL will send you an invoice requesting the duty they paid on your behalf to customs. You might get it within a week of receiving the parcel or sometimes, like DHL at the moment, about two months later!

“You don’t need to be VAT registered. I am not, you can avoid it until your turnover reaches the threshold, but that doesn’t stop customs asking you for VAT and duty. It’s just you can’t claim it back.

“If you reach a certain amount you may have to request an EORI number from customs. I had to do this when I got a parcel from UPS. This is instead of a VAT number if you’re not registered for VAT. Don’t bother getting one until you have to, that’s my opinion.”

Do I need a specific import/export license?

I am planning to start up an import / export company, I will be importing and exporting to and from the UK, middle east and far east regions mainly. The nature of the company I am going to register is import/export but i was wondering do I need an extra license for this? 

Forum user Anglo-Sino explains:

“We import from China-generally licenses depend on what you are importing/ exporting. The HMRC website is very informative, the only problem is it’s not specific to everyone’s needs (obviously can’t be with so many different options).

“For containerised import my suggestion is to use an agent, certainly to begin with, then as you become more experienced try the process yourself. Agents are generally pretty cheap. Main costs are offloading, dock fees etc. which you have to pay either way bonus being they know what they are doing!”

Importing from Thailand

I run a small Thai boxing club in Essex. I am considering importing boxing equipment from Thailand to sell to my members (and possibly on eBay) to subsidise the running of my club as it does not generate enough money. Can anyone advise how I would import such goods?

Forum user Skypist says:

“What equipment do you mean? If shorts and gloves, 20kg or under per order go for airmail. FedEx and DHL require paperwork and often Certificates of Origin but are slightly cheaper but more hassle than the Thai post office service (EMS). You can look up all rates online. As you send more frequently go for a UK consolidation agent which will bring prices down as long as you mail x boxes per month.

“For shipping you need to calculate the cost per cubic metre regardless of weight. However, there are a lot of extra charges both ends, but if you’ve got 50kg+ coming over and can wait five weeks… then it’s the best option.”

Importing from China

I want to import goods from a Chinese manufacturer but really don’t know where to start. Are there any companies specialising in helping small businesses import and take care of paperwork, customs etc.

Forum user Colin says:

“If you’ve already identified a supplier you want to import from then you’re best bet is probably to contact some shipping agents and have a chat with them. Many of them take care of the whole process and the paperwork, etc. A quick google search for “shipping agents China” will give you plenty of options.”

Another user added:

“There are many potential problems that would need to be addressed before going it alone with regards to importing. Do yourself a favour and speak to a few different freight forwarding companies about the possible pitfalls.

Would it be worth importing small amounts of jewellery from china, rather than buying it from a UK base wholesaler? 

Forum user Ola discusses the pros and cons:

“I have imported products from china in the past.

“On the plus side:
“It allowed me to get products to a lower price and it increased my margin when selling.
“It was delivered to my door via courier.

“On the down side:
“I had to order larger quantity than with UK provider.
“I had to pay up front and hope for the best:S
“I wouldn’t have been able to return the goods in case the goods was faulty.
“It took four weeks for the parcel to arrive.”

Startups member Karen gives a bit of insight on importing from Taiwan to UK, with widely applicable importing principles:

“Import duty applies to most products: take a look at the Government’s Trade Tariff document for a list of commodity codes, duty and VAT rates.

You’ll also need form C88 (‘The Single Administrative Document for import and export’) which details movements of goods imported from outside the EU and exported outside of the EU. Read more about the SAD here.

Don’t forget other charges such as Goods in Transit. You could insist upon a c.i.f. price (cost + insurance + freight) – this will cover you insurance whilst being freighted to the UK, payment of VAT, and duty to customs.

You will either need to be VAT registered or if not registered will need to apply for a pseudo turn number from Customs as this is commercial.

Finally, there will be UK terminals handling charges, but these depend on who the supplier uses at the other end in Taiwan.”