I delivered a mentoring session today to a client whose business is beginning to outgrow the Irish B2C market. While she’s very excited about expanding, she’s also highly apprehensive about the complexities of exporting.
Customs procedures should never be a barrier to progress but it’s important that traders fully understand the process alongside their legal obligations. This requires careful planning and understanding of the fundamental regulatory and logistical factors.
With that in mind, I thought I’d put together a few basic key pointers to help guide those looking to take their first steps into exporting.
I. Get an Economic Operators Registration and Identification (EORI) Number
An EORI number is essential for importing and exporting. This number allows you to import and export goods in and out of the EU. You can apply for your EORI number through the Revenue Online (ROS).
II. Fully Understand Your Products
Knowing your product’s make up is essential and from that the Harmonized System (HS) code is crucial. This code determines the customs charges and conditions that will apply. You’ll also need to know your product’s country of origin (where wholly made), which can influence tariffs which are based on trade agreements.
III. Choose the Right Incoterms
When exporting, Incoterms (International Commercial Terms) define your responsibilities as the seller and your customer’s obligations as the buyer. Delivered Duty Paid (DDP) is often chosen for B2C exporters because it ensures that you, as the seller, handle all costs, including shipping, VAT, and any duties. This can be built in to the selling price and prevents unexpected charges for your UK customers.
IV. Handle UK VAT and Duties Compliantly
For goods under £135/€150, no duties apply but UK VAT, in the majority of cases, does. For goods over that threshold, customs duties may apply (based on the HS Code and Origin) and which are due to HMRC on arrival of the goods.
If offering DDP Incoterms and you do not have a commercial entity set up in the UK, as an Irish operator, there are a number of ways in which you can deal with payment of charges:
- If your packages are under a particular size, you can find a carrier who will manage the DDP services, customs declarations and charges on your behalf. In this instance if you are not registered for VAT in the UK, you cannot claim it back. Duties will always be a dead cost.
- If you opt to use an alternative freight forwarder, you will need to register for UK VAT, charge it at point of sale and submit it to HMRC in regular returns. You will also need to be registered to pay duties on arrival of the goods.
- You can look into a having a distributor based in the UK so VAT and duties will be taken care of prior to your goods reaching their final destination.
Each option has their pros and cons and should be well researched so as to figure out the best and most cost-effective and efficient option for you, your product and your customers.
Depending on your product there may be other logistical issues to consider but by managing the steps wisely, Irish exporters can avoid delivery delays, unexpected costs, and ensure a smooth and pleasant experience for their UK customers.
Onwards and Upwards Peeps!
