What You Need to Know about Customs Compliance in International Trade

As international trade experts, we understand the difficulties surrounding customs compliance for trading businesses. It’s not always easy to ensure you’re following the latest rules and regulations within your sector, especially when there are other important factors to consider such as your efficiency, stock management and ROI.

At clearBorder we’re dedicated to providing simple, accessible solutions to the main issues businesses face at the border, and in this guide we aim to support you in your understanding of customs compliance: from the information that may be required from you, to the penalties you may face if you fail to comply.

Why is it Important to be Aware of Changing Customs Regulations?

As an international trader, you will likely be aware of the regulations that apply at departure and destination. However, it’s important to note that these regulations often differ depending on the countries involved and the goods being traded. In most cases, trade compliance will consist of several key elements, including:

• Licence management
• Customs management
• Goods classification and valuation
• Incoterms
• Rules of origin
• Tariffs, VAT and excise duties

With so many factors to consider (and this applies to staff across your organisation), changes to customs procedures can easily catch you off guard, leaving you open to challenge from customs authorities and the potential to be fined. By ensuring your company is aware of the latest trade regulations, you not only reduce your risk of incurring these fines, but you also protect your company’s reputation, avoid shipment delays, and thereby increase customers satisfaction. With this in mind, let’s cover some of the key things you need to know about customs compliance.

Information Required by Customs Authorities

If you are required to have a compliance check, you will be asked to provide certain documents as well as additional information about your trading licence and your goods. Be prepared to provide the following:

• Goods specifications
• Trade contracts
• Business bank records
• Import and export paperwork
• Export licences and supporting evidence
• Certificates, licences and attestations

Government bodies can request any information about your business. They may do this as part of routine customs audits (similar to a tax audit) or if they suspect a lack of regulatory compliance. If you fail to provide information that is requested you may face a penalty, so try to ensure you have everything you need to hand. With that said, you may be able to request time to provide information if, for example for personal reasons, you are unable to comply with an instruction within a given timeframe.

What Happens During a Customs Compliance Check?

A customs compliance check may happen at any time and can involve a number of different compliance processes. The most likely circumstance is that you will be asked to provide certain information, as mentioned above, regarding your goods, bank records or customs declarations. You must provide this as soon as possible, in order to avoid additional strict compliance procedures further down the line.

Compliance checks can also involve visits to your business premises. HMRC members or customs brokers must be granted access to your premises upon request. You must also provide access to your home if your business is run from there or it is being used to store import or export goods. During a visit to your business premises, you may encounter officials doing the following:

• Inspecting documents you have yet to provide
• Inspecting any import or export goods
• Inspecting your business records
• Checking authorisations, licences and ensuring you are adhering to customs regulations
• Taking further details with regards to your premises, goods, supply chain, internal stakeholders and customs requirements
• Taking identification samples

While compliance checks can feel a little unnerving, you needn’t worry about receiving any fines or penalties just yet. You will be able to receive support if something needs to be put right, and there is usually ample time to do so. For example, if you are found to have problems with your business accounts, in the majority of cases you can agree to actions that need to be taken before you receive any penalties.

Potential International Trade Customs Penalties

If you are found to have broken European Union, other national or UK customs laws during a customs compliance check, customs authorities will attempt to recover what’s owed to tham and may seek a prosecution.

As stated here, “The Customs and Excise Management Act 1954 (CEMA) sets out the penalties for non-compliance with export regulations when exporting from the UK. HMRC and the Crown Prosecution Service are responsible for enforcing these penalties”. In the majority of cases, you will receive a warning letter followed by a financial penalty if the issue brought forward in the warning letter is not resolved within a given timeframe. The maximum penalty is currently £2,500 per contravention, but this will depend on the individual circumstance. You can find out more about penalties, appeals and your rights in this document from gov.uk.

Make Trade Borders Invisible with clearBorder

Good compliance processes will help you avoid fines. But, just as importantly, good compliance will help you import and export more effectively. Good compliance requires robust processes and up-to-date knowledge.

If your company is continuously aware of changing trade rules, with the right systems in place and quality training across your organisation, you can minimise the risk of unexpected customs fines.

Our team at clearBorder is dedicated to helping you ensure a seamless trade process from beginning to end.  We guarantee access to the latest information from the government and resources to ensure customs compliance. Making trade borders invisible might not seem like an easy task, particularly for a large, multinational trading business, but with our support, your entire staff network could be onboard with the most up-to-date, accessible information sooner than you think.

For further information on our training materials and ongoing consultancy, don’t hesitate to get in touch directly with our specialists.