Importing into the UK: 4 essential tips for businesses

Importing into the UK. Night flight

Importing into the UK: 4 essential tips for businesses

We live in a global market, and for business that means a world of opportunity. Importing into the UK can help to grow a business in many ways. Many import goods or materials for their business because they can be purchased below domestic prices. Some companies import foreign products because they are popular in the UK, such as champagne, coffee, famous designer brands, or other products famed for their non-British origins. Other companies need to buy inventory such as their machinery from abroad because there is no equivalent provider in the UK. Then there are those who build their entire business around importing and exporting. They act as conduits for the distribution of goods between countries.

As in all areas of business, a decision to start importing into the UK is a case of weighing up risk versus reward. Importing can be complicated and time-consuming, with regulatory and legal hurdles adding costs. Overcoming barriers of distance, language and culture when dealing with overseas suppliers is not always easy, and there are risks associated with agreeing contracts, logistics and payments

However, success in business is about managing risk, not avoiding it. Here are the key areas to consider when weighing up importing as an option. Things you will need to know and tips on how you can set yourself up to make the potential rewards work for you.

1. Make a Plan

Everything you do in business should have clear objectives and goals. Start from these – identify the aspect of your business which you think importing will improve. For example, are supply costs eating into profits? Has your market research suggested a particular product would be popular? Can you put figures on what you want to achieve, and would importing help you get there?

Once you have a clear set of goals, draw up an import plan and make sure it aligns with your overall business strategy. Your plan should cover:

Quality controls:

Do the goods and materials you intend to source meet statutory UK regulations? Will they meet with the expectations of your customers? Do they fit with your processes? You need to understand how you’re going to find out this information.


Importing into the UK adds costs to your business, and takes time and effort. Do you have the right resources? Will the venture still be profitable?

Long-term strategy:

Is your commitment or need for importing long-term or just a one-off? Given the investment demands of importing, it may not be worth it to meet a one-off need.

Risk management:

What contingencies do you have in place if things go wrong? What if the goods are late, lost, or damaged?


Do you understand customs procedures and international payment procedures? Is it worth training someone up in-house, or do you want to recruit a third-party specialist?

2. Be Diligent with Suppliers and Contracts

The same rules apply to working with a supplier abroad as with a domestic supplier. The main issues are distance, language differences, and, most significantly, arranging contracts across legal jurisdictions.

Distance affects relationship building. In the digital age, communication is not a problem, but nothing can replace meeting a potential supplier in person, and that obviously demands time and money.

Even if you cannot meet in person to thrash out a deal, you must perform background checks on suppliers as thoroughly as possible. Look for references and reviews, which is more straightforward with suppliers who already work with UK firms. Check any supplier is creditworthy and make checks on any sub-contractors.

Dealing with established exporters could also get round potential language barriers – if they are experienced dealing with UK companies, they will probably have staff who speak English. Employing a trade forwarder or import agent will also give you a translator (more on this shortly).

How to deal with the legal hurdles of trading across borders is a more pressing issue. Contract negotiations are crucial. Here are things to consider when drafting a sound import contract:

  • Use international legal language so the terms are binding in all countries.
  • Be explicit on delivery and payment terms.
  • Negotiate incoterms: who is liable to pay insurance and transport costs? Who is responsible for clearing goods through customs?

It is worth considering professional third-party assistance, either from freight forwarders, import agents or import legal specialists. Weigh up if the additional cost off-sets the time and risk of making mistakes.

Finally, when importing into the UK, plan for a worst case scenario. If delivery is delayed, damaged or lost, who is liable? Have you protected your business? For example, it might be worth ‘over-stocking’ on deliveries so if something does go wrong in the future, you still have a supply in reserve.

3. Organise your finances

Importing incurs added costs in transport, insurance, import duty and taxes. Budget for these carefully to ensure importing into the UK is viable for your business.

Bear in mind the effect of currency exchange rates – although it might seem like you are getting a great deal when you do your initial pricing, a sudden fluctuation in exchange rates can make a big difference by the time you come to buy.

Look into finance arrangements to help with cash flow. Ask if your supplier offers credit, although considerable discounts can be gained by paying cash. A trade finance service can help you weigh up the best for your business, but choose a service which specialises in imports and which can pay suppliers abroad directly.

Finally, be clear on Terms of Sale and Shipping. This impacts on the amount of import duty and VAT payable on arrival in the UK, and getting it wrong can leave you with a nasty surprise.

4. Handling customs

The red-tape and regulations surrounding revenues and customs is probably the most complex aspect of importing into the UK. Customs clearance at UK borders is managed by the CHIEF system (Customs Handling of Import and Export Freights). This is an electronic logging system for customs declarations, monitoring the movement of goods and liaising with EU border controls (see below).

The information required to complete customs clearance is complex, and getting it wrong can end up costing you dearly in excess duty or tax. Much of the complexity stems from the tangled web of trade agreements and customs regulations which dictate import tariffs and tax. These generate a commodity code depending on what your goods are and where they come from, which again must be included in CHIEF. Again, specialist customs brokers will do the work for you.

Here are some of the main points to bear in mind about customs regulations when importing from different parts of the world:

Importing from countries outside the EU

When importing into the UK, all goods entering the UK from non-EU countries must be declared at UK customs using CHIEF. They are liable for import duty and VAT, dependent on low value limits and exemptions.

Duty rates are determined by UK trade tariffs and by what the goods will be used for. The duty rate needs to be calculated in advance so it can be added to CHIEF. VAT is charged on the total value of the goods entering the country, which includes importing costs and duty paid. There are duty exemptions of goods from certain countries known as ‘preferences’, which depend on UK trade agreements with those countries. VAT can sometimes be claimed back from HMRC if standard conditions for tax deduction are met.

Goods will not be released by UK customs until duty and VAT are paid.

Importing from EU countries

As an EU member, the UK is part of the European Economic Area (EEC), otherwise known as the free market. Any goods originating from the EU are not liable for import duty, but VAT still has to be paid.

Duty on goods originating from outside the EEC has to be paid at the point they arrive in the EU. So for example, if you were importing goods from China via Rotterdam, customs clearance and duty would take place in the Netherlands. You would not pay duty when the goods entered the UK.

Importing from the EU post-Brexit

The rules on trade with and via the EEC are liable to change following the UK’s decision to leave the EU. The exact details are yet to be negotiated, but there are three likely scenarios for the UK:

UK exit the EEC entirely

World Trade Organisation (WTO) rules would govern imports from all European countries initially, and they would follow the same rules as for non-EU countries. Duty would be levied on all goods originating in EU countries and so-called ‘Free Movement’ would end. UK importers bringing in goods from outside the EU via Europe would have to clear customs and pay duty a second time once they reached the UK.

The UK remains part of the EEC

The UK could remain a member of the EEC without being a member of the EU, like Norway and Switzerland. Goods originating from EU countries could still be imported duty free, but the benefits of Free Movement rules for goods brought into the EU from non-member countries would end.

The UK brokers a ‘customs agreement’ with the EU

Similar to Turkey’s deal with the EU, UK companies would continue to benefit from Free Movement rules, so they could transit goods from outside the EU via European ports without having to pay duty again on entering the UK.

The Bottom Line

Importing into the UK offers mature, established businesses a fantastic option for lowering costs and gaining the competitive advantage they need to grow. The processes can appear complex and there are risks – but if your business is able to commit the time, effort and resources required, the rewards can be fantastic.

Importing into the UK: 4 essential tips for businesses