February 5, 2025
We are now four years on from when the United Kingdom (UK) officially left the European Union (EU). According to Gov.UK, the “UK has grown faster than Germany, Italy and Japan and at a similar rate to France. Our service exports are at a record high of £472 billion since the referendum in 2016”
Additional sources state that “the UK was the fifth biggest exporter in the world in 2022, up from sixth in 20211 and achieved £870 billion exports in the 12 months to November 20232”.
While there appear to have been some benefits from Brexit, we are still supporting our previous and new clients with their import and export frustrations into the UK and EU. Four years ago, the recommendation was to apply for a GB EORI number for UK imports and exports (and an EU EORI for the EU). However, this wasn’t the full picture. If wanting to sell the goods under a DDP incoterm, then it was advisable to VAT register as a non-resident in order to recover the import VAT and then find an EU entity to represent the importer at clearance. This was particularly prevalent for companies looking to sell their goods through Amazon, 3PLs and warehouses. A lot of companies went down the route of setting up an EU (or UK) entity to act as the Importer of Record, but we still find that VAT registering and having us ‘indirectly represent’ the client proves quicker and cheaper.
Whilst most German freight agents have always had a strict policy to not act as the indirect representative, we have seen over the four years, more UK agents realise the risk providing this service. This has been largely through BIFA (British International Freight Association) notifying their members of what it means to be an Indirect Representative and have been inundated with questions about the risks and potential pitfalls. As such, some Freight Forwarders now refuse to provide this service, which can make importing more complex for non-UK companies.
HMRC have also tightened the rules on what an established company is. No longer can a foreign company set up a ‘letterbox company’ in the UK and have it act as the Importer of Record. The company must now be of substance. This includes having a physical premises and an employee should a customs officer wish to visit the premises. We learnt of a freight forwarding company that directly represented what they thought was a UK company but was actually simply PO Box owned by a Chinese manufacturer. As the freight forwarder had acted as the declarant, they were deemed the ‘indirect representative’ for the shipments (becoming jointly and severally liable for the import taxes) and billed £600,000.
How can we help?
Going forward, we continue to support freight forwarders and customs agents through our customs representation. While the import and export process and risks are better understood after Brexit, there still needs to be better guidelines available for all involved with moving goods internationally. Will things change in the next four years? Possibly, but we’ll be here to support our clients navigate the complex world of import and export.
Source 1: UNCTAD Goods and Services (BPM6) Source 2: ONS UK trade November 2023
For full details on the report, please visit the .Gov.uk website here.