I have a customer who wants to order a component in the UK that should be delivered to his supplier in China that will be built into a product in China then delivered back to the UK In effect free issued to the manufacturer in China
How can we export when the customer is in the UK. How do we value it for customs and who pays import duty and tax?
Your question covers both the fiscal and physical – they are related but it is best to take one step at a time.
Who is the exporter of record and the importer of record does not depend on ownership of the item or who does the work. It does depend on who is willing to take legal responsibility for the shipment. If you have the contract correctly laid out this will be clear.
You know the price of the item you are selling to the UK customer so that is the value for export.
Who pays import duty and tax into China is a contractual issue between your UK customer and his supplier in China. I would suggest that the Chinese supplier should handle this and pay anything relevant. He may be able to use import regimes to avoid paying the duty and tax as he will be re-exporting the item.
I would also recommend that the Chinese supplier also manages the re-export from China.
When the product from China is imported to the UK I would recommend that the same company manages the import as managed the export. It is important to know in value terms what percentage of the value of the finished product can be attributed to the exported component. If it is only a small percentage then it is not worth worrying about it and it would be easier to simply import the finished product as a completely new item with normal import duty and tax to be paid based on the tariff classification of the finished product. If it is a significant percentage then work can be done to separate out the component and the rest of the item for import purposes.
Please feel free to contact me directly to go into further detail if you wish.
Information on the Customs requirements for exporting are given in HMRC Public Notice 275. All notices can be found on our website www.hmrc.gov.uk under Quick Links > Library > Official Statistics – Publications – Notices, Info Sheets & Other Reference Materials > Import, Export & International Trade. The Public Notices are in numerical order.
Outward Processing Relief’ would normally be the appropriate relief to consider for items which need to be sent outside of the EU for repair or processing.
Outward Processing Relief enables you to obtain relief from Import Duty when you re-import goods that have previously been exported for processing or repair, as long as you can demonstrate that the exported goods were used to produce, or are incorporated in the products you are importing.
Further information on ‘Outward Processing Relief’ is contained within our Public Notice No. 235 which again can be obtained from our website by following the links above.
HM Revenue & Customs
Customs International Trade & Excise