A Guide To Importing Goods Into The UK

If you’re looking to start a business in the UK either by expansion or as a local, importing goods into the UK is a process that requires some careful planning and consideration of all the relevant regulations. 

In this article, we’ll cover the most important legal aspects that need to be taken into account when importing goods into the UK. We’ll discuss: 

• VAT taxes
• Freight forwarding
• Product labelling
• Customs duty 
• Product liability 
• Insurance
• Record keeping
• Other relevant documents 
• Tariffs 

When Would I Import Goods?

A lot of businesses tend to import all or part of the goods for the products they are supplying to their customers. As a result, getting familiar with import and export practices are usually essential in smoothly running a business. 

For the purposes of this article, we’ll focus on importing goods into the UK and the right way to go about it. 

Do I Need To Pay VAT On Imported Goods?

Value Added Tax (VAT) does need to be paid on imported goods. It’s also known as a Goods and Services Tax (VAT) and, like most other types of tax, it’s calculated based on your individual circumstances. 

If you’re thinking about calculating the VAT for the goods you plan on importing, you can read more about it here. 

What Is Freight Forwarding?

Freight forwarding involves hiring a third party as a ‘middle person’ between the business needing the items shipped to another destination and the transportation services. A freight forwarder aids with a number of important aspects when it comes to importing and exporting goods. 

For example, they:

• Negotiate deals for their clients
• Aid with the relevant documentation 
• Manage customs 
• Organise the storage of the goods
• Sort out insurance

There’s no requirement to hire the services of a freight forwarder, however, they can be pretty helpful. If you’re thinking of engaging a freight forwarder, it’s good to get a Freight Forwarding Agreement first. 

What Is A Freight Forwarding Agreement?

A Freight Forwarding Agreement is a legally binding contract between you and the freight forwarder. The agreement essentially lays out the terms of your business relationship. 

The agreement usually covers matters such as: 

• Payment date and method
• What happens if the goods are damaged
• The process if there is a delay

A freight forwarding agreement can be customised to suit your specific needs, so let us know if you need one and we’d be happy to help! 

Product Labelling Requirements UK

Product labelling refers to providing details about an item on the label of the package. Not all products need to be labelled, however, some do require labels. If your products need to be labelled, be transparent and accurate with the information you provide. 

A label will usually contain information regarding:

• A description of the item(s)
• The use of the item 
• Weight and size
• Materials the product was made from 
• Where the product was made
• Monetary value of the product
• Details on anyone that endorses the product 

Ensure you are careful as failing to label products correctly or providing the wrong information can lead to prosecution as well as goods being seized. 

Customs Duty

Another tax you will need to pay is customs duty. This is the tax that is paid for importing and exporting goods. 

All goods that are imported into the UK require customs duty if they are excise goods or worth more than £135. Customs duty is charged both on the value of the goods, as well as packaging and postage. 

You can read more about customs duty in the UK here. 

How Can I Limit My Liability?

When importing goods, there is the aspect of liability to take into account. Liability is present in a number of different circumstances, however if you’re thinking of importing goods into the UK, then product liability is high on that list. 

What Is Product Liability?

Product liability refers to who is responsible when a product is faulty or damaged. When manufacturers and makers of a product are outside of the UK, and  something is wrong with the product, the liability falls to the person or organisation that is responsible for importing the goods. 

Understandably, this can seem unfair. Therefore, it’s essential that your contracts exclude liability for products. 

Excluding Liability For Negligence In A Contract

If a manufacturer or provider of a product has been negligent and that has resulted in the harm of another, then contractual clauses in contracts can ensure they are held liable for their negligence as opposed to you. 

Essentially, any written agreements you have with your manufacturer (you must always have a written agreement in place) should have a clause that excludes your liability for any negligence on your behalf. That way, if a customer is hurt due the negligence of another, you are not burdened with the legal consequences. 

It’s best to seek the help of a legal professional when adding liability clauses to contracts – contact us and we’d be happy to assist!

Do I Need Insurance?

Insurance is another way to keep your business protected. When shipping goods from one destination to another, there’s a huge transit in between where you have no control over what is happening. 

This can be stressful, so many business owners choose to get insurance to make sure they are covered in case something goes wrong. There are different types of insurance depending on your needs. 

For instance, open cover insurance will cover every import journey to the UK, whereas a specific policy can be used for singular shipments. The kind of insurance you choose to get will be based on your specific preferences. 

Keep in mind that there’s no legal requirement to have an insurance policy prior to having goods imported. However, you might like to consider additional coverage. 

Should I Keep My Records?

Record keeping is a legal requirement when importing goods into the UK. The HM Revenue and Customs (HMRC) possess the authority to request these documents to conduct an audit, so it’s essential all your records are accurate, up to date and are as detailed as possible. 

The kinds of records that should be kept include: 

• Customs declarations
• VAT and excise documents 
• Transport documents 
• Legal agreements 

As you need to have these documents on hand and ready to be accessed within a reasonable timeframe, it’s recommended they are stored in a secure way – you don’t want to lose these! 

What Other Documents Do I Need?

Transporting goods over international seas can mean being engaged in business transactions with a few others. It’s great to work with different businesses and people who can provide a service that aids your business goals. However, it’s equally important to make sure you’re protected when collaborating with them, which is where having strong agreements make all the difference. 

We’ve listed some of the most important ones for you. 

Supply Agreement

Suppliers are those agents that provide something, such as materials to your business. As your supplier will likely play an important role in your business, having a contract in place can help both parties establish their rights and obligations to one another. 

This can also help mitigate risks around losing equipment during the shipping process or what happens if the items that arrive are incorrect. 

Supply Agreements cover:

• What goods are to be supplied
• The price and delivery of the goods 
• Dispute resolution 
• Liability of either or both parties 
• Warranties 

A Supply Agreement can help in managing expectations and keep the relationship between you and your supplier a positive one.  

Contractors Agreement

Businesses like to hire out contractors to carry out certain duties without having to hire an internal employee. Contractors are usually used on a more short term basis. 

Example Tina needs a graphic designer to create a logo for her business. She hires Tom, a freelancer for a period of one month, where he’s assigned the task of creating Tina’s logo within that time frame. During their contract, Tom sends Tina updates on what he’s working on and in return, Tina provides feedback. At the end of the month, Tom has a logo ready for Tina.

Their arrangement is known as a Contractor Agreement, as Tom was hired externally for a limited period of time, to complete a specific task.  

Hiring a contractor’s services can be highly beneficial, however we recommend having a contractors agreement in place. A contractors agreement outlines: 

• The scope of work
• Payment
• Contract termination
• Duties and responsibilities
• Confidentiality
• Liability 

This way, both parties are aware of their respective rights and responsibilities towards one another. 

International Shipping T&Cs

If you’re selling outside of the UK, then you should be looking into having international shipping terms and conditions. The document sets out the terms for shipping on orders outside of the UK and it’s important to distinguish it from the terms and conditions used for local orders. 

This is because there are more risks and considerations when shipping internationally. Matters such as currency, international shipping costs and damages are different when the goods are travelling internationally, so the terms and conditions must account for this.  

What Should I Know About Tariffs?

Tariffs impact the export and import of goods, so it’s important to stay updated on them. They can also change at any time without warning so if you’re importing goods into the UK, be consistent in checking for any changes. The Global Online Tariff tool provided by the government can aid in staying in the loop with traffic and duties. 

Key Takeaways

Importing goods into the UK requires taking into account a number of different factors, agreements and regulations. However, if done correctly, importing goods can be a great benefit to your business. 

The key is to not get overwhelmed and contact a legal professional to aid the process. To summarise what we’ve discussed: 

• VAT and customs duty will likely need to be paid
• A freight forward can be useful when securing transportation for the goods 
• If you’re required to label your products, it should be done in accordance with any rules and regulations
• It’s important to be proactive when it comes to product liability, especially in light of another’s negligence
• Consider insurance if you’re interested in additional security 
• Collect and maintain records of all important documents 
• Look into getting additional agreements i.e supply agreement, contractors agreement and international terms and conditions 
• Stay updated on tariffs and duties 

If you would like a consultation on importing goods into the UK, you can reach us at 1800 730 617 or [email protected] for a free, no-obligations chat.

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