How to Reduce Import Duty Costs Legally

Managing import duty costs can be one of the most complex parts of coordinating international trade – and it’s one of the most important, too. Failure to appropriately manage import duties can present a range of challenges for businesses, so it’s vital to have a clear and informed overview of how duties work and what is owed.

For businesses transporting large volumes of freight, duty costs can become expensive. Understanding ways to legally reduce import duty costs can make a real difference to the cost-effectiveness of your operations.

At Allegro Freight Forwarding, we provide freight forwarding services with a personal touch. In this article, we offer guidance on how to reduce import costs legally, helping your business minimise its outgoings without breaking any regulations.

Duty Relief Programmes in the UK

Duty relief programmes serve to reduce how much customs duty must be paid on certain goods. Access to duty relief can also depend on what a business does with its goods, or where they’re from.

Each country will have its own distinct duty relief procedures, so it’s important to be clear on the duty relief protocols of all nations involved in your trade. Below, we outline some duty relief programmes in operation in the UK.

Temporary Admission

Temporary admission offers duty relief and VAT relief for your imports, provided that the goods in question will be re-exported within a given period of time. This is typically a two year window, but can vary depending on what the goods are.

Criteria for this method of duty relief include:

The payment of a deposit to HMRC – often this is the amount of import VAT that would be due. This is typically refunded if deadlines surrounding re-export have been met.
Authorisation from HMRC prior to import – applying at least one month in advance is recommended.

It should be noted that items that are imported with a purpose of being processed or repaired do not qualify for temporary admission duty relief.

ATA Carnets

This method allows for temporary exports outside of the UK, contingent on reimportation back into the UK. In the event of an ATA carnet document being presented at customs, goods can travel duty and import free, into a country outside the UK, for one year.

The use of ATA carnets does not waver obligations for freight managers to comply with licencing controls surrounding restricted or prohibited goods.

It should be noted that not all countries accept ATA carnets. So, it’s important to carry out the necessary checks and research prior to their use.

Returned Goods Relief

Returned goods relief can be claimed on re-import in instances such as goods being exported on loan or for use in research.

To qualify for returned goods relief, the goods must return in an unaltered state to that when they were exported. This includes there being no changes or repairs to an item, even alterations that may be seen to increase an item’s value prevent qualification for this relief.

Outward Processing Relief

This type of duty relief might apply in instances such as when goods are returned to the UK after being processed, repaired or replaced elsewhere.

Outward processing relief reduces the amount of VAT and duty paid. This relief will not remove tax liability but can make a significant impact on how much is paid overall, with the amount that is due often reflecting the ‘added value’ acquired through processing.

Outward processing relief requires authorisation from HMRC.

Inward Processing Relief

In reverse – inward processing relief refers to the importing of goods for processing before re-exporting. This relief does also require authorisation but may offer businesses access to reduced customs and VAT.

How to Apply for Import Duty Exemptions

As previously noted, most import duty exemptions must be approved by HMRC – however, as previously noted, the procedures relating to import duties (including application), can vary from one country to the next.

Steps to follow when applying for import duty exemptions are:

Prepare your documentation – this includes all documents that might be used as evidence for your claim, for example: invoices, shipping details and other documents relating to your goods.
Contact relevant authorities – in the UK, this will be HMRC. If you’re looking to claim relief on goods moving elsewhere, be sure to identify who your authorities are.
Ensure compliance – based on advice from the relevant authorities, be sure that conditions to your relief are adhered to and documented.

Using Trade Agreements to Reduce Duties

Trade agreements can be made between countries to establish rules for moving, buying and selling goods between the two.

The rules created by the trade agreement often reduce restrictions on trade – which not only simplify the movement of goods, but make it cheaper as well.

At present, the UK has over 70 active trade agreements that businesses can utilise to reduce costs. So, keeping up to date on new and existing trade deals can make a real difference for businesses!

Mistakes to Avoid when Claiming Duty Relief

Issues with Paperwork

This might mean the required paperwork is missing, incomplete or incorrect, all of which can put the brakes on your claim being processed.

When preparing to claim duty relief, getting all the relevant paperwork present and correct is essential to keeping your claim running smoothly.

Incorrect Valuation

As noted above, the value of goods is central to claiming duty and tax relief on an import. For this reason, valuation errors can create challenges when processing applications – potentially resulting in delays or unnecessary rejection. As such, it is important to be as accurate as possible when assessing the value of your goods.

Failure to Meet Conditions

With relief schemes such as temporary admission, it is important that the movement of goods is coordinated to meet a scheme’s conditions. For example, the necessity for goods to be re-exported after a given duration. Failure to meet this requirement will prevent relief from being granted.

Import Support with Allegro Freight Forwarding

The main ways you can cut import costs legally are to pay attention to the regulations, take advantage of any relief available to you, properly declare your goods – and work with a trusted freight forwarding partner.

Allegro Freight Forwarding are experienced freight forwarders offering tailored end-to-end solutions for businesses. Our range of services support air, sea, road and rail freight – covering all the bases to help your assets reach their destination without breaking the bank.

The team at Allegro Freight Forwarding helps take the hassle out of freight management while granting you peace of mind that your shipments are in safe hands. For more information about our services and how we can support your business, contact us today.

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