UK Customs Academy

International markets offer huge opportunities for UK businesses. Finding and developing new markets for products is a hugely valuable avenue for expansion. For first-timers, however, even the terminology can be daunting.

Here is a straightforward explanation of the key export terms that new exporters are likely to encounter related to the movement of goods overseas:

Ad valorem

Customs Duty is usually based on the customs value of goods and is usually calculated according to the value – 'ad valorem' in Latin. Most goods are taxed in this way, although sometimes different criteria are used such as weight, dimensions, quantity, or some other criteria. For instance, flour is taxed by weight and clocks are taxed by quantity.

Agent

An individual or firm that serves as the foreign representative of a domestic supplier and assists a business in transporting and/or selling their products abroad.

Airwaybill

A transport document used when goods are transported by air freight, typically issued by the carrying airline or freight forwarder. It acts as a receipt for the goods being shipped, and confirms the terms and conditions of the contract of transport

Alongside

Goods to be delivered ‘alongside’ are to be placed on the dock or barge within reach of the ship's lifting tackle so that they can be loaded aboard the ship.

Anti-Dumping Duty (ADD)

This is an additional Customs Duty on imports chargeable to certain products and originating from certain countries. It provides protection against the dumping of goods in a country at prices substantially lower than the normal value. It is charged in addition to, and independent of, any other duty to which the imported goods are liable.

APHA

The Animal and Plant Health Agency (APHA) works to safeguard animal and plant health for the benefit of people, the environment, and the economy.

Associate Trade Agreement (ATR)

The EC-Turkey Associate Trade Agreement (ATR) is a special agreement that applies mainly to industrial goods. It removes Customs Duty on goods which arrive from Turkey into the UK under the current EU ATR scheme (and vice versa). To qualify, the goods can be of any origin, but they must be in free circulation, meaning imported into Turkey/UK and all duties paid.

ATA Carnet

A set of documents used when goods are despatched internationally as temporary exports (for instance for exhibitions), the carnet replaces formal customs clearance formalities on entry into, and exit from each country, and avoids the need to pay import duties. A carnet is usually obtained in advance from Chambers of Commerce.

ATR (Movement Certificate)

The ATR is a preference document and is also known as a movement certificate.

Authorized Economic Operator (AEO)

A status awarded to traders within the UK who demonstrate that they achieve high standards of supply chain security and / or compliance in customs matters. AEO status is a part of an international “Trusted Trader” programme, designed to increase global supply chain security. Companies who achieve AEO status can benefit from simpler and less rigorous customs controls, access to customs procedures, and lower requirements to provide financial guarantees.

Bill Exchange

A written unconditional order in writing from one party (the drawer) to another (the drawee), to pay a specified amount either immediately (a sight bill) or on a fixed future date (a term bill) for payment of goods and/or services. Used primarily in international trade, it is non-interest-bearing.

Bill of Lading

A legal document between the shipper and a transportation company that confirms the terms of a contract under which freight is to be moved by sea between specified points for a specified charge. It must be signed by an authorised representative from the carrier.

It acts as a receipt for goods shipped and identifies the nature of the goods, the number of packages, their quantity and weight and their condition at the time of loading. Bills of lading can also act as documents of title.

 

A consignee usually needs at least one original to take possession of the goods.

 

Binding Tariff Information (BTI) decision

A Binding Tariff Information (BTI) decision is a written tariff classification for goods from HMRC. It provides assurance that goods have the correct commodity code, and it is generally valid for 3 years.

Bonded Warehouse

A bonded warehouse is a building, or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. See also customs warehouse.

Border Force

Border Force is a law enforcement command within the Home Office. It secures the UK border by carrying out immigration and customs controls for people and goods entering the UK.

Bunker Surcharge, also Bunker Adjustment Factor (BAF)

“Bunker” refers to fuel used by vessels, planes and other conveyances. Carriers may typically charge a Bunker Surcharge over and above standard freight rates, in order to compensate for frequent fluctuations in the cost of fuel, as an alternative to constantly adjusting freight rates. Surcharges may be in the form of a percentage of the freight cost, or a fixed amount per freight unit.

C79 VAT certificate

Importers can reclaim import VAT (input tax) on their monthly/quarterly VAT returns using a C79 VAT certificate.

C88

See Single Administrative Document (SAD)

Capital Gains Tax (CGT)

A tax on the profit when an asset is sold that has increased in value. It is the gain that is taxed, not the amount of money received.

Cargo Insurance (also known as "marine" or "goods in transit" insurance)

Insurance undertaken by an exporter or importer to protect themselves against the risk of loss or damage to goods in transit, over and above the limited liability cover offered by carriers or forwarders. Cargo insurance is required under some Incoterms®, and may be a requirement when selling through a letter of credit.

Certificate of Conformity (CofC)

A document that certifies that a product complies with minimum production, technical, and safety standards.

Certificate of Inspection

Following an inspection, usually performed by a third party, this document certifies that goods were correct and in good order, immediately prior to their shipment.

Certificate of Origin

This certificate proves that your goods have been manufactured or processed in a particular country. A Certificate of Origin is usually required for overseas customs clearance and can determine the level of duties payable.
It is generally issued by a Chamber of Commerce and is required by some countries to establish the place of manufacture or production of the goods.

The document should include the name and address of the exporter, the manufacturer (if different), the importer and a description and origin of the goods.

CHIEF (Customs Handlingof Import Export Frieght)

This is the computerised operating system and interface used in the UK by H.M. Revenue & Customs which is responsible for controlling and recording all of the UK’s international trade movements. It links UK Customs offices to thousands of sea-and airports, inland facilities, freight Customs agents, UK businesses and European Customs authorities.

Civil Penalty

A financial penalty imposed by a government agency as restitution for wrongdoing. The civil fine is not considered to be a criminal punishment because it is primarily sought in order to compensate the agency for harm done to it, rather than to punish the wrongful conduct. Usually a civil penalty will not result in a prison sentence or other legal penalties. For example, if a person were to dump toxic waste in a national park, the park authority would have the same right to seek to recover the cost of cleaning up the mess as would a private landowner, and to bring the complaint to a court of law, if necessary.

CLAUSE

A term inserted onto a transport document, such as a bill of lading regarding the condition of the goods. This is usually a negative comment, reflecting actual or possible damage to goods or packaging, so a “claused bill of lading” can have negative implications for a seller and buyer. A claused bill of lading may also be referred to as a “foul” bill, while a “clean” bill of lading, containing no adverse clauses is considered as desirable, and is usually required for letters of credit.

"Clean" Bill of Lading

See “clause” above, a clean transport document is one containing no adverse comment about the condition of the goods.

Clearance

The documented permission to pass that a national customs authority grants to imported goods so that they can enter the country, or to exported goods so that they can leave the country. The customs clearance is typically given to a shipping or customs agent to prove that all applicable customs duties have been paid and the shipment has been approved.

CMR (Convention Relative au Contrat de Transport International de Marchandises par la Route)

A transport document that gives information about the cargo that is being transported. CMR only applies to road transport in European countries as well as additional countries in Asia and Africa. CMR sets out terms and conditions for road haulage.

Comercial Invoice

The commercial invoice is the primary document used in international trade to provide information about a shipment or transaction and identify products being shipped. It is used to support customs declarations in valuation and duty determination, and when submitting certificates of origin or other documents for certification. In many cases a commercial invoice will be the same as a sales invoice, although specific version, containing particular information may be required in certain circumstances, or when trading with specific countries.

Commodity Code

A code for classifying goods for import and export in order to fill in declarations, to check if there is duty or VAT to pay, and to find out about duty reliefs. This is based on the WCO's Harmonized System.

Commodity or Tariff Code

A sequence of digits, used to identify goods for customs purposes. When trading internationally, you will need to know the correct commodity code for your goods so you can fill out customs paperwork correctly. UK and European Union tariff codes are usually 8 digits long for exports, and 10 digits (or sometimes more) for imports.

Most tariff codes globally are based on the Harmonized System of classification, and are often referred to as Harmonized System, or H.S. codes. The harmonized system covers only the first 6 digits of codes.

 

Common Agricultural Policy (CAP)

CAP puts import controls on food, agricultural and horticultural products and their derivatives. Excise charges are extra duty on things like alcohol, tobacco, and hydrocarbon fuels.

Common Agricultural Policy Licensing (CAP Lic)

Licences for the export and import of agricultural products. A licence may be needed to export or import to or from a non-EU country.

Consignee

Who the goods are being sent to (the importer).

Consignment

Delivery of goods from an exporter (the consignor) to an overseas party (the consignee) under agreement that the agent sell the goods on behalf of the exporter.

The consignee sells the goods for commission and remits the net proceeds to the consignor. The consignor retains title to the goods until the consignee has sold them and bears legal responsibility for paperwork and customs declarations made.

 

Consignor

Who is sending the goods (the exporter).

Container

A steel transport unit, constructed in standard dimensions and structure, which enables cargo to be moved quickly, safely and efficiently by sea, road, rail or inland waterway.

Controlled goods

Controlled military and dual-use items that require an export licence.

Countervailing Duty (CVD)

CVD is a Customs Duty imposed on goods which have received government subsidies in the originating or exporting country.

Country Whence Consigned (CWC)

This is the country where the goods are being sent from (this may be different to where they were made).

Credit Reference Agency

A company that assesses a person's or an organisation's credit standing and/or ability pay back money they are lent or provided on credit terms.

Customs Brokers

A specialist company with expertise that includes tariff and customs laws, rules and regulations for the clearance of imported or exported goods or merchandise from customs authority, and the preparation of export or import documents including computation and payment of duties, taxes and other charges. Custom brokers may be employed by, or affiliated with, freight forwarders, independent businesses, or shipping lines, importers, exporters, trade authorities, and customs brokerage firms.

Customs Comprehensive Guarantee (CCG)

An agreement to cover a customs debt to guarantee the duty payment.

Customs Declaration

A legal document that lists the details of goods that are being exported from or imported into the UK/EU.

Customs Declaration Service (CDS)

CDS will replace the existing Customs Handling of Import and Export Freight (CHIEF) system, with all declarations taking place on CDS.

Customs Duty

A tax levied on goods imported. Customs Duty is there to raise revenue, and/or to protect domestic industries from (subsidised) competitors abroad.

Customs Frieght Simplified Procedures (CFSP)

HMRC has introduced simplified customs procedures to reduce formalities at customs and to speed up delivery.

Customs Handling of Import and Export Freight (CHIEF) system

The system that records UK customs declarations for goods that are being exported and imported by land, air, rail, and sea.

Customs Intermediaries

Customs brokers, freight forwarders and clearing agents are all customs intermediaries that help exporters and importers to declare and move goods internationally. Services include preparation of shipping and export documents, warehousing, booking cargo space, negotiating freight charges and freight consolidation.

Customs Notice

Documents issued by HMRC which bring together the law and guidance relevant to a particular aspect of customs.

Customs Procedure Codes (CPCs)

HMRC uses CPCs to identify the reason for the export or import and therefore the relevant customs regime.

Customs Special Procedures

Most imports are brought into free circulation. If not, there are 4 Customs Special Procedures covering transit, storage, specific use and processing from which a business can select.

Customs Supervised Exports (CSE)

CSE enables an export declaration to be made inland.

Customs Union

A form of trade agreement between two or more countries. It means they decide not to impose tariffs (taxes on imports) on each other's goods and agree to impose common external tariffs on goods from countries outside their customs union. Setting common external tariffs is what distinguishes a customs union from a free trade area.

Customs Value

This is the amount customs will charge duty on (transaction value + insurance + freight). This calculation will be shown on the E2 form generated by CHIEF once the import entry has been accepted.

Customs Warehousing (CW)

Customs warehouses are operated by warehouse keepers, who must be authorised by HMRC. Customs warehousing allows goods to be held duty and VAT free until they are released to free circulation. See also bonded warehouse.

Dangerous Goods, (also Hazardous goods)

Dangerous goods are cargoes which have the potential to cause harm, damage or loss of life if released. Dangerous goods are subject to strict requirements to ensure safe handling and transportation. Each mode of transport has specific procedures and regulations for dangerous goods, which are governed by international regulations. Dangerous goods can include explosives, compressed gases, flammable liquids and solids, oxidising substances, toxic materials, radioactive substances, corrosive materials, as well as various miscellaneous articles, including lithium batteries and electronic devices containing lithium batteries. Traders dealing in these commodities are advised to seek expert advice.

Dangerous Goods Note

This is not a customs document, but it is used for the safe transport of hazardous goods.

Declarant Status

The declarant status indicates the type of representation for a customs declaration. It shows if a business is acting on its own behalf, or if a direct or indirect representative is completing the customs declaration.

Declaration

All goods leaving the EU must be declared to customs. The declaration is a customs form completed and submitted by the exporter at the port of export.

It provides information on amount, nature, and value of exports to the statistical office for compilation of foreign trade data, and serves as an export control document.

Declaration Unique Consignment Reference (DUCR)

The main Unique Consignment Reference (UCR) is known as the Declaration Unique Consignment Reference (DUCR) and is mandatory for all export declarations.

Declaration Value

Value of a shipment as declared by its shipper to serve as the basis for computation of duties and taxes. It usually reflects the selling or the replacement price of the shipment.

Deductions

These are costs that can be removed from a customs declaration. For example, domestic freight costs, overseas export duties or licence fees, buying commissions, financial arrangements such as a discount for paying early and quantity discounts open to anyone.

Deferment Account

A deferment account is set up with customs, subject to an agreed maximum limit – usually this is sufficient to cover a full month's Customs Duty and import VAT liability. No interest is charged by customs, so in effect an importer obtains up to six weeks of positive cash flow.

Deferment Approval Number (DAN)

This is the unique reference number issued to a business to identify their deferment account.

DEFRA

The Department for Environment, Food and Rural Affairs (DEFRA) performs checks on fruit and vegetables, plants, fish and fish products, and furs.

Department of International Trade (DIT)

The DIT is responsible for promoting British trade and investment across the world.

Direct Representative

A customs intermediary acting in the name of, and on behalf of, another business.

Direct Trader Input (DTI) Agents

Importers, exporters or their agents need dedicated software to use DTI for making electronic declarations. In the absence of this software a customs agent can be appointed to make declarations.

Distributor

An overseas sales partner which buys products, usually in bulk volumes, for resale to individual clients. A distributor will typically generate revenue by negotiating special price rates from the principal, and adding their own mark-up to the resale price. A distributor should normally support the principal’s marketing strategy by providing local promotional and sales activities, as well as after-sales service, and by providing market intelligence.

Documentary Proof of Origin (DPO)

Sometimes import controls require proof of the 'economic nationality' of goods. Usually the local chamber of commerce or Ministry of Trade in the export country authenticates a Certificate of Origin. Sometimes invoice statements may also be permitted.

Dual Use

Goods which have a valid commercial or civilian function, but which could also be used for strategic, or military purposes. They are therefore subject to export controls (see below). Examples of dual use goods include advanced materials, chemicals or metals, high technology machine tools and instruments, software and other technology.

Dual-use Goods

Although not designed for strategic purposes, such as military, dual-use goods can be used without modification in such environments. They include chemicals, computers and telecommunication equipment and specially designed components as well as information needed for the development and production of such goods including blueprints, plans, and models.

Duty

A tax payable to customs when importing or exporting goods. Customs Duty is generally based on the value of goods or upon the weight, dimensions, or some other criteria of the item.

Duty Relief

Duty relief allows businesses to pay less or no duty on imports where duty would otherwise be payable.

E2 Form

Goods imported into the UK receive an Entry Acceptance form (E2) from CHIEF.

Economic Operator Identification Registration (EOIR) Number

A unique identification number used in customs declarations across the European Union to identify the trader (exporter or importer). EORI is generally based on a company’s VAT number. Any business wishing to engage in export or import in the UK should apply to HM Revenue & Customs for an EORI number.

Embargo

An embargo is a government order that restricts commerce or exchange with a specified country or the exchange of specific goods. An embargo is usually created as a result of unfavourable political or economic circumstances between nations.

Entry Acceptance

Goods imported into the UK receive an Entry Acceptance form (E2) from CHIEF.

Entry into Declarant's Records (EIDR)

EIDR allows economic operators to release goods to a customs procedure using a simplified data set via an entry in their electronic commercial records. The contents of the declaration must be available for customs to inspect at the time it is made.

Entry Summary Declarations (ENS)

In order for the goods to even leave a country, the carrier must lodge an ENS (sometimes called a 'safety and security declaration') with customs at the first place of arrival within the customs territory to let HMRC know which goods are bring carried. The ENS must be lodged within certain time limits. For example, if sea transport is used, an ENS needs to be filed by the ship 24 hours before the goods are scheduled to be loaded.

EUR1

The name of a type of movement certificate (a form of certificate of origin) which can be issued within the EU to prove that goods are of EU origin, and therefore qualify for a preferential rate of duty when imported (see “Preferential Trade” below). The form must be stamped by a Chamber of Commerce or customs authority, but the exporter must demonstrate that the goods meet the required conditions of origin.

EUR1 Form (C1299)

A form for claiming preferential duty rates on goods exported to countries that have a preferential trading agreement with the European Union.

Euro

The common currency used in 19 of the 28 member states of the European union; it is currently used in Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain. In addition, Andorra, Monaco, San Marino and Vatican City, which are not EU member states, also have formal agreements with the EU to use the Euro.

European Union (EU)

The EU is a unified trade and monetary body of 28 member states. It eliminates all border controls between members and allows the free flow of goods and people.

Exchange Rate

This is the customs rate of exchange which is updated daily and can be found on gov.uk. For imports the rate of exchange is built into CHIEF so every entry is automatically converted at the current customs rate.

Excise

Excise Duty is chargeable, in addition to any Customs Duty which may be due, for certain types of goods that include alcohol, tobacco and some energy products.

Exit Summary Declaration (EXS)

This is referred to as the combined fiscal and safety and security declaration. It is also known as a pre-departure message. The EXS provides security information to the customs authority in the EU country of exit if the movement involves goods passing through more than one member state and can also provide advance details to customs in the import country to assist with cargo risk assessments.

Export

An export is when a good produced in one country is shipped to someone in another country for sale. The seller of such goods and services is an exporter; the foreign buyer is an importer. Services are outside the scope of this training.

Export Controls

There are several reasons why governments aim to control the export of goods, depending on the nature and destinations of the proposed export.

Certain types of goods are flagged as strategically important as military goods or high tech products that could be used in a strategic military way without modification or have the inherent capabilities to assist in the delivery or manufacture of chemical or biological weapons. The export of strategic goods and technology is the specific remit of the Export Control Organisation (ECO). Military and dual-use controlled goods require an export licence before they can leave the UK.

Export controls are not unique to the UK. All countries should have some form of an export control policy, legislation and enforcement mechanisms.

Export Control System (ECS)

The Export Control System (ECS) is the EU system for the control of indirect exports.

Export/Import Measures

An export/import measure is anything that is flagged when looking up a commodity code in Volume 2 of the UK Trade Tariff. This includes the potential need for a licence, licence quotas, end-use suspensions, special permits/certificates needed, restrictions on certain products, restrictions on countries to trade that product with, and additional duties.

Export Credit Insurance

Credit insurance provides cover against default by debtors (customers), and may also protect against “country risks”, (factors within the buyer’s country which prevent the buyer’s ability to pay, such as social unrest). Cover can protect all of the debtor book or specific debtors. Some credit insurance companies also provide credit reference services.

International credit insurance is provided by a number of commercial organisations. In circumstances where commercial organisations are unwilling to provide cover due to commercial risks, cover may be obtained from a government department, such as U.K. Export Finance, previously known as the Export Credit Guarantee Department.

Ex Works (EXW)

One of the 11 current Incoterms® (see below). Under ex works terms, a seller is only responsible for supplying goods at the nominated place (usually their premises), and plays no further part in the transportation process.

Flexible Accounting Scheme (FAS)

An accounting sub-system on CHIEF. It can only be used by Direct Trader Input (DTI) agents. DTI agents use a computer terminal linked to CHIEF. It works like a bank account – there must be enough money kept in the account to cover duty charges and a guarantor may be required.

Free Circulation

Goods that have been produced in the EU, or that have been imported into an EU country can be released for “free circulation” after payment of the import duty to which they are liable. Once relevant import formalities are completed, and Customs Duty has been paid, the goods are deemed to be in free circulation. Imports in free circulation can be sold within the EU like any product made in the EU.

Free Movement

Free movement allows goods to leave one country and enter another country without extra taxes, legal documents or official limits.

Free on Board (FOB)

One of the 11 current Incoterms® (see below), usually used in conjunction with the name of a place or port. Under FOB terms, a seller is responsible for all costs and bears the risk until the goods are placed on board a vessel in the nominated port in the country of export.

Free Trade Agreement (FTA)

An agreement between two or more countries to trade freely with each other while still being able to set their own tariffs on goods from the rest of the world. FTAs make trade cheaper (by eliminating or reducing customs duties and red tape) and faster (by making transit through customs easier and setting common rules).

Freight

Goods transported in bulk by truck, train, ship, or aircraft.

Freight Forwarder

A freight forwarder, forwarder, or forwarding agent, is a company that organises shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.

Front End Credibility Checks (FECs)

In addition to validating the data declared in each field of the declaration, CHIEF will also perform Front End Credibility checks (FECs). These examine any inconsistencies declared between different fields of the declaration and will require confirmation from the trader that the information is correct. FEC checks will target any fields within a declaration where the data is conflicting.

General Average

A convention in international maritime transport which can occur when an “extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of

preserving from peril the property involved in a common maritime adventure." This involves both the vessel and also the cargo being transported during the voyage; such that all parties are required to

make a contribution towards the costs and financial sacrifice incurred.

If “General Average” is declared by a shipping line, all exporters or importers with cargo on board will have to make a proportionate contribution, and cargo will usually be held by the carrier under a lien until payment or some form of guarantee is received to cover the outlay.

General Interpretative Rules (GIRs)

The GIRs are a set of 6 rules provided to ensure uniform legal interpretation of the Harmonized System for the accurate classification of goods.

Generalised System of Preferences (GSP)

Generalised System of Preferences (GSP) agreements are unilateral trade agreements designed by developed countries to support the economies of developing and least developed countries. They offer preferential market access to 150+ countries which benefit from this scheme.

Goods Departure Message (GDM)

The official evidence of export when shipping goods outside the EU.

Groupage

See “Less than Container Load” below.

GSP Form A

Where REX is not yet implemented, GSP Form A is used. It is a certificate of origin issued by exporters in GSP beneficiary countries. It must be stamped and signed by the relevant government authority.

Guarantee

Bonds and guarantees give international customers extra confidence that sellers will meet their part of a deal. It has become increasingly common, particularly in international trade, for a buyer to request that a bank guarantee or bond be provided on behalf of their seller. This provides a means of securing performance or other obligations under the terms of a contract.

They provide the beneficiary with access to a sum of money should the seller fail to fulfil contractual or other obligations in respect of an underlying transaction, contract or order.

Guarantor

A third party who promises to provide payment on a bond, loan, or other liability in the event of default.

Harmonized System

The Harmonized Commodity Description and Coding System generally referred to as "Harmonized System", or simply "HS", is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). It comprises about 5,000 commodity groups each identified by a six-digit code. The system is used as a basis for customs tariffs and for the collection of international trade statistics. Over 98% of the merchandise in international trade is classified in terms of the HS.

Harmonized System Codes (also H.S. Codes)

See “Commodity codes” above.

Hazardous Goods

See “Dangerous Goods”, above

HMRC

Stands for Her Majesty’s Revenue & Customs; this is the body which oversees customs and tax matters within the United Kingdom.

HMRC Civil Penalties

The HMRC penalty system aims to encourage accurate declarations and compliance with the law. Civil penalties can range from a minimum £250 per offence up to a maximum of £2,500.

Home Office

The part of UK government responsible for immigration, security and law and order.

Home Use

Most import clearing agents will enter goods to customs under home use. This declares the goods are to remain in the UK/EU.

House Bill of Lading (or Airwaybill)

A form of transport document issued by a freight forwarder, rather than the main carrier of the goods. This type of document may not be allowed when goods are sold with a letter of credit.

Import

A form of transport document issued by a freight forwarder, rather than the main carrier of the goods. This type of document may not be allowed when goods are sold with a letter of credit.

Import Licence

A document required and issued by some national governments authorising the importation of goods into their individual countries.

Import Licensing Branch (ILB)

Regulates a small proportion of imported industrial goods that require import licences.

Income tax

A tax imposed on individuals or entities that varies with respective income or profits. Income tax generally is computed by applying a tax rate to taxable income. Taxation rates may vary by type or characteristics of the taxpayer.

Incoterms®

International Commercial Terms (known as Incoterms®) are a series of trade terms that set out responsibilities of both parties in a contract of sale involving carriage of goods. They are frequently abbreviated to 3 letter terms.

Published by the International Chamber of Commerce, they are recognised and accepted around the world. They are intended to take the uncertainty out of trading in order to protect both the buyer and seller and, as such, are regularly incorporated into sales contracts worldwide.

The most recent version, Incoterms® 2010 contains 11 terms which establish at a glance who is responsible for transport costs and insurance to duties and customs clearance. They also specify where the goods should be picked up from and transported to and who bears the risk in case of loss or damage to the goods at each stage of transportation.

Indirect exports

Moving goods for the export through the EU to non-EU countries, such as export consignments declared for export at a location in one member state that then exit the EU via another member state.

Indirect representative

A customs intermediary acting in their own name but on behalf of another business. They are jointly responsible for the declaration and any duty payable.

Integrated Tariff of the United Kingdom

The UK Trade Tariff sets out the duties and measures affecting the import, export and transit of goods to and from the UK. It has 3 volumes.

Intellectual Property

Intellectual property describes intangible assets or “creations of the mind” which enable a business to operate, and which are the property of the business or the individual. This can refer to trademarks, patents, industrial designs or copyright. Any business intending to trade internationally should protect all intellectual property effectively in all markets in which their product or service may be exposed. Traders are advised to seek expert advice from the UK Intellectual Property Office:https://www.gov.uk/government/organisations/intellectual-property-office

International Commercial Terms (Incoterms)

Incoterms are standard international law terms that aim to clearly communicate the tasks, costs, and risks associated with the global or international movement of goods between buyer and seller.

Intrastat

The Intrastat system collects statistics on the trade in goods within the EU. All VAT-registered businesses trading with other EU member states must provide details of the total value of goods dispatched to other EU member states and the total arrivals of goods acquired from other EU member states, on their VAT return. The supply of services, however, is excluded from Intrastat.

Inventory-linked

Several UK ports and airports are linked to the customs computer systems. Being inventory-linked enables these ports/airports to handle the presentation, arrival and departure of goods on HMRC's behalf.

Invoice

A commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices for products or services the seller had provided the buyer.

ISO country codes

ISO country codes define 2- or 3-letter abbreviations for countries. The ISO code for the UK is GB.

LIC99

If the commodity code indicates that a licence might be required, but the exporter establishes that no licence is required, they may enter "LIC99" in Box 44 of the CHIEF system. Note that LIC 99 is being phased out as CHIEF migrates to Customs Declaration Service (CDS).

Legalisation

A term used in conjunction with certificates of origin, particularly for shipments to Middle East destinations. A certificate of origin (and / or other documents) may have to be legalised (certified) by a representative of the destination country, usually the Embassy in the country of export. Legalisation is an additional form of verification over and above that which is undertaken by the chamber of commerce.

Less than Container Load (LCL)

When goods are shipped by container (see above), a shipper may not have enough cargo to fill a container. Less than Container Load (or LCL.) services are operated by carriers or forwarders to cater for such shippers. LCL operators will receive small shipments from multiple shippers at receiving depots in the country of export, and consolidate them into cost-effective full container shipments, charging each shipper for the weight or volume of cargo shipped, and issuing a transport document (usually a Bill of lading) to each client. On arrival in the destination country, goods will be deconsolidated from containers at a freight depot, for transfer or delivery to the client.

Similar services can also apply when goods are transported by road or air; in such cases they are typically known as “groupage” or “consolidation” services respectively.

Letter of credit

Importing and exporting involves risks. Exporters run the risk of buyers failing to pay for goods, while importers may risk paying but never receiving anything. Because of the distances involved, it may be difficult to resolve any disputes.

A letter of credit is a written undertaking given by a Bank to pay the seller (the beneficiary) an amount of money within a specified time provided that the beneficiary presents specified documents which are in compliance with the terms of the letter of credit

By using a Letter of Credit, the seller knows the precise terms and conditions which must be met in order to obtain payment and when that payment will be received. It is provided by the buyer’s bank — for a fee.

Licences

Some goods require export and/or import licences, like certain military, paramilitary, dual-use goods and technology, artworks, plants and animals, medicines, or chemicals. Exporting or importing controlled goods without the right licence is a criminal offence.

Lodged

In order to comply with the legal obligations and to place goods under a customs procedure, a customs declaration needs to be lodged. The declaration should be lodged with the customs office where the goods were or will shortly be presented.

Logistics

Logistics refers to the process of co-ordinating and moving resources such as materials, inventory, and equipment from one location to storage at the desired destination.

Master Unique Consignment Reference (MUCR)

A group of Declaration Unique Consignment References (DUCRs) into one MUCR reference number. A container could typically have 1 MUCR linked to 10 DUCRs. A ship or flight could have 1 MUCR linked to 10,000 DUCRs.

Most Favoured Nation

The principle of Most Favoured Nation treatment means that, unless a preferential agreement is in place, the same rate of duty, on the same goods, must be charged to all WTO members equally.

Movement certificate

This enables importers to import goods from certain countries at a reduced or nil rate of duty under specific trade agreements with the beneficiary countries.

Movement Reference Number (MRN)

A number issued to a consignment after importing customs have conducted safety and security validation of the data. The MRN confirms that the goods are allowed to be shipped.

National Clearance Hub (NCH)

The single UK national site that handles the movement of third country goods and processes goods transiting the EU. It replaced the separate entry processing units that used to operate at major ports and airports.

National Export System (NES)

The system for declaring all exports from the UK to third countries to customs. NES operates as an electronic interface with Customs Handling of Import and Export Freight (CHIEF).

No Licence Required (NLR)

A good that is not controlled, so does not require a licence.

Non-preferential origin

Non-preferential origin confers an 'economic nationality' on goods. It is used for determining the origin of products subject to all kinds of commercial policy measures (such as anti-dumping measures and quantitative restrictions) or tariff quotas.

Open General Export Licence (OGEL)

Allows the export of specific goods by any exporter to a range of destinations. Open licences may be available for less restricted controlled items.

Origin

The 'economic nationality' of goods, as determined by the rules of origin.

Outward Processing (OP)

A Customs Special Procedure that allows EU traders to temporarily export free circulation goods from the EU for processing/repair in a non-EU country and then claim full or partial duty relief when the goods are re-imported. OP also enables faulty goods to be returned to a third country for repair with re-import to the EU with reduced or nil duty liability.

Packing list

A complete list of what is being sent in a consignment. Customs and border authorities need the packing list so that they can find what they want to inspect more quickly.

Port Health

The Association of Port Health Authorities is responsible for health controls at sea and airports, with the primary objective of preventing the introduction into the country of dangerous epidemic, contagious and infectious diseases and ensuring the wholesomeness of imported food.

Post-clearance amendment form

An online service or postal form (C81) to make an amendment to export declarations.

Preferential origin

Preferential origin confers certain benefits on goods traded between particular countries. One aim of a Free Trade Agreement (FTA) is to give preferential access for goods between the parties in the agreement. This is done by significantly reducing, often to zero, the duty rate on goods originating in partner countries

Pre-lodged

Goods entered to customs prior to arrival.

Preferential Trade

Preferential trade is a trading agreement that gives more favourable access to certain products from the participating countries. This means that manufactured goods may enter those countries at a lower customs duty rates. Preferential trade can occur either within a Free Trade Area, or between countries or trading blocs which sign Free Trade Agreements.

Processing

Inward processing (IP) allows businesses to obtain relief from customs duties and import VAT on goods that are imported from outside the EU to be processed and which can be exported outside the EU.

Proforma invoice

An advance draft of a sales invoice, which can act as a format for a sales offer, or may be used to facilitate payment in advance by a client. A proforma invoice may also be requested by a client in order to secure an import licence, foreign exchange or to initiate a letter of credit.

Prohibition

A set of regulations preventing goods from being exported or imported. This is often connected with embargoes and sanctions, safety of persons, flora and fauna which aim to maintain or restore international peace and security.

Quota

An import quota is a limit on the amount of certain goods that can be brought into the UK.

Reduced rate

A rate lower than the standard VAT rate in the UK of 20% as of February 2019. This rate can depend on what the item is as well as the circumstances of the sale.

Regime

The CPC shows the customs regime which goods are being entered into or removed from. Regime is another word for this part of the customs process.

Registered Exporter Scheme (REX)

REX allows an invoice declaration to be used as evidence of origin. To be entitled to make out a statement on origin, a business will have to be registered by the customs authorities.

Restriction

Goods that may only be exported/imported under certain conditions, and sometimes require a licence or authorisation such as a permit. These permissions will sometimes specify a limit or quota which the business is not allowed to exceed.

Returned goods

Goods that have been returned within 3 years and which have not undergone a process may qualify for Returned Goods Relief (RGR).

Returned Goods Relief (RGR)

A relief from import duties that can be claimed when free circulating goods that were previously exported out of the customs territory/UK are being reimported in an unaltered state. The goods must be reimported within 3 years of export, although an extension may be granted.

Rules of origin

The WTO rules used to determine the country of origin ('economic nationality') of a product for purposes of international trade, where there is not a free trade agreement between the relevant countries.

Safety and security declaration

In order for the goods to even leave a country, the carrier must lodge an ENS (sometimes called a 'safety and security declaration') with customs at the first place of arrival within the customs territory to let HMRC know which goods are bring carried to the UK.

Sanctions

Sanctions are political trade restrictions put in place against target countries with the aim of maintaining or restoring international peace and security.

Section and chapter notes

Within the Trade Tariff, there are important section and chapter notes. These are important as they are legally binding and are especially useful when dealing with sets, parts and accessories. The notes also show what is not included within a section or chapter.

Shipped on Board

Confirmation that the goods have been loaded and dispatched for shipment on a maritime vessel. This clause is usually inserted onto a Bill of Lading (See Above), with conformation of the vessel name and date of international departure.

Short Shipped

The term used when cargo is not dispatched on the international vessel or flight which it was booked onto.

Simplified Declarations Procedure (SDP)

SDP allows businesses to release goods to a customs procedure using a simplified data set submitted at the point of release on an electronic customs declaration.

Single Administrative Document (SAD)/C88

Import customs declarations are based on the information required on the SAD (known as a C88 in the UK). It is either completed by the importer or by their appointed agent on their behalf, for instance a freight forwarder.

SIVA (Simplified VAT accounting)

SIVA stands for Simplified VAT accounting possible. It is a scheme that allows businesses to reduce the level of financial guarantee needed to operate a duty deferment account for VAT purposes.

Standard Individual Export Licence (SIEL)

A SIEL allows the export of a quantity of specified goods to a specified importer as set out in the licence.

Standard rate VAT

The standard rate of VAT in the UK is 20% as of February 2019. Most goods and services are standard-rated.

Sterling

British money, especially the pound as the basic unit of currency of the United Kingdom.

Strategic Export Control List

The Strategic Export Control List is a consolidated list of strategic military and dual-use items that requires authorisation before export is permitted.

Substantial transformation

Goods whose production involved materials from more than one country will originate in the country where the last substantial or sufficient transformation occurred. For instance, goods being converted from one commodity code to another.

Surveillance

Where the import of goods is monitored with licences for safety and security, or to protect certain industries.

Tariff Codes

See “Commodity Codes”, above

Tariff suspension

Certain goods benefit from a temporary suspension or reduction of Customs Duty. This is designed to allow manufacturing industries within the EU to compete on equal terms with non-EU producers of finished products. It permits the complete or partial suspension of import duties on components or raw materials for further processing.

Temporary Admission (TA)

Used for goods temporarily imported for a specific use for a limited time, such as for an exhibition.

The Export Control Joint Unit (ECJU)

Administers the UK's system of export controls and licensing for military and dual-use items.

The Tariff

Another name for Volume 2 of the UK Trade Tariff. The Tariff sets out the duties and measures affecting the import, export and transit of goods to and from the UK.

Trademark

A trademark is “a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises” (World Intellectual Property Office). Trademarks are protected by intellectual property rights. See “Intellectual Property” above.

Trading Standards

Trading Standards are the local authority departments that enforce consumer protection legislation.

Transaction value

The price paid by the buyer when goods are sold by the seller in a normal commercial transaction. If goods have been sold to more than one buyer (wholesaler to distributor, for example) it is the last sale price in the commercial chain before goods cross the border.

UK Trade Tariff

HRMC guidance that includes how to classify goods by commodity code, duty, excise and VAT rates and preferential trade agreements and restrictions on goods, licences and permits

Unique Consignment Reference (UCR)

A reference number that businesses and customs use to identify boxes/packages being sent in a single consignment. Sometimes also known as Unique Consignment Indicator or Unique Consignment Number.

Value build up

The costs that Customs Duty is levied on. This is the value of goods (minus any discounts) + insurance + freight + delivery costs to the customer's location.

VAT

Value Added Tax is a general, broadly-based consumption tax assessed on the value added to goods and services. VAT is charged as a percentage of the declared value, either at standard, reduced or zero rate.

VAT value adjustment (VVA)

CHIEF calculates the value for VAT by adding any duties, levies or additional costs to be included in the VAT value to the value declared in Box 22 – Invoice total.

VAT zero rating

Zero-rated means that the goods are still VAT-taxable, but the rate of VAT charged to customers is 0%.

Volumetric weight

The cost of a shipment can be affected by the amount of space that it occupies on an aircraft or ship, rather than the actual weight. This is the volumetric (or dimensional) weight.

Generally freight charges are calculated on the actual weight of the goods plus packing (gross weight) but if the goods are a low weight but large in volume then the freight carrier may charge for the amount of space the goods use. In this case an estimated weight is calculated from the length, width and height of a package.

The concept of volumetric weight has been adopted by the transportation industry worldwide as a uniform means of establishing a minimum charge for the cubic space a package occupies.

Warehousing

Warehousing is the act of storing goods that will be sold or distributed later.

Waybill

A form of transport document; waybills are frequently issued by small parcel or express courier companies, although many operators no longer issue paper documents. The term “waybill” is also used as a generic term for an unspecified transport document.

Wholly originating

A wholly origination good can originate in the country it was born, farmed, fished, mined, grown, dug out of the ground.

World Customs Organization (WCO)

The World Customs Organization (WCO) represents 182 Customs administrations across the globe that collectively process approximately 98% of world trade.