Customs options for small businesses

Four ways for SMEs to declare customs and the pros and cons of each

Since the transition period with the EU ended on 1 January 2021, the UK has operated a full, external ‘hard’ border and the government has introduced controls on the movement of goods between the UK and EU.

Doing business with EU countries has changed, and new laws mean a whole range of different rules and regulations now apply. One of the biggest changes is the requirement to submit customs declarations when you import or export goods.

When it comes to customs declarations, the options can feel complicated. Choosing the best option for your business isn’t always as simple as it sounds. That’s why Deloitte’s Global Trade Advisory Team has broken down the options.

Please note that this publication is designed to give a general summary of customs declarations options for businesses trading between the UK and EU – it’s not specific to any one type of goods or business scenario.

Right now, there are acute forces at play for small- or medium-sized businesses that want to export from or import into the UK. Logistics challenges, as well as an increasingly vulnerable and volatile supply chain are significant obstacles. And then, there are the additional compliance and documentation obligations (with new rules as of 1 January 2022). Right now, the key for businesses is maximising simplicity, efficiency, and accuracy, while avoiding factors that may slow down or disrupt their supply chains.

So, what are the main customs declarations options and their pros and cons?

1. The freight forwarder

The freight forwarder collects and moves your goods and completes the customs declarations for you. Businesses usually use freight forwarders if they don’t have their own transport systems. They may also provide optional services, including warehousing and storage. Some may also facilitate cashflow and administrative benefits by simplifying and deferring customs obligations.

How does it work? Usually, you have a choice: do your own customs compliance or let the freight forwarder do it for you. At a glance, choosing the freight forwarder to do it for you may feel easier. It’s all in one place and they do the majority of the work. But under closer inspection, is it really? Sometimes it can be difficult to understand what you’re paying for and whether you’re getting good value for your money.

If you use a wide variety of freight forwarders because you shop around, it might be that you’re providing the same information multiple times in multiple formats to different providers – this can lead to time-consuming, redundant tasks. Furthermore, processing customs declarations is often not the core business of freight forwarders. This can mean they outsource the customs compliance to a third party, which might not be a cost effective or a smooth experience. It could mean you’re tied to their processing schedules which could potentially slow down your goods.

What does it usually cost? Charges vary considerably. It can often be difficult to see how much you are paying for customs services because they are bundled with other costs – but they tend to vary from around £50 up to £200 per declaration for specialist goods.

Pros

  • Easy to use
  • Services are all in one place

Cons

  • Can be costly
  • Charges are less visible
  • Typically, relies on a provider whose principal focus is on physically moving your goods, as opposed to customs compliance

2. A customs broker/agent

A customs broker or agent is an expert who performs customs declarations on your behalf – in other words, they represent you when it comes to customs. They often deal with complicated supply chains, obscure customs regulations, and intricate nuances. If you have large scale/high-volume requirements or complex multinational supply chains and you need extra attention, then customs brokerage might be the best option for you. They may also be the last resort if your logistics provider can’t help with customs compliance.

How does it work? Normally, you provide the customs broker or agent with the data needed. You may even connect your systems to theirs to allow seamless data flow. They then act as your legal representative in making customs declarations. It’s important they communicate in real-time and react quickly to any challenges facing goods in the customs process. This requires seamless data flow and a high level of service. If you’re a low-priority client for them, you might need to ask how you’re getting the attention you need. If you work with a broker or agent, check how your data moves. Some brokers operate systems that require manual data transfers which may require inputting data from commercial invoices or transport information.

Businesses usually use a customs broker if they are working with particularly complicated goods or supply chain arrangements. If you’re importing the same goods regularly from the same suppliers in the EU, is it worth spending the money? If it is, it’s important to choose one that really understands your supply chain – the goods, regulatory processes, country of origin, etc. That way, they’re in the best position to spot things like inaccuracies in your data.

What does it usually cost? Again, charges vary considerably, but tend to be around £60 to £150 per declaration. They can be significantly lower if large volumes are involved – as low as £10-£20. In some cases, you may pay for inbuilt expertise that you’re not using.

Pros

  • Great for large supply chain arrangements where there are complexities and significant data volumes

Cons

  • Costly – You might be paying for service/expertise you don’t need
  • Slower manual processes

3. Digitally enabled customs brokers

Digitally enabled providers are similar to traditional customs brokers but use technology to simplify data entry requirements and are often more specialised. They might be used by businesses with large-scale supply chains and/or complicated arrangements that are looking for a more automated experience when providing data during the declaration process.

How does it work? These digitally enabled providers still represent you as a traditional customs broker would, but they use technology to make the data entry and submission experience more user friendly.

As with a traditional broker, this option usually comes with detailed advice and support for complicated supply chain/customs matters – so the key question is usually one of cost. While the digital experience supports the process, the back-end, expertise and representation may be more labour intensive.

What does it usually cost? Charges tend to be slightly lower than a traditional broker/agent and can range from around £30 up to £100 per declaration. But again, they can be significantly lower if large volumes are involved. In many cases you might be paying for inbuilt, niche expertise and support that you’re not actually using.

Pros

  • Better user experience
  • Simpler to use for large supply chain arrangements where there are complexities and significant data volumes

Cons

  • Potentially paying for service you don’t need
  • A smooth user experience may still involve significant data entry requirements

4. Manage it yourself with a digital platform

With the rise of technology, doing your customs declarations yourself is easier than ever before. As HMRC moves to their new Customs Declaration Service (CDS), small and medium businesses can lodge customs declarations using simple digital platforms — like CustomsClear. This means much quicker responses, rather than relying on brokers. By doing your own declarations, you receive real-time feedback, leading to an increased knowledge and control.

Even with the new CDS, businesses need the right online tool to do their own customs declarations. Particularly if you’re unsure of the information you need, or the tariff codes you should apply. It’s important that you’re supported by the right digital solution – one that can guide you through the process, is intuitive to your business needs, and is simple to use.

What does it usually cost? Because technology and automation do most of the work, the cost of manual intervention is lower, and prices tend to vary from about £10-20 per declaration.

Pros

  • Significantly lower cost
  • A streamlined experience
  • More visibility into customs declarations processing

Cons

  • Without appropriate digital support, it can be difficult to do

Choosing the option for you

Every business’s importing and exporting profile is different, and what works for one business may not work for another. Until recently, the process of customs compliance was driven by a heavy reliance on a limited number of intermediary options. But now, HMRC and other customs authorities are digitising their own customs processes, giving businesses a range of options. These platforms make it easier for businesses of all sizes to comply with customs while remaining cost effective. You can pay for the service that suits you and your business’s unique needs.

Information correct at publication date 20.01.2022


This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.