Intro

Use this guide to help explain some of the key terms and how you may need to adapt your documentation going forwards.

In principle you may be familiar with existing Incoterms such as EXWORKS, however you may need to employ some additional terms going forwards.

Glossary

CC: Commodity Code
They’re required for import and export documentation, and they, along with the country they are going to /coming from, decide the tariffs and VAT (if any) that need to be paid.

Country of Origin
Where goods are produced. The country of origin, along with the commodity code, will determine the tariffs and VAT (if any) that need to be paid.

CPC Code
Customs Procedure Code. A seven digit number required when filling out a customs declaration for imported and exported goods. The CPCs identify the customs and/or excise regimes which goods are being entered into and removed from (where this applies). The codes are based on where the goods come from, where they are going to and how they will be treated/handled after entry. This is neither company nor goods specific. Import declarations can be complicated and require software that can integrate into the government’s Customs Handling of Import and Export Freight (CHIEF) system

EORI No
Economic Operators Registration and Identification Number. You need an EORI number to move goods between the UK and other countries. The numbers will start with GB. If you are shipping to or from Northern Ireland, you may need a second EORI number to cover NI.

Goods
Products or services

Incoterms
International Contract Terms. Incoterms are a set of internationally recognised 3-letter trade terms. They describe the practical arrangements for the delivery of goods from sellers to buyers and allocate the obligations, costs and risks between the two parties. As an exporter, you need to make sure shipping and delivery responsibilities are written down and clearly understood. Using international commercial terms (known as incoterms) in contracts can help you do this. They cover where the goods will be delivered, who arranges transport, who handles and pays for insurance, who handles customs procedures and who pays any duties and taxes. If you are exporting, you will already know about these. There are currently 11 Incoterms, of which the most common are;

1. EXW: Ex Works.
   The seller makes the goods available at the seller’s location, so the buyer can take over all the transportation costs and also bears the risks of bringing the goods to their final destination.
    
2. FCA: Free Carrier.
   The seller is responsible for delivery of goods to a named carrier. Responsibility for cost and risk then passes to the buyer.
    
3. FAS: Free Alongside Ship.
   The seller must place the goods alongside the ship at the named UK port. The risk of loss or damage to the goods passes when the goods are alongside the ship, and the buyer bears all the costs from that moment on.
    
4. FOB: Free on Board.
   The seller is responsible for all costs involved in the process up until the goods are loaded on to a vessel at the named UK port. Once goods have been loaded, the buyer is responsible for any costs and risks involved in the onward shipment.
    
5. CFR: Cost and Freight.
   The seller must pay the costs and freight to bring the goods to the overseas port of destination. The buyer pays costs and takes risk from then on.
    
6. CIF: Cost, Insurance and Freight.
   This is the same as CFR. However, the seller must also obtain and pay for the insurance.
    
7. CIP: Carrier and Insurance Paid to.
   The seller pays for the carriage and insurance to the named overseas destination point, but risk passes when the goods are handed over to the first carrier.
    
8. DPU: Delivered at Place Unloaded.
   The exporter arranges carriage and delivery of the goods, ready for unloading at the named place. The seller is required to unload the goods at this destination. After the goods’ arrival, the customs clearance in the importing country needs to be completed by the buyer at his own cost and risk, including payment of all customs duties and taxes. This used to be called DAT: Delivered at Terminal
    
9. DDP: Delivered Duty Paid.
   The seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination.

Tariffs
Tariffs are a form of tax paid on imports, applied by the country to which the import is made. In other words, tariffs in the UK are payable to HMRC. Also referred to as duty, tariffs are calculated at customs based on the commodity code.

UKGT
UK Global Tariff. It will replace the EU’s Common External Tariff. It will apply to all imports from countries for which the UK does not have a trade agreement.

VAT
Value Added Tax. If you are importing or exporting into any country where VAT is charged, then someone will need to pay the VAT. Each country has its own rules about what VAT rates to charge depending on the type of good being sold (or imported), and often the logic is not obvious.

Exports to EU countries are treated like those to non-EU countries, which is to say, they should be zero-rated for UK VAT. Imports are subject to import VAT. VAT rates may change and be different for each Commodity Code.

Checklist

Assuming no deal, when exporting to the EU, what will you need to add to an Export Quotation & Order Acknowledgement?

• EORI Number
• Commodity Codes
• Countries of Origin

Likewise, when importing from the EU, what will you need to add to an Import Purchase Order?

• EORI Number
• Commodity Codes
• Countries of Origin