Importing doesn’t have to be difficult. Buying from a company based within the European Union is usually relatively straightforward. After all, you are the customer: most of the burden of making sales, and delivering the goods, usually falls on the supplier.
But there are pitfalls. The key is not to take anything for granted. You cannot assume that the supplier will behave in the same way as a UK company would – or that it will be easy to sort out any problems. As with any supplier, delivery could be incomplete, or arrive late. Their product might not meet UK requirements. You might even be prohibited from importing that kind of product in the first place.
You can minimise the risk of any problems by taking a thorough approach. Make sure you agree exactly who takes care of what. Investigate exactly what your legal, customs and licensing obligations are. Where necessary, take advantage of advice from your trade association, your lawyer and business support organisations.
Find out what payment procedures and credit terms are typically used.
Assess your chances of enforcing your legal rights in the local courts in case of a dispute.
It may be difficult to make checks such as whether the supplier has good quality control. You may want to visit the supplier to look at their working practices and build a relationship. Consider running a credit check on the supplier. International business reports are available from many companies such as Experian (www.experian.co.uk) and Dun & Bradstreet (www.dnb.co.uk).
Find out what experience other importers have of dealing with suppliers in that country. You can also ask your local chambers of commerce for information.
For example, the supplier may need an export licence for their product. Obtaining the licence could delay delivery, add to costs, or even prove impossible.
If your supplier is breaching local laws, you might not be able to enforce a purchase contract. You could face legal action yourself if your business becomes involved in an illegal transaction.
The supplier is likely to try to pass on the cost of any local taxes.
The HM Revenue & Customs' (HMRC) Authorised Economic Operator (AEO) scheme is an accreditation scheme for international traders. AEO is a quality mark in international trade, particularly for businesses who trading goods into and out of the EU. Other benefits of the scheme include fewer customs inspections of goods, less paperwork and faster clearance of goods through customs.
Useful sources of advice can include your trade association, the British diplomatic missions overseas and the foreign country’s representatives in the UK.
You need an import licence for some goods, including diamonds and military or dangerous goods, such as firearms and some chemicals.
You usually need a licence to import plants, agricultural products, some food and animals.
You may need an import licence for some products coming from outside the EU: textiles, footwear, iron, steel or ceramics. There may be a quota limiting the total volume of imports of a particular kind, such as textiles.
For information on restricted goods, import licensing and quotas, visit the BIS website at www.bis.gov.uk/importlicensing/
For information on importing food, plants and animals, contact the Rural Payments Agency on tel: 0845 603 7777
Illegal drugs, and some chemicals used in their manufacture, are controlled by the Home Office.
You must register with the European Chemicals Agency REACH database if you import more than one tonne of chemicals per year.
You may need approval from the Health & Safety Executive to import dangerous products.
Imports of food, plants or live animals generally need to conform with UK safety regulations.
Timber products and packaging may need to be licensed and inspected.
Radio communications equipment may need licensing.
From time to time, the UK government may order sanctions, restricting imports of some or all products from a particular country.
These may include VAT, import duty and excise duty (see section 6).
Your trade association, freight forwarder or legal adviser can help.
Some safety regulations are legal requirements. For example, fireworks for sale to the public must meet the relevant British Standard; nightwear and children's clothing must comply with safety standards; and all children’s toys must carry the CE mark certifying that they meet European toy safety law.
You may want to ensure that products you import meet relevant safety standards, even if this is not a legal requirement. Failing to do so is likely to significantly weaken your defence if the goods harm someone.
Goods must be as safe as people are reasonably entitled to expect. If the goods are as safe as similar UK products, they are likely to meet this requirement.
You may want to have a sample safety tested. Consider contacting your local Trading Standards office or the British Standards Institution.
Large suppliers may have already done this themselves and marked their product (eg with the British Standards kitemark). However, some unscrupulous suppliers simply mark their products without having them tested.
If you import a product from outside the EU, you could be held liable for any harm or loss caused if it is unsafe. If you import from within the EU, primary liability for any harm will normally fall on the manufacturer, provided you do not modify or ‘own brand’ the product.
You may want to ask the supplier to indemnify you against any claim for damages as a result of a faulty product (see section 4).
You are legally required to take reasonable steps to ensure that any product you sell is safe, regardless of who produces the product or where it comes from.
Products must be labelled in English (though other languages may be used as well).
Labels must use metric weights and measures.
Labelling must not be misleading.
You may need to include safety information on the label and appropriate safety instructions.
Check environmental labelling requirements; for instance, household electrical goods must be marked with EU energy-rating labels.
Larger businesses may be required to recycle a percentage of the packaging materials used.
For example, another business might hold a patent for a particular product. They could take legal action against you if you import a product that infringes on their rights.
The owner of a trademark can take action to stop you sourcing their goods from a cheaper non-EU supplier and reselling them in the UK.
You could face prosecution, or be sued, if you import counterfeit goods.
For example, there are rules on the labelling and packaging of food products.
Your trade association should be able to advise you.
For example, what you are purchasing, what quality and quantity you require, and what the price is.
Tell the supplier about any UK regulations or standards that you require the product to meet.
Ask the supplier to indemnify you against any legal action caused by defective goods. This will not stop you being prosecuted or sued, but could cover some of the costs (provided the supplier remains solvent).
Negotiate responsibility for each stage of delivery, insurance and customs clearance.
Use the internationally recognised ‘Incoterms 2010’ which sets out exactly what each party’s responsibilities are.
You may be able to negotiate payment on account once a supplier trusts you, particularly if you are buying from a supplier within the EU.
Many suppliers will require an alternative payment method, such as by letter of credit, which protects them if you do not pay.
Aim to negotiate that UK law will apply.
Agree a dispute resolution procedure that can be used rather than going to court. For example, the contract might name a particular arbitration organisation.
You may want to use a lawyer to draft a suitable contract, particularly if you do not have a previous import purchase contract to use as a model.
Use a lawyer with experience of import contracts and ideally with experience of the country you are buying from.
If you are buying from a supplier within the EU, you may have negotiated for the supplier to clear the goods through the UK port and deliver them to your premises. If so, you will not need an agent.
If you are buying from outside the EU, you are likely to be responsible for customs clearance and for onward delivery from the UK port to your premises. Many importers find it easier to use an agent to handle this.
Make sure the supplier knows what agent you will be using and what their responsibilities will be.
You might be liable for the actions of your agent.
EU law sets out specific obligations to any individual (rather than company) who acts as your agent. You may face a claim if their earnings are lower than expected, or if you terminate the agency agreement.
You need to take advice on the legal position if you will be using an agent in a non-EU country.
Make sure you have a written agreement with anyone who acts as your agent. A lawyer can prepare an agreement that will help protect you.
If you are purchasing goods from outside the EU, you must usually pay the VAT (and any duty) to HMRC before you can take delivery of the goods.
HMRC run VAT deferment schemes for traders, where qualifying businesses are allowed to pay a short time after the goods are cleared.
If you are purchasing goods from within the EU, give the supplier your VAT number. This allows them to omit the charge to VAT from the invoice, though you must account for it on your VAT return.
For goods from outside the EU, duty is typically around 5-10%, but can vary widely depending on the product and country of origin.
For goods ‘in free circulation’ within the EU, you do not have to pay any import duty.
Excise duty is payable on products such as alcohol and tobacco.
Any excise duty is payable whether goods are coming from within the EU or not.