How to export to EU and beyond
Opportunities to sell their goods overseas are increasing all the time for British SMEs, yet many are reluctant to start exporting because of their concerns over the complexities of the process; things like tax and duty implications and the myriad of customs regulations and export control that can differ enormously between countries and regions.
There is legislation to comply with and it can be complex, however, with help and advice from the government bodies set up to support British exports, and the various trade bodies and independent advisers, the red tape associated with exporting can be untangled with ease.
Export consultant Keith Stringer has worked with many UK firms over the years, helping them export to places such as China, North America, and Japan, and is currently based in north Wales, advising SMEs on the export of Welsh goods.
He said: "Regulations do differ, not only between markets, but also between products or services that are being exported. For example, the UK has preferential trading status with the EU that does not exist outside of the Union. And you have to check that a product is legally exportable first, as some countries have restrictions on some foods and natural resources. My advice would be to always work with someone who understands the regulations, as this can save a lot of time and money in the long run."
Good sources of professional help include UK Trade & Investment independent international trade advisers, and the trade organisations that represent the relevant product group. "Business owners who decide to go it alone are advised to make the HMRC website their first point of reference, following the links through to the relevant pages on tax and VAT. Here they can also find out about commodity codes, which classify goods for import and export and ensure that exporters pay the right tax and export duty and follow regulations. An online trade tariff tool at allows you to search for the right commodity codes," adds Stringer.
The Institute of Export offers plenty of information for those new to exporting; however, for help with some of the more complex, or special rules and regulations around exporting specific goods, SMEs should consult their relevant trade or industry organisation.
The UK has a buoyant fashion and textile industry, with huge potential for global export, yet many designers and manufacturers are confused by the process, says Paul Alger, director of international business development at UK Fashion & Textile Association.
He says: "All fashion and textile goods in 'free circulation' in the EU can be exported to any part of the EU. There is no additional paperwork required and no duties are payable. Outside the EU, however, each company has its own rules and regulations.”
"In the USA, for example, it is fairly easy to work out the duty on products as long as you have your commodity code (link to https://www.gov.uk/trade-tariff/sections) from UK customs. UK companies can also call the customs division of the US embassy in London who will confirm the duty rates and any restrictions on certain kinds of goods."
When it comes to dealing with tax and VAT regulations, it is always worth getting advice from a legally qualified tax accountant, as it can get complicated, he says.
"Exporters who are registered for VAT in the EU would normally charge VAT on all transactions, unless it is a B2B transaction where you hold on file the VAT registration number of the company you are selling to. For such cases, no VAT is charged between the two parties, however, this could have an implication with the VAT returns in another country, so always get professional advice," says Alger.
Having the appropriate, correctly completed documentation, for example, EC Certificates of Origin and Letters of Credit, to ensure that goods are delivered and payments received, is one of the most complex and potentially problematic areas for businesses new to exporting.
Getting it right is essential if customs penalties and delays are to be avoided, says Paul Wrighting, national trade services manager at the British Chambers of Commerce. He explains: "EC Certificates of Origin (The European Community Certificate of Origin), for example, are a commercial or customs clearance requirement in some countries to evidence the origin of goods, and are widely used by importers in Asia, the Middle East and Africa, as they want proof that goods have been made in the EU. If businesses are taking advantage of the 'Brand Britain' boom, having documentary proof that goods have been made in the UK gives importers the confidence that they are purchasing genuine British produce."
Letters of Credit ensure that payment terms and conditions are agreed in advance, and with differing payment terms and languages to deal with, organising them can be challenging. For example, some exporters may expect to receive payment on goods leaving a shipping yard, whereas the importer may only pay for goods on arrival. A Letters of Credit that agrees terms in advance helps businesses to manage their cashflow more effectively.
Local chambers of commerce can be a good source of help to exporters by issuing and authenticating these documents, as Inspiration Healthcare a Leicestershire-based global exporter of neo-natal intensive care equipment, has discovered.
The company asked its local chamber for help with EUR.1 certificates to Switzerland and Norway, and EC Certificates of Origin for the Middle East.
Managing director Neil Campbell says: "Both certificates prove origin; that our goods have been manufactured in the EU. Our local chamber of commerce gives them their official seal of approval and our products and certificates are then collectively shipped to the customer, proving that goods were manufactured in the UK and helping them to claim back import duty. This provides us with a competitive edge over other countries that export outside of the European Union."
Another area of exporting abroad that frequently causes concern is the undertaking of currency transactions and ensuring that margins are not eroded by currency movements. Consulting a specialist currency broker at an early stage can help to reduce some of these risks.
James Hickman, managing director of currency exchange business Caxton FX says: "When agreeing credit terms with a potential customer abroad, as in the UK, it is advisable to use a credit ratings agency or similar service. Many companies use escrow services, where the money is held by a third-party on behalf of transacting parties, which takes the worry out of not being been paid once goods have been delivered."
HMRC (Her Majesty's Revenue and Customs) - http://www.hmrc.gov.uk/
UKTI (UK Trade & Investment) - http://www.ukti.gov.uk
IOE (The Institute of Export) – http://www.export.org.uk
UKFT (UK Fashion & Textile Association) - http://www.ukft.org/
BCC (British Chamber of Commerce) - http://www.britishchambers.org.uk/
ECO (Export Control Organisation) - https://www.gov.uk/government/organisations/export-control-organisation