What is customs clearance?

Customs clearance is a compulsory process which goods must pass every time they enter or leave a country. Custom clearance procedures are designed to keep global trade flowing smoothly by ensuring that the correct taxes and duties are paid, and regulations are complied with.

International imports and exports across all industries must pass customs clearance, including commercial shipments. Individuals and businesses can arrange this, however it is worth noting that for international ocean freight shipments, the goods must pass customs clearance in every country. As such, this task is typically handled by a specialist customs broker.

 

What is a customs declaration?

 

A completed customs declaration is required as part of the mandatory customs clearance process. Usually filed electronically, the document includes key information about the goods which are passing the customs border during the import/export process. If the declaration does not meet the requirements set out by the relevant customs authority, the goods may be held at the border for inspection or until further information is obtained. To avoid these kinds of delays, a specialist customs broker is often used to complete and submit the customs declaration.

 

Who pays customs charges?   

 

Technically speaking, customs duties and taxes can be paid by either the buyer or seller. Having said this, in commercial shipping, it is almost always the importer or consignee who pays customs charges. In other words, the person bringing the goods into a country from abroad is the one that covers any customs duties and taxes.

The party responsible for paying customs charges will be pre-agreed and set out in the contractual incoterms. It is important for those involved in the international shipping of goods to understand who is responsible for paying customs charges, as well as the accepted payment methods and deadlines of the relevant country, which can vary significantly around the world.

 

What is a customs broker?

 

A customs broker helps simplify the customs clearance process when importing or exporting goods across international borders. They ensure the smooth transit of goods so that the items get to where they need to be without any unnecessary delays of charges. An individual or business can appoint a customs broker to take care of the administrative tasks related to customs clearance, such as ensuring the correct customs declaration is submitted and all necessary duties and taxes are paid. A customs broker may also offer to pay duties on behalf of the importer as part of their service. Customs brokers have specialist knowledge of the local customs rules, regulations, and requirements, so using their expertise can help to avoid errors and ensure goods clear customs easily and efficiently.

 

What are custom clearance services?

 

Due to the complexity of customs regulations, many organisations enlist a customs broker to assist with this part of their business operations and prevent any delays or disruptions. But what exactly are customs clearance services and what support can they provide? They can help with:

• Preparing customs documentation, including correcting errors and identifying any missing information before submitting the paperwork.
• Ensuring compliance with customs regulations in the destination country.
• Identifying and advising on any trade agreements which can help reduce duties and taxes.
• Paying customs duties and taxes for the importer, making customs clearance easier and simpler for the client.
• Liaising with the relevant authorities to resolve any issues.
• Providing post-clearance support for clients, such as compliance audits and record-keeping.

 

How does the customs clearance process work?

 

There are four key stages to the customs clearance process:

• When entering/leaving a country, the goods are declared to the relevant customs authority, including details of their value, origin and destination. Supporting documentation, such as invoices or bills of lading, may also be required.
  
• Based on the documentation provided, the customs authorities will calculate how much must be paid in duties and taxes.
  
• If the customs declaration meets the requirements and all necessary payments have been made, the shipper will receive documentation confirming the goods are cleared to legally pass the border.
  
• Once customs officers clear the shipment, it can be released for onward travel/delivery.

 

Do processes vary country-to-country?

 

Yes, customs clearance processes vary country-to-country. While, generally speaking, the customs process is similar around the world, individual countries have distinct (and important) rules and requirements that traders must be aware of. The main differences in the customs clearance country-to country include:

• Whether there is an agreement between the trading countries (e.g. EU Customs Union)
• Local laws relevant to the specific goods being imported/exported
• The applicable taxes and duties
• The classification and valuation of goods
• Documentation requirements specific to the goods being imported/exported

 

What documents are required for customs clearance?

 

Successful customs clearance requires a range of documents to be submitted. Each of these commercial documents needs to be completed accurately – with full detailed and specific information about the goods.

 

Mandatory documents for customs clearance:

 

• Commercial invoice – This gives details of the goods being imported (e.g. description, quantity, unit price and total value) as well as information about the buyer and seller.
  
• Packing list – This provides further information about the shipment, such as packaging, weight and dimensions and helps customs officials check all items on the commercial invoice are accounted for.
  
• Bill of Lading (BoL) or Airway Bill – This gives details of the shipment’s point of origin, destination and shipping terms. It acts as a contract between the shipper and carrier and is needed for the goods to be released to the importer.
  
• Certificate of origin – This is proof of the country in which the goods were manufactured, making it essential for determining the applicable duty rates. Preferential trade agreements between certain countries impact the fees due, in some cases reducing them or meaning zero duty rates apply.

 

Depending on the type of commodity being imported, and where it is being imported to, some additional documents may also be required, such as:

• Import license – Certain goods (e.g. firearms, agricultural products) require an import license when being imported into some countries. If an import license is required, you need to obtain this prior to your shipment arriving in the destination country.
  
• Insurance certificate – While this document is not usually mandatory for clearing customs, it is advisable to protect your goods against any potential loss/damage.
  
• Customs declaration form – The UK requires all goods entering the country to have a completed Single Administrative Document (SAD). This document lists the nature of the goods, their value, applicable tariff codes, and other details.
  
• Importer’s EORI number – All businesses importing goods into the UK need an Economic Operator Registration and Identification (EORI) number, which is used to track and process shipments.
  
• Import VAT certificate – When importing goods to the UK, VAT-registered businesses need to provide an import VAT certificate during customs clearance. Once the business has paid the import VAT, UK customs will issue this certificate, which can be used to reclaim the VAT paid on imported goods.
  
• Health and safety certificates – In order to pass customs clearance, some goods (e.g. food, pharmaceuticals, medical devices) may need additional health and safety certificates to prove they meet the safety standards of the country they are being imported to.

 

How long does customs clearance take?

 

There are a number of factors which impact how long customs clearance takes. These include:

• The nature of the goods
• The country that goods are being imported to
• Whether all required documentation is complete and accurate
• Whether there is port congestion or airline delays
• How the goods are arriving in the country (i.e. by air, sea or road)
• The customs clearance procedure (i.e. Temporary admission, permanent import)

 

In the UK, customs clearance times vary depending on the mode of transport and the completeness of documentation. For road and sea freight, if all paperwork is received in good time, entries can be pre-lodged, allowing for automatic clearance upon arrival. Airfreight can generally be cleared within 1–2 hours of arrival. However, if there are issues such as missing commodity codes, country of origin details, or required certificates, delays can occur, sometimes extending for several weeks.

 

What are the common challenges in customs clearance?

 

There are several common challenges in customs clearance, all of which can cause delays and incur additional costs that affect business operations. Let’s look at some of the most common challenges in the customs clearance process:

• Incorrect documentation – Incomplete paperwork or paperwork with mistakes can cause major challenges in the customs clearance process. Issues like missing invoices or incorrect tariff codes can mean goods are held up at customs and/or fines are issued. This is a particularly common challenge due to the sheer volume and complexity of documentation that is required in customs clearance.
  
• Duty/tax discrepancies – Complex duty and tariff structures can make it hard to know exactly how much is due on goods, especially as rates vary between countries. If goods are misclassified and/or duty miscalculated, it can mean customs hold the goods for a longer period in order to reassess them.
  
• Customs inspections – While these are a routine part of the customs clearance process, challenges can arise, particularly when importing restricted or high-value goods that require additional screening, causing delays at the border.
  
• Non-compliance with local regulations – Each country has its own customs regulations. Businesses need to understand the specific requirements of the countries they are transporting goods between and ensure the conditions are met. Failure to do so can lead to fines, additional inspections that cause delays and/or for goods to be rejected entirely.

 

How can you avoid delays in customs clearance?

 

Delays in customs clearance can be very costly. As such, finding ways to minimise the chance of problems during the customs clearance process is very important. There are a number of preventative strategies which help to avoid delays, including:

 

• Training to better understand regulations
  Training can help keep companies up to date with the ever-changing customs landscape – ensuring teams have knowledge about the latest duty and tax regulations, including free trade agreements and exemptions. Having a better grasp of these systems will help to proactively address potential issues during the customs clearance process and hopefully avoid them altogether.
  
  
• Rigorous documentation checks
  Taking steps to ensure all documentation is accurate helps minimise the chance of errors that could cause delays in customs clearance. For example, it is good practice to always double-check invoices, permits, certificates, and any other customs-related documentation before shipment, as well as to check goods have been classified correctly using the Harmonized System (HS) codes.
  
  
• Using digital technology solutions
  Leveraging available digital solutions – such as real-time shipment tracking, automated customs declaration software, and electronically submitting documentation – can help reduce errors, secure quicker customs approvals and ensure a faster clearance process.
  
  
• Working with an experienced customs clearance agent
  Arguably the best way to ensure you avoid delays in customs clearance is to work with a reliable customs clearance provider, such as Clarksons. The benefits of doing so are extensive – from faster processing times to guaranteed compliance. For example, as an experienced freight forwarding and customs clearance broker, Clarksons has an in-depth understanding of import regulations, customs procedures and applicable tariffs in different markets. We help clients by ensuring complete and accurate documentation is submitted, oversee the smooth processing of goods through both import and export customs, and even offer a Duty Deferment service. This service means clients can choose for Clarksons’ Duty Deferment Account to pay the Customs Duty and VAT due – avoiding the potential risk of miscalculating the amounts and/or underpaying, thus leading to fines and/or additional charges at a later stage.