Exporting goods: how to nail the paperwork

Despite the business benefits of trading internationally, the UK lags behind its economic peers when it comes to international trade, especially the trade in goods rather than services. There is broad political consensus on encouraging UK firms to trade more. This week is E-Commerce Week, encouraging SMEs to use e-commerce to quickly reach global markets. The UK government also continues to promote its export strategy Made in the UK, Sold to the World. 

One of the biggest barriers to trade is a lack of requisite knowledge about the administration involved. Many businesses are put off as a result. 

“Compared to a domestic sale, which typically requires a tax invoice and is relatively simple, the paperwork trail for international sales is much more intense,” notes Ruth Corkin, Principal for Indirect Tax at Hillier Hopkins and Member of ICAEW’s Duties Committee. 

Understanding this paperwork and how to compile it is a critical component of developing an export strategy. Both customs and VAT considerations need to be factored into any exporting activity.

Compiling core customs paperwork

From a customs perspective, businesses need to provide details of what they are shipping, evidence that it has been shipped and to complete a customs declaration. “It is about providing an audit trail to HMRC,” says Roger Marshall, Customs Consultant at The Institute of Export & International Trade. “This means that if HMRC inspects your declarations for export and import, you have a trail that justifies your declaration.”

In terms of documentation, this translates to commercial invoices or packing lists that provide details of the consignment. Then there is the bill of lading (BL), a legal document that provides the carrier and shipping company with the information needed to complete the shipment and acts as a receipt for the shipped goods. 

Companies also need to complete a customs declaration. From 4 June 2024, all customs declarations must be submitted using the Customs Declarations Service (CDS), which replaces the outgoing Customs Handling of Import and Export Freight (CHIEF) system, and the Single Administrative Documents (SAD) declarations. 

The customs declaration details the goods being moved, weight including immediate packaging and weight including the outer packaging, Corkin explains. It also needs to show the planned route, means of transport, and the exporter’s and importer’s details. The commodity code details what the goods are. “Finally, there is the value of goods, the currency used and details of any authorisations required for the movement.” 

Once submitted, CDS generates a Movement Record Number (MRN), which must be provided to customs as evidence of shipping. 

While some companies have in-house capabilities to manage the declaration process, many opt to work with customs agents. These may be dedicated agents or a department within an accountancy practice. 

“As with most things in business, the best endorsement is recommendation. So, if you know others in the sector who use certain agents, it is worth talking to them. HMRC also has a list of customs agents and details of what those agents will or won’t do,” says Corkin. “You then have to be really specific about what you instruct your agent to do. By and large, agents are not responsible for errors in customs declarations. They are only culpable if they have willfully ignored a client’s instruction, which is more a professional negligence case.”