Accounting & Tax for Import & Export Businesses

Yes — an EORI (Economic Operator Registration and Identification) number is mandatory for any UK business importing or exporting goods. Without an EORI, your shipments will be held at the border. EORI registration is free and takes 5–10 minutes via HMRC’s website. We register EORI numbers for all new import/export clients as part of onboarding.

Normally, import VAT is paid at the point of customs clearance — requiring immediate cash payment before the VAT is recovered on the next VAT return (which can be 1–3 months later). Postponed VAT Accounting (PVA) allows you to account for import VAT on your VAT return instead — Box 1 (output) and Box 4 (input) cancel out, meaning no cash payment at the border. This eliminates the cash flow gap entirely.

The arm’s length principle requires that transactions between related companies (e.g., UK company buying from its own Hong Kong subsidiary) are priced as they would be between independent parties in a free market. HMRC requires documentation that demonstrates arm’s length pricing for related-party transactions above certain thresholds. We prepare transfer pricing documentation in the OECD format required by HMRC.

Exports of goods from the UK are zero-rated (0% VAT) — but HMRC requires evidence of export to be retained for 4 years. Acceptable export evidence includes: customs export declaration (C88), commercial invoice, bill of lading or airway bill, and certificate of shipment. Without documentation, HMRC can assess VAT at 20% on exports during a VAT inspection.

IPR is a customs duty suspension scheme that allows goods to be imported into the UK for processing (manufacturing, assembly, repair) and then exported, without paying import duty on the materials. It’s particularly valuable for manufacturers importing components from high-tariff countries (e.g., China) for use in goods that are then exported. We apply for IPR authorisation and manage the ongoing compliance.

Freight forwarders are logistics specialists, not tax advisers. Their commodity code classifications are often based on brief descriptions rather than detailed product analysis. They bear no liability for incorrect classification — you do, as the importer of record. Always have classifications independently verified.

Many UK importers are still paying import VAT at the border (via C79 certificates) and waiting for recovery on their VAT return — tying up thousands in cash for 1–3 months per shipment. PVA is free to activate and available to all VAT-registered businesses. There is no reason not to use it.

VAT zero-rating on services to overseas customers is not automatic — it depends on the ‘place of supply’ rules, which vary by service type and customer type (B2B vs B2C). Many services that appear to be overseas supplies are actually standard-rated. Incorrect zero-rating of services is a common VAT investigation trigger.

If you import from a country with which the UK has a Free Trade Agreement (Australia, Japan, South Korea, Canada, etc.), you may be entitled to reduced or zero duty rates — but only if you claim preference by providing a valid origin declaration. Many importers are paying full MFN rates when FTA rates would apply. Check every country of origin against the UK’s FTA schedule.