Is Every Single UK Import Agent Run By Crooks?

[Martin Winlow]

I have been importing various items from China these past 5 years or so and *every single* one of what must be getting on for 20 separate imports has left me feeling that the UK agent handling the importation has tried (and often succeeded) in ripping me off.

My latest exercise involves the imprtaion of 2 farly large PV (solar module) tracking arrays from Cnina. Despite paying the supplier on a 'DDU' basis (delivered duty unpaid) which should mean that the crate would be delivered to my door with only import duty and VAT payable to HMRC (or so I understand), the UK import agent initially tried to charge me ~£800 for delivery from Felixstowe to my business address, a 'customs clearance fee' and also wanted me to pay them use their HMRC deferment facility rather than just let me pay HMRC directly as I have done several times with other agents in the past.

Taking the matter up with my supplier and their shipping agent, I was assured that there should be *no* fees to pay other than duty/VAT.

Despite a week of emailing I could get nowhere with the UK agent with my position and in the end was threatened with storage costs if I didn't pay up... which, in the end, I did (duty/VAT and customs clearance, deferment fee)... albeit very reluctantly.

Can someone either confirm these people are a bunch of shysters, all descended from perfectly dodgy Victorian-esque dockside wheeler/dealers or if I (or my supplier) is in error, here?

Regards, MW
Isle of Colonsay
Scotland

 

[japancool]

the UK import agent initially tried to charge me ~£800 for delivery from Felixstowe to my business address

Did you get your supplier to arrange this, or did you arrange it yourself?

a 'customs clearance fee'

This is normal, and covers their paperwork and administrative costs.

and also wanted me to pay them use their HMRC deferment facility rather than just let me pay HMRC directly as I have done several times with other agents in the past.

You can always contact HMRC directly to pay them.

 

[Customs Geek]

DDU is one of the older Incoterms and was removed as long ago as the 2010 revision. Part of the buyers responsibility in DDU is to take financial and physical responsibility to transport to their own premises from the port of arrival. This includes paying for any customs duty and other fees associated with importing. The final delivery point should be clearly stated on the documents to avoid confusion.
It looks as if it was not clear to the agent that amendments to standard DDU had been made to cover transport from the port to your premises or how that transport had been arranged.
You may be better off looking at some of the more up to date 2020 Incoterms for future shipments.

Did you engage this clearance agent? If so you should have been able to agree all costs and payment methods with them before the goods arrived.

You could arrange to have your own deferment account set up with HMRC so you would be charged monthly by Direct Debit. Also there is a new cash account that you can deposit money into. These are both free to set up. The Agent would not charge you for using these.

If you are VAT registered you can also use postponed VAT accounting so you just account for the VAT in the VAT return instead of paying and reclaiming.

 

[Mark T Jones]

The title and tone of your OP makes me wonder if the problem might start closer to home

Are you being realistic in your expectations?

Have you reasearched terminology and variables before negotiating?

Are you just grabbing the cheapest quote and/or providers who say what you want to hear?

 

[Customs Geek]

I would echo @Mark T Jones and add that sellers are not best placed to understand all the possible costs in the destination country. Nor are they always transparent in what exactly is included.
There can be costs imposed by the port , demurrage costs , handling costs, fuel surcharge to name a few. As a buyer you should make sure that you understand what costs are likely so you fully understand what the price actually includes. ’caveat emptor’.

You can’t blame the customs agent if the seller hasn’t arranged for the goods to be collected nor expect them to deliver if no one has paid for them to do so.

 

[Mike Foulds]

As has been mentioned, you should ALWAYS be able to pay HMRC direct, avoiding the need for a Deferment fee, however, a Customs Clearance fee on DDU terms would be considered quite normal. The haulage cost, if on a DDU basis, is unreasonable, however, as mentioned by others, if the seller hasn't paid the agent in China for this, or the agent in China hasn't paid the UK agent, then they wouldn't cover, as why should they make an £800 on a job? I would suggest that this is where the issue is, rather than the UK agent trying to rip you off.

DDU, as has been mentioned by others, has now been discontinued and mostly replaced by DAP, I would suggest googling and downloading a copy of the Incoterms 2022, and reviewing and considering the options now available, and what is covered by each.

As has been mentioned by others, I would strongly recommend using terms of FOB, and working with a UK agent on that basis, as then you can receive quotes for ALL charges prior to shipping of cargo, and keep a MUCH more accurate control over them.

 

[Customs Geek]

I would add that the International Chamber of Commerce (ICC) who publish the Incoterms say that FOB is only suitable for sea shipments only that are bulk or breakbulk.
It is therefore not recommended for containerised goods. As an alternative FCA is suggested.
As @Mike Foulds says you can have full visibility of costs if you take control of shipping and UK clearance yourself.

 

[Chris wants more]

Having read your initial post, I am sorry to hear they you are feeling slight bemused by your experiences and have suffered additional costs which were not made transparent to you. Having worked in the industry myself for over 20 years for a well established Freight Forwarder, I can tell you now that things aren’t as clear and straight forward as what you may think. Customs processes are a ‘minefield’, being a Freight Forwarder myself, as soon as we get used to one system, another one is introduced a few years later and the current system CDS appears to have many problems.

Going back to your post, based on the Incoterms DDU, effectively the shipment has been prepaid to an agreed location minus the payment of UK Customs Duties & Taxes. Regardless the fact the shipment has been ‘paid through’, unless you can arrange the import clearance yourself you would need to work directly with the agent in order to arrange the import clearance and organise the delivery. Unfortunately there will also be additional costs to pay in the UK, the UK consolidator / Forwarder has a business to run and need to make money per shipment. As the delivery has been prepaid, they will have a set fee for the UK import clearance and will probably bill an agency fee. I can assure you, the UK Freight Forwarder is not out to get you, the Chinese should have made it clear the procedures and possible costs payable in the UK (usual story to be honest with you)

You can set yourself up for PVA (Post VAT Accounting) then you claim the VAT back against your VAT return however as cargo of Chinese origin the Duty must be paid upfront. You can pay this directly to customs (FAS Accounting). It does work but it not fool-proof, it’s not unusual for customs taking several days to process the payment, for example if your shipment unpacked late on a Friday, you take into account the weekend then customs time to process payment, you could almost be into storage fees before you have even got anywhere (standard free time 5-7 days).

If the agent has their own customs deferment account then they can utilise this (with your approval) however this will not be done for free, the minimum charge to do this will be around GBP 25 (effectively you would be using their back account).

I really have no clue on what you paid the Chinese agent for this service, however for future shipments it will be worth you looking at moving under a different incoterm, would probably work out more cost effective to arrange the customs clearance and delivery yourself, I suspect you paid an overinflated freight rate for the DDU terms.

I can assure you, from my point of view, we are not out there to rip you off at all, if you need any help in the future I am more than willing to offer my advice and guidance

 

[CHUKTC]

As Mike Foulds as advised - the bast if not only way to avoid this constantly recurring (and clearly annoying you) is to buy FOB or even Ex Works and arrange shipping and delivery yourself (or through a UK agent). That way you will have clarity of all the costs and possible additional charges involved before you ship. As others have said paying HMRC direct should be an otion and certainly would be if you arranged it that way.

 

[Martin Winlow]

Hi,

Thank you to all of you who replied.

I think my main gripe is the complete lack of clarity of costs involved when relying on whatever UK agent ends up dealing with the consignment on arrival in the UK - it often seems that the exporting agent doesn't know who this will be, let alone the seller.

In fact I have done what CHUKTC suggests before and got a UK-based freight-forwarder with a global presence to deal with it all and, were it not for the fact that, on that occasion, the shipping crate disintegrated on arrival in the UK, leading to all sorts of headaches and additional costs, I might have walked away from that particular deal feeling this was the way to go even if it was a bit more expensive.

On the HMRC front, will look into setting up an account with them but in my latest case, it is explicitly clear that the UK agent was trying to pull a fast one, given my repeated email requests to simply obtain a reference from the agent and pay HMRC direct - as I had done before - right up to the veiled threat of additional storage costs if I didn't comply (which in the end I did).

I can't help but feel some sort of enforced standard tariff for appropriate costs would be helpful - certainly for basics like 'port fees' and 'HMRC deferment'.

Anyway, your replies have reassured/educated me and I'll probably stick with FOB from here on in.

Thanks for your input. MW

 

[Customs Geek]

I think my main gripe is the complete lack of clarity of costs involved when relying on whatever UK agent ends up dealing with the consignment on arrival in the UK - it often seems that the exporting agent doesn't know who this will be, let alone the seller.

I think that’s where the problem for you lies. If the UK agent isn’t sorted out before the goods arrive then you are in the hands of whovever ‘claims‘ the load for clearance and they may not be the best or cheapest option for your shipment. Under DDU neither the seller or their exporting agent is required to sort this out. They will presume this is something you have sorted yourself.

I can't help but feel some sort of enforced standard tariff for appropriate costs would be helpful - certainly for basics like 'port fees' and 'HMRC deferment'.

I think this would be unlikey to happen as the ports and customs agents are business who can set their own commercial rates. Agents will be able to provide you with quotes and tell you what sorts of fees the particular port charge them that they will pass on to you. Most ports start charging storage (demurrage) after a few day so there is always pressure to get the goods customs cleared and removed asap.

 

[GraemeL]

Thanks to all who have posted in this thread, some very good advice.

 

[Joygirl]

Hi,
Having recently started a courier service, I'd be interested to know how to avoid this perception. How could the business have won your trust?

 

[Imevaconsult]

I have been importing various items from China these past 5 years or so and *every single* one of what must be getting on for 20 separate imports has left me feeling that the UK agent handling the importation has tried (and often succeeded) in ripping me off.

My latest exercise involves the imprtaion of 2 farly large PV (solar module) tracking arrays from Cnina. Despite paying the supplier on a 'DDU' basis (delivered duty unpaid) which should mean that the crate would be delivered to my door with only import duty and VAT payable to HMRC (or so I understand), the UK import agent initially tried to charge me ~£800 for delivery from Felixstowe to my business address, a 'customs clearance fee' and also wanted me to pay them use their HMRC deferment facility rather than just let me pay HMRC directly as I have done several times with other agents in the past.

Taking the matter up with my supplier and their shipping agent, I was assured that there should be *no* fees to pay other than duty/VAT.

Despite a week of emailing I could get nowhere with the UK agent with my position and in the end was threatened with storage costs if I didn't pay up... which, in the end, I did (duty/VAT and customs clearance, deferment fee)... albeit very reluctantly.

Can someone either confirm these people are a bunch of shysters, all descended from perfectly dodgy Victorian-esque dockside wheeler/dealers or if I (or my supplier) is in error, here?

Regards, MW
Isle of Colonsay
Scotland

Hi Martin,

I can confirm that the all brokers have a fee for completing the customs declaration, as well as for using their deferment account, if you wish so. The customs broker should always follow your instructions and if you wish to pay the Import Tax yourself, then they should have provided this option. However, they will still charge a 'clearance fee' for the work that they do.

I recommend to all my clients to get an independent customs broker to act on their best interests, rather than a broker that has a contract with the shipping company.

 

[Martin Winlow]

Hi,
Having recently started a courier service, I'd be interested to know how to avoid this perception. How could the business have won your trust?

Hi,

Apologies for the late response.

I have re-visited this thread as I am in this in the throes of importing another consignment from another manufacturer in China, seen your comment and can provide an example of just one way in which I feel I am being unfairly treated by UK import agents.

The UK import agent has emailed me to complete and send back two forms relating to them acting as my customs agent. One of them relates to dealing with payment of importation fees; customs, VAT, etc.

The options provided on the form are either for me to supply my own HMRC deferment account or to authorise them to use theirs, with the associated cost (at least refer to).

This to my mind is an example of dodgy practice in that there is a third obvious option which is for me to pay HMRC directly on invoice, not having my own deferment account, yet this is not mentioned as an alternative. The cynic in me immediately feels I am being pushed into just accepting using the import agents deferment account and therefore attracting an unnecessary cost to do so.

I appreciate this is as much naïveté as anything but nevertheless it gives an example of where an import agent wishing to attract business especially from young, Inexperienced companies could have a lever over the competition.

Regards, MW.

 

[japancool]

If you're vat registered, just use PVA.

 

[Customs Geek]

What the agent is asking is entirely normal practice. There simply isn’t the option to pay HMRC by invoice later. HMRC do accept direct payment by credit card or bank transfer but your goods won’t get released from customs until the duties have physically been paid.

Ports and airports are busy places short on space so they expect goods to be shifted fairly quickly otherwise they charge. Agents need to get goods cleared quickly so using a deferment account secures the duty and release the goods . The agent needs to charge as they are taking a chance the customer doesn’t pay them back once they have their goods.

All EORI holders also have a cash account that allows you to deposit monies to pay any duty. This is accessible via your Government gateway login.
Plus it’s also quite easy to set up your own deferment account . You can easily apply for credit of up to 10000 and provided you set up the direct debit so you pay monthly.

As Japancool says if you are VAT registered you can use Postponed VAT accounting to account for the VAT element but not duty. This is available without any prior approval you just need to tell your agent you want to use it. You will need to account for this on your VAT return .

The agent is also legally bound to get permission from you to act as their agent.

 

[Martin Winlow]

So, for the benefit of anyone else finding finding themselves in the same predicament…

The answer is if you only receive relatively few imports and are not VAT registered (as I am not) and therefore it is not worth setting up your own HMRC deferment account and also wish to avoid having to pay your importation agent for the privilege of using their own HMRC deferment account, the answer is to apply to the HMRC to subscribe to the Customs Declaration Service whereupon, if successful, you will automatically receive a cash account for paying Customs fees for imports.

I assume that at the appropriate point in the importation timeline, I will advise your agent of your CDS details so that they can arrange for import fees to be paid from your CDS cash account avoiding any delays or complications.

Obviously you will be required to fund that account in good time to avoid problems.

MW

 

[japancool]

I assume that at the appropriate point in the importation timeline, I will advise your agent of your CDS details so that they can arrange for import fees to be paid from your CDS cash account avoiding any delays or complications.

You will?

 

[Paul Kelly ICHYB]

This to my mind is an example of dodgy practice

Why?

avoid having to pay your importation agent for the privilege of using their own HMRC deferment account

So, you expect them to use their money to fund the import for free?

 

[Martin Winlow]

Why?

So, you expect them to use their money to fund the import for free?

No, I expect them to explain *every* way to settle HMRC's bill, not just the ways that earn them money!

 

[MBE2017]

No, I expect them to explain *every* way to settle HMRC's bill, not just the ways that earn them money!

I can understand why you would like this, but I can easily understand why ANY company would prefer not too. A lot comes down to time, and understanding what works for the 99% of people who are happy.

I used to sell electrics for houses and industrial buildings, and if someone approached myself about getting lighting for instance, I would offer two, potentially three ideas, and nail the solution from their responses. I simply wouldn’t waste my time discussing the other hundreds of potential solutions, since for 99% it would be a complete waste of time. I am sure most companies do the same.

As for not earning them money, I’m sure they will cope without the odd charge, usually delays leading to storage fees will more than offset any loss in monies.

 

[Paul Kelly ICHYB]

No, I expect them to explain *every* way to settle HMRC's bill, not just the ways that earn them money!

There are only 2 ways - you pay or they pay on your behalf. It is not their responsibility to be your advisor for one off events!

With 20 imports, surely you should have worked that out by now and started asking the right questions by now! I have used several different companies (mostly my choice, but sometimes 'allocated') and all of them have helpful and answered any questions.

Choose a FF, when you import, tell the supplier about your FF. As mentioned, look at FOB pricing, compare costs and decide which route is best for you!

 

[Martin Winlow]

With respect this is not correct. You can use your agent's deferment account (and pay for the privilege), pay HMRC directly when the invoice is raised by the agent (which causes delay for all involved) or pay HMRC either immediately or regularly/collectively via a CDS account.

 

[Martin Winlow]

I can understand why you would like this, but I can easily understand why ANY company would prefer not too. A lot comes down to time, and understanding what works for the 99% of people who are happy.

I used to sell electrics for houses and industrial buildings, and if someone approached myself about getting lighting for instance, I would offer two, potentially three ideas, and nail the solution from their responses. I simply wouldn’t waste my time discussing the other hundreds of potential solutions, since for 99% it would be a complete waste of time. I am sure most companies do the same.

As for not earning them money, I’m sure they will cope without the odd charge, usually delays leading to storage fees will more than offset any loss in monies.

Sorry, but the analogy is as inappropriate as it is silly. There only 3 ways to pay HMRC for import fees and I simply think it rather underhand to not cover them all especially when they know they are dealing with an inexperienced importer/customer.

 

[marcus_bond]

We have a cash account with HMRC... full of cash... and despite authorising many different hauliers/importers to use it to use it, and telling them to do so... they don't... it's never been touched... the vague answers we get for why they don't use it are that it doesn't actually work. So we get charged anywhere between £50-100 to use their deferment account, often to collect tiny amounts of duty, far smaller than the deferment account fee. As far as we're concerned, it's a way for the haulier to make their fee, if it wasn't this, they would simply get it another way.

 

[scstock]

My FF doesn't charge me to use their Deferment account. It's usually <£100 Duty, 2 or 3 times a month. I was paying £60 a quarter to HSBC to Guarantee our own Deferment account which irked me.

The introduction of PIVA was definitely a Brexit Benefit (though could have been introduced before).

 

[Customs Geek]

Out of interest when you say you have authorised many different hauliers/ importers did you do this online through your account? The party/ intermediary making the declaration needs to be authorised by you as the importer using their EORI number.

 

[Customs Geek]

My FF doesn't charge me to use their Deferment account. It's usually <£100 Duty, 2 or 3 times a month. I was paying £60 a quarter to HSBC to Guarantee our own Deferment account which irked me.

The introduction of PIVA was definitely a Brexit Benefit (though could have been introduced before).

For most UK based importers it’s is not been a requirement to hold a deferment guarantee with a bank or financial institution for some time- you can ask / apply for a guarantee waiver . If you have a monthly deferment limit of £10,000 or less it’s very simple.
If it’s over that it’s a bit more paperwork to prove you are trustworthy and a fully solvent business but still possible to get a waiver .
Look up
check-if-you-can-get-a-guarantee-waiver-for-a-duty-deferment-account-in-great-britain on the .gov website