Temporary Imports Headache!

[Alan Starkie]

Our business is camera repair - the older film variety and as such we offer a very specialised service. Our customers are worldwide which gives us a headache. For businesses like us - we take something, add value and return to the owner. Technically, any incoming item is subject to import duties and VAT - and there are no exceptions to this rule in the context of what we do. There is a scheme that essentially defers/suspends these duties and allow goods to pass through without delay. It is called Inward Processing (IP). As long as the goods are returned within 6 months, there are no duties to be paid. Great, until you find out that you need guarantees - basically lodging a few thousands in cash with the bank so that they will pay if the rules are broken. There is another method, whereby you pay the customs fees up front and reclaim them later - the problem is you can only use it three times per year! I was just about to sign up for full IP when I heard about another repair shop like ours who is IP registered but everything has to go through Parcelforce/UPS and goods are delayed by about 1 month plus he still gets a handling charge. My friend has spent a lot of time and money trying to get this sorted but unfortunately nobody is interested in his problem. If after Brexit, tariffs aren't sorted out we'll have all of our European customers to deal with in the same way. At the moment we rely on the stuff that gets through without duties and take the others as a business loss but it isn't really sustainable. I just wondered if any readers have similar businesses who have found a better way of working? I don't think it was set-up this way to harm small businesses but the reality is that it isn't suitable for purpose. Thanks.

 

[Deleted member 302361]

You have a number of separate issues that compounded have made trade difficult.
I'm unsure that the other shop has been given the correct information, with regard as to who they can use at import. If the UK government turned around tomorrow and said that going forward you could only use the Royal Mail for Imports and Exports there would be uproar - I can only guess that this restriction has been imposed by a third party. You can use whatever shipping agent you wish and as you have identified the fast parcel operators may not be your first choice.
Guarantees are now a fact of life for the majority of Customs authorisations. Introduced out of EU law they protect Joe public from a financial loss (i'm sure that you are an honest soul, but there are many who are not and all Customs authorities have a requirement to protect the revenue). What you pay is made up out of the revenue that needs protecting and the money the bank wants to protect their interest - Whilst the first part is initially non- negotiable you may find someone who may do it cheaper. The rules on who can issue a guarantee means that just about any reputable financial institution (e.g. a bank) can do it.
After you have a couple of years of Importing and Exporting done, without issue, you can approach Customs to see if the level of guarantee can be reduced. Finally whilst guarantees came out of Europe, when we leave the happy club I doubt the Government will withdraw them.

 

[James Rae]

What would be the lowest value, typical value and maximum value of the goods when repaired?... I'm assuming that when not repaired it is nominal as not working?

 

[Alan Starkie]

Thanks Tom, we're pretty much resigned to how it is. If we were dealing slightly more specialist equipment, we could appoint shipping agents that would make life easier. Our customers are dotted around the world - general public really but here is the thing. Someone in New York wants to send us a camera. We advise them to use FedEx or UPS for one reason only - providing they make sure there is a properly completed CN23 form on the parcel marked 'Repair and Return', more than 50% of the time, they sail through without charge, but in the USA, these carriers are expensive and instead use their national postal service USPS. All USPS packages are automatically directed through Parcel Force and I'd say 90% or more get held up and attract the usual duties. We are of course aware that these things are open to abuse. My complaint is that if we go down the official IP route, everything is automatically passed through Parcelforce/UPS (they work together) at this end. Presumably they're contracted to input the paperwork, they get bottlenecked for a month and even though VAT and Duties are deferred, you get charged handling anyway!

James - a typical camera we work on may be realistically valued between £900 - £2000 without a lens. We've had lenses in worth several thousands occasionally. If we do a full restoration, we charge anywhere between £500 - £750. Because these cameras are top-end, even a broken one would be worth at least £500. We advise our customers to place a realistic value on them when sending, especially if faulty but we never ever ask anyone to under declare - then you'll get a customer who doesn't follow our advice and sends as a gift - thinking they're helping us in some way - they always get gripped!

 

[Import Expert]

Hi Alan, There is perhaps a longer term solution to the IP problem - Bit it will take some time & effort (and as such, there is an indirect cost). If you apply to HMRC to become an Authorised Economic Operator (AEO), this typically means that any need for a financial guarantee for full IP is waivered. The process is quite a long one though. You need to have everything in place to meet the criteria before you apply. HMRC then have 30 days to accept or reject the application. If the former, they then have up to 120 days to authorise the application (or indeed reject it).

See: https://www.gov.uk/guidance/authorised-economic-operator-certification

 

[NickGrogan]

We advise them to use FedEx or UPS for one reason only - providing they make sure there is a properly completed CN23 form on the parcel marked 'Repair and Return', more than 50% of the time, they sail through without charge, but in the USA, these carriers are expensive and instead use their national postal service USPS.

Why don't you arrange for the products to be collected by your choice of courier, rather than sent by the client. That way everything comes via Fedex/UPS, you get better rates and less customs charges.

And its less work for the clients.

Win / Win