Frequently Asked Questions.

Customs Duty- Ad Valorem and Excise

Customs Duty is payable to HM Customs immediately upon import of goods and is non-refundable, except in certain special circumstances. It is a tax on the importation of goods.

Duty is usually, though not always, calculated as a percentage of the “landed” value of the goods, in other words the value of the goods once the cost of their shipment to the UK has been taken into account.

A typical calculation for Customs Duty would comprise:
Value of goods + Freight Costs + Any Insurance cost X Duty percentage rate =
In certain instances Duty is payable on quantity of items rather than value. There may also be additional duties to pay on particular types of goods, for example foods or wine. Some of these Duties are known as Excise. As with Ad Valorem Duty it is payable on import, is non refundable and is most often payable in addition to Ad Valorem Duty.

Duty rates can vary considerably from just one or two percent to over fourteen percent. Many items also carry a nil rate. It is therefore essential that the correct classification code be obtained.

VAT (Value Added Tax)
VAT is a tax payable to HM Customs immediately upon the import of virtually all goods brought into the UK. VAT is payable on the landed cost of the goods plus Duty and clearance charges. Customs dictate the declaration of a nominal amount for the clearance charges. On airfreight this is £100.00 or £0.40 per kilo.
A typical calculation for Import VAT would comprise:

Value of goods + Freight Costs + Insurance + Duty + Clearance Costs X VAT rate = VAT

If you are registered for VAT you are able to reclaim all VAT paid on import, this is done in conjunction with your usual VAT returns (C79).

If you are not registered you will not be able to reclaim, but you must register with HM Customs prior to arrival of the goods. They will issue a number which can be used on initial and subsequent Customs entries and which can be used by you to reclaim the VAT paid if and when you do decide to register

All product imported into the UK must be classified using the Customs Tariff. The classification code, sometimes known as Commodity Code, Tariff Heading or Harmonised Code is the key to discovering what Duty rates, restrictions and reliefs may apply to the import of your goods.

  • Duty rates can vary considerably from just one or two percent to over fourteen percent. Many items also carry a nil rate.
  • From certain countries relief from Duty may be available upon production of the correct certificate.
  • Some items are subject to import licence requirements
  • Some items are subject to documentary requirements such as Certificate of Origin

It is absolutely vital to ensure that you have obtained the correct Commodity code for your goods prior to completing any order. If the code indicates that goods are subject to an Import Licence or that you may be able to obtain relief from Duties it is important that you and your supplier are aware of the attendant documentary requirements as certain certificates may not be available once consignments have departed the country of origin.

Customs Duty- Ad Valorem and Excise

Once you are satisfied that your goods are correctly classified you should check that the Customs Procedure to be utilised is suitable

If you are importing goods for any other purpose than to sell them within the EU you may be able to claim relief from Duty and / or VAT.

For example goods being imported for repair you can utilise a Customs Procedure known as Inward Processing Relief, under which full relief can be obtained.

There are a great number of Customs Procedures; again it is important to make yourself aware of what is available and suitable prior to shipment.

The Incoterms or Shipping terms will be the agreed purchasing terms and conditions between a supplier (consignor) and their client (consignee). It is the incoterm which sets the parameters for a financial transaction and specifies which costs becomes the responsibility of the parties involved.

The incoterms can significantly affect the overall cost and handling of the imported product, it is therefore essential you know your options prior to any agreement and have a clear understanding of the benefits of choosing the right incoterm for your import requirements.

The most commonly used ‘Incoterm’ are as follows:
DDP – Delivered Duty Paid: The supplier pays ALL charges for transporting the consignment to your door. (This will exclude in most cases VAT as this can be reclaimed by the consignee)

DDU – Delivered Duty Unpaid: The supplier pays all charges for transporting the consignment to your door, except any import Duty and/or VAT.

CIF – Cost Insurance Freight: The supplier pays all charges for transporting the consignment the UK. The value of the goods shown on the invoice/bill of sale includes these costs. All UK charges are for your account

C&F – Cost & Freight: This is the same as above, but in the shipper has not paid for any insurance.

FOB – Free On Board: The supplier pays for the goods to be transported to the port/ airport of departure. All other charges are for your account.

EXW – Ex Works. You pay all charges incurred from supplier’s door to your own.

EQUIPMENTINTERIOR DIMENSIONSDOOR OPENINGTOP OPENINGTARE WEIGHTCUBC CAPACITYPAYLOAD
40′ High cube ContainerL:12.056m 39′ 6 ½
W:2.347m 7′ 8 ¼
H:2.684m 8′ 5½
W:2.340m 7’8
H:2.585m 8′ 5 ¾
 2,900 kg 6,393 lbs76.0 cbm. 2,684 cu. ft.29,600 kg 62,256 lbs.
40′ Dry ContainerL:12.051m 39′ 6 ½”
W:2.340m 7′ 8″
H:2.380m 7′ 9½”
W:2.286m 7′ 6″
H:2.278m 7′ 5 ½”
 3,084 kg 6,799 lbs.67.3 cbm. 2,377 cu. ft.27,397 kg 60,401 lbs.
20′ Dry ContainerL:5.919m 19′ 5″
W:2.340m 7′ 8″
H:2.380m 7′ 9 ½”
W:2.286m 7′ 6″
H:2.278m 7′ 5 ½”
 1,900 kg 4,189 lbs.33.0 cbm
1,116 cu. ft.
22,100 kg 48,721 lbs
20′ Open Top ContainerL:5.919m 19′ 5″
W:2.340m 7′ 8″
H:2.286m 7′ 6″
W:2.286m 7′ 6″
H:2.251m 7′ 4 ½”
L:5.425m 17′ 9 ½”
W:2.222m 7′ 3 ½”
2,174 kg 4,793 lbs31.6 cbm. 1.116 cu. ft.21,826 kg 48,117 lbs
40′ Open Top ContainerL:12.403m 39′ 6″
W:2.338m 7′ 8″
H:2.272m 7′ 5¼”
W:2.279m 7′ 5 ½”
H:2.272m 7′ 5 ¼”
L:11.585m 38″
W:2.162m 7′ 1″
4,300 kg 9,480 lbs.64.0 cbm
2,260 cu. ft.
25,181 kg 57,720 lbs
20′ Flat Rack ContainerL:5.702m 18′ 8 ½”
W:2.438m 8′
H:2.327m 7′ 7½”
  2,330 kg 5,137 lbs. 28,390 kg 47,773 lbs.
40′ Flat Rack ContainerL:11.820m 38′ 9 ¼”
W:2.184m 7 ½”
H:2.095m 6′ 10½”
  5,260 kg 11,596 lbs. 25,220 kg 55,600 lbs

Many Importers do not have their own warehousing and distribution services, especially if they have seasonal lows or sporadic activity. Empty warehouses, idle staff and un-utilised vehicles create an un-necessary drain on resources and profitability.
Nucleus PDS offers such services at Heathrow, Barking, Southampton and South Africa.

If you’re interested in learning more about these services please do not hesitate to contact us.

Cargo Insurance is obviously the most reliable and cost effective way to protect a shipper’s cargo against instances of unexpected damage and loss.

Freight forwarders rarely offer their own insurance, however most will be able to recommend a reliable insurance broker.

Please do not hesitate us on details provided should you require any further information on this matter.

In simple terms, a letter of credit is an undertaking by a bank to make a payment to a named beneficiary within a specified time, against the presentation of documents which comply strictly with the terms of the letter of credit.

Its main advantage is providing security to both the exporter and the importer, but the security offered however, comes at a price and must be weighed against the additional costs resulting from bank charges. The exporter must understand the conditional nature of the letter of credit and the fact that payment will not be made unless the terms of the credit are met precisely.

An importer/buyer (Applicant) may open a letter of credit if they wish to ensure that the exporter/seller (Beneficiary) has performed those requirements as per the underlying sales contract, by making the documentation requested conditions of the credit. (N.B. The sales contract is not an inherent part of the letter of credit, although the letter of credit may contain a reference to such contract).

When an exporter asks for payment by letter of credit, he is transferring the risk of non-payment by the buyer to the Issuing Bank -and the Confirming Bank if the letter of credit is confirmed-, providing the exporter presents the required documents in strict compliance with the credit, with the exception of cash in advance. For the exporter a letter of credit is the most secure method of payment in international trade provided the terms of the credit are met.

A bill of lading (also referred to as a BOL or B/L) is a document issued by a carrier e.g. a company’s shipping department, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. The term derives from the noun “bill”, a schedule of costs for services supplied or to be supplied, and from the verb “to lade” which means to load a cargo onto a ship or other form of transport.

Please Note

Our address has changed

Nucleus International Cargo Ltd
Kingswick House, Kingswick Drive
Sunninghill, Ascot
Berkshire
SL5 7BH

IncoTerms.

The incoterms define the role between seller and buyer at an international transaction. In the contract between the seller and the buyer, the following is determined:

  • The duties of the buyer and the seller.
  • Who takes care of the insurances, licences, permissions and all other formalities.
  • Who arranges the transport until which point and who is responsible for this.
  • The point where the costs and risks pass on from the seller to the buyer.

There are thirteen different incoterms in Incoterms 2000 and 2010. These incoterms take care of the international rights and duties from the buyer and the seller. Six of the thirteen incoterms are about ocean freight. The remaining seven incoterms are regarding all transport modalities. The Incoterms are being prepared and published by the International Chamber of Commerce (ICC). The most common terms are:

EXW – ExWorks (2000 and 2010)
This term represents the seller’s minimum obligation since they only have to place the goods at the disposal of the buyer. The buyer must carry out all tasks of export & import clearance. Carriage & insurance is to be arranged by the buyer.

FCA – Free Carrier (2000 and 2010)
This term means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. Seller pays for carriage to the named place.

CPT – Carriage Paid To (2000 and 2010)
This term means that the seller delivers the goods to the carrier nominated by them, but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. The buyer bears all costs occurring after the goods have been so delivered. The seller must clear the goods for export. This term may be used irrespective of the mode of transport (including multimodal).

DAT – Delivered at Terminal (named terminal at port or place of destination) (2010)
Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

DAP – Delivered At Place (named place of destination) (2010)
Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

DDP – Delivered Duty Paid (2000 and 2010)
This term represents a maximum obligation to the seller. This term should not be used if the seller is unable to directly or indirectly to obtain the import license. The terms mean the same as the DDU term with the exception that the seller also will bear all costs & risks of carrying out customs formalities including the payment of duties, taxes & customs fees.

FAS – Free Alongside Ship (2000 and 2010)
This term means that the seller delivers when the goods are placed alongside the vessel at the named port of shipment. The seller is required to clear the goods for export. The buyer has to bear all costs & risks of loss or damage to the goods from that moment. This term can be used for ocean transport only.

FOB – Free On Board (2000 and 2010)
This term means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. This means the buyer has to bear all costs & risks to the goods from that point. The seller must clear the goods for export. This term can only be used for ocean transport. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

CFR – Cost and Freight (2000 and 2010)
This term means the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs & freight necessary to bring the goods to the named port of destination, BUT the risk of loss or damage, as well as any additional costs due to events occurring after the time of the delivery are transferred from seller to buyer. The seller must clear goods for export. This term can only be used for ocean transport.

CIF – Cost, Insurance, Freight (2000 and 2010)
The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the cost & freight necessary to bring goods to a named port of destination. Risk of loss & damage is the same as CFR. Seller also has to procure marine insurance against buyer’s risk of loss/damage during the carriage. The seller must clear the goods for export. This term can only be used for ocean transport.

CIP – Carriage and Insurance Paid (2000 and 2010)
This term is the same as CPT with the exception that the seller also has to procure insurance against the buyer’s risk of loss or damage to the goods during the carriage. This term may be used for any mode of transportation.

DDU – Delivered Duty Unpaid (2000)
This term means the seller delivers the goods to the buyer, not cleared for import, and not unloaded from arriving means of transport at the named place of destination. The seller bears all costs & risks involved in bringing the goods to the named place other than “duty” (which includes the responsibility for customs formalities & payment of those formalities, duties & taxes) for import into the country of destination. Buyer is responsible for payment of all customs & duties & taxes.