Selling goods abroad

Every country decides for itself what can come across its own border, in what quantity and on what terms. Those are not the rules that apply when goods leave Great Britain. They are a separate set, written and enforced by the country the goods are going to, and they come first in the order of things an exporter needs to work through.

Rules set by the destination country

The country receiving the goods sets its own list of what is allowed in, what needs a permit, and what is banned outright. It also sets its own duty and tax on the goods once they arrive, worked out under its own system. A product that moves freely out of Great Britain can still be refused, delayed or taxed heavily at the other end, depending entirely on rules the seller does not control.

The practical consequence is that the destination country's rules are worth checking before an order is agreed. A supplier's own paperwork or a courier's standard terms will not tell you what the receiving country actually requires.

Checking the buyer can import the goods

Sending goods abroad is only half the movement. The buyer has to be able to receive them, and that depends on rules in their own country. Before goods are sent, it is worth asking the buyer to confirm a few things directly, since they are usually better placed to know their own country's requirements than the seller is.

• Whether the goods need an import licence, permit or registration in the buyer's country
• Whether the goods are restricted, controlled or banned for import there
• Whether any duty or tax will be due on arrival, and who is expected to pay it
• Whether the buyer is already set up to import this type of goods, or is doing so for the first time

A commodity code, the reference number used to describe a product for customs purposes, often decides the duty a country charges on goods coming in, just as it decides the position for goods coming into Great Britain. The commodity codes guide covers how a code is found and what it is used for.

Some goods cannot leave Great Britain at all without a licence or a certificate, whatever the buyer wants or the commercial invoice says. The requirement sits separately from the paperwork you prepare for the sale, and it has to be sorted out before the goods are sent.

Categories GOV.UK lists

GOV.UK keeps a list of goods that need a licence or certificate before they can be exported. The categories include:

• Weapons, military equipment and related technology
• Dual-use items, meaning goods that could have both a civilian and a military use
• Certain plants, animals and products made from them
• Cultural objects and antiques
• Some chemicals and medicines

Whether a licence applies to a particular product usually turns on the commodity code assigned to it, since that code is what identifies the goods for export control purposes. Working out the right code is covered on the Commodity Codes and the Trade Tariff page.

Sanctions

Separately from licensing, the government maintains sanctions that can restrict or block trade with particular countries, organisations or individuals. These lists change, so they are worth checking against a new buyer or destination before a sale is agreed. GOV.UK publishes the current sanctions lists and updates them as they change.

Where a licence, certificate or sanctions check applies, the detail needs to be kept with the other records for the sale, alongside the information covered on the Customs Declarations page.

A commercial invoice describes what you are selling, who is selling it, who is buying it, and what it costs. The buyer uses it to pay you and to get the goods through customs in their own country, and customs there uses it to work out the duty owed on the shipment.

A commercial invoice usually shows:

• the seller's and buyer's names and addresses
• a description of the goods
• the quantity and the price per unit
• the currency the price is set in
• the commodity code, where you know it
• the country where the goods originated
• the Incoterm you agreed with the buyer

Showing freight and export insurance separately

Customs works out the value of a shipment from the price paid for the goods, and whether transport and insurance are added to that value depends on the terms you agreed with the buyer. You can read more about how customs value is worked out and how the agreed terms affect it.

Listing the freight cost and the export insurance as their own lines on the invoice lets the buyer's customs authority apply the right treatment to each. Where the goods are not insured for the journey, there is nothing to list, and the invoice can say so.

What travels with the goods

A copy of the commercial invoice normally travels with the shipment itself, attached to the outside of a parcel, carried by the transporter, or sent electronically alongside the customs declaration. That way, a customs officer checking the shipment at the border can see it without waiting for a copy from anywhere else.

Other papers may need to travel with it too, such as proof of origin or a certificate a particular product needs. What else the buyer's country asks for is worth checking before the goods are sent, since it varies by country and by product.

Proof of origin is a document or statement that shows which country goods were made in. A product bought from one country but made in another takes its origin from where it was made.

Why origin can change the duty the buyer pays

Where the UK has a trade agreement with the country your buyer is in, the buyer's customs authority may charge a lower rate of Customs Duty, or none, on goods that originate in the UK. The agreement looks at where the goods were made and how much of them came from UK materials and UK work. Working through these rules of origin is usually the hardest part of claiming the lower rate.

Without proof of origin, the buyer's customs authority normally charges duty at the standard rate, even where an agreement exists and the goods would otherwise have qualified for less.

What proof of origin can look like

Depending on the agreement between the UK and the buyer's country, proof of origin can take more than one form:

• A statement on the commercial invoice, worded the way the agreement sets out, confirming that the goods originate in the UK.
• A separate certificate of origin, issued or signed before the goods leave.
• A supplier's declaration from a UK supplier, where goods pass through more than one business before they are exported.

The buyer's customs authority decides which form it will accept, so it helps to ask the buyer which one their country's agreement needs before the goods are sent.

When you sell goods to a business or a customer outside the UK, you do not normally charge UK VAT on the sale. HMRC calls this zero rating, and it means the sale is still a taxable sale for VAT purposes, just charged at a rate of nought per cent.

What zero rating means

Zero rating is not the same as a sale falling outside VAT altogether. A zero-rated export still goes into your VAT records and onto your VAT return, but the rate charged on it is nought per cent, so your buyer pays no UK VAT on the price. HMRC sets out the conditions for this in Notice 703, VAT: export of goods from the UK and the Channel Islands.

The time limit for the goods to leave

Zero rating only holds where the goods actually leave the UK within the time limit HMRC sets in Notice 703. If the goods are still in the UK once that time limit has passed, the sale stops qualifying for zero rating and VAT becomes due on it. The time limit itself depends on the type of export, and Notice 703 sets out the limit for each case.

The evidence you need to keep

To support zero rating, HMRC expects you to hold evidence that the goods left the UK. This falls into two kinds. Commercial transport evidence covers things such as the airway bill, the bill of lading or the International Consignment Note. Supplementary evidence covers the order from your buyer, your correspondence with them, or the insurance documents for the shipment. Notice 703 describes what counts as acceptable evidence in each case.

Without this evidence, HMRC can treat the sale as though it happened in the UK and charge VAT on it. Keeping it alongside the records kept for a customs declaration makes it easier to show, if HMRC asks, that a sale qualified for zero rating.

Once the paperwork for leaving Great Britain is in order, the goods still have to get past the destination country's own border, and that border runs on its own rules. GOV.UK publishes country-by-country guidance for exporters, setting out the licences, standards and documents each country expects for goods arriving from outside it. Look up the guidance for the country you are selling to before the goods are booked for shipping, because the requirements for one country rarely match another.

Asking the buyer

The buyer is often the fastest route to a correct answer. Someone who imports regularly from outside their own country usually knows exactly what their customs authority wants to see, because they deal with it each time a shipment arrives on their side of the border.

• Which documents their customs authority asks to see alongside the goods
• Whether the goods need a licence or certificate in their country, separate from anything required to leave Great Britain
• Whether proof of origin would let them pay a lower rate of duty
• Who is making the import declaration at their end, and what information from you it needs

Two things travel with the goods whatever the destination: a commodity code and, in most cases, a customs declaration covering the export. The code used to describe the goods on export is found the same way as for an import, and the rules for making a declaration apply on the way out as well as on the way in.