During the current economic climate it is the ideal time for companies to review their operations with a view to reducing costs and an important part of this for an importer will be the landed cost of goods, including supply chain and related expenses.
Obviously as a first step a company will be looking to apply pressure to suppliers to reduce the cost of the goods, increase credit terms, reduce transport and ancillary charges as well as possibly utilising consolidation overseas or a more radical rationalisation or re-organisation of the supply chain.
A pro-active importer may also look at the total cost of import by reviewing their customs declarations to ensure that they are tax and cost efficient.
Some traders may look at the cost of the process of making customs declarations with some deciding that there are savings to be achieved by consolidating their clearances to a single point or indeed bringing them in house altogether. By obtaining and using their own deferment account alongside obtaining SIVA approval can also potentially significantly reduce costs or improve cash flow.
By reviewing the tariff codes being declared, the basis of valuation used and the procedures available to them can all lead to potential cost savings or at the very least ensure that there are no nasty surprises on the horizon from the tax man because of inadequate controls or procedures.
Customs Warehousing is one of those customs procedures that is often overlooked because it is usually considered by importers to be administratively burdensome or expensive to both implement and operate but that need not necessarily be the case. As the pressure on cash flow increases then the ability to store goods without payment of duty and VAT until the goods are removed to free circulation should clearly be an attractive proposition.
With the tightening of Inward Processing Relief equivalence rules and the forthcoming demise of IPR drawback then Customs Warehousing may also be the only option for traders who are likely to re-export imported products outside the EU without payment of import duty but either undertake only minor handling operations or are unsure which products will be re-exported at the time of import.
So does Customs Warehousing have to be difficult? Sure an importer could employ a third party operator to store your goods on your behalf but what if the importer wants to take control and store goods in house?
One company who decided to do this is Harrison & Clough, the UKs leading supplier of fasteners, fixings, hand tools and power tools. Andrew Brook, Group Financial Controller sets the scene We could see from a cost benefit analysis that we needed customs warehousing but we didnt really know too much regarding how best to gain the necessary approvals from HMRC or in fact about the ways in which the goods within a customs warehouse would need to be treated and controlled.
Harrison & Clough made the decision to contact e-customs Limited, the leading supplier of web based customs management systems. Andrew continues However we did know about e-customs Ltd and it was very quickly clear that these were the right people to advise and guide us further.
It was quickly established in order to meet the operational requirements and existing supply chain framework that a Type E customs warehouse was the only viable option.
A common concern in the application process is that HMRC generally like to see a working model of the proposed customs warehousing solution before giving final approval. This can be difficult where installed systems or large upfront costs are involved and can lead to uncertainty as to whether to proceed with development.
But by choosing a web based model Harrison & Clough and e-customs worked closely together over a number of months to create a combined solution which when demonstrated to HMRC showed exactly how a companys commercial system could work in synergy with the e-customs duty management modules to produce a comprehensive and compliant customs warehousing management system.
By implementing a duty management solution and recording duty paid and bonded stock it also enabled Harrison & Clough to gain the full advantages of customs warehousing. This is achieved by prioritising stock to ensure that the most tax beneficial stock is picked for removals first without the need for a lot of time and effort on the part of the company trying to manage this manually. Using the e-customs web based system also allowed them to be flexible in the way the system was implemented and the option to include their logistical partners at the ports and airports in the process.
As a result HMRC duly authorised the warehouse application and the trader was free to choose the ideal implementation date.
So did Harrison & Clough find the implementation process difficult and the operation arduous? As matters have turned out we simply could not be more pleased with the results. From the initial application forms, to the different HMRC and software meetings, e-customs have steered us through each step of the way and ensured that when we finally went live, it was a bit of a non-event! Now after running the e-customs Limited, web based duty management system, Webware, it boils down to some simple daily checks with very little or no manual intervention by us, and thats with over 56,000 product lines. answers Andrew.
Therefore in terms of cash flow savings the benefits have been achieved and Harrison & Clough feel that implementing customs warehousing has been an overall success.
Andrew Brook summarise the positive outcome for his company Our deferment account looks an awful lot healthier and the e-customs implementation costs were more than reasonable. I really do wish the company had done it a few years ago! It has been an overall success for 2009. I would like to take this opportunity to say a big thank you to the e-customs implementation team for their time and effort that has been given to Harrison & Clough in getting to where we are today.
Alun Davies, Managing Director of e-customs Limited says, When Webware first came onto the scene, we were keen to ensure that the product could provide links to the very best methods of working with Customs electronically. It was soon clear to us that, of the various solutions on the market, many offering little more than a simple submission; the e-customs product had the most to offer. In particular our web-based approach scores impressively in the way it does not clash with legacy hardware and can deal with the output from most in-house and ERP systems. Following our initial development of Webware and an ongoing collaboration with our client base we have continued to work together to extend the facilities jointly offered, including fully-automated and seamless transmission of declarations to e-customs server from within clients in-house systems, just like the implementation at Harrison & Clough.
Our clients have benefited from our knowledgeable staff, which has provided professional and successful implementations to the client. Providing the client with a cost effective, value for money package and the associated numerous savings. I would urge all large traders who hold duty paid stock for a length of time, to look at customs warehousing and the introduction of the submissions process in-house. I believe in turn this will bring significant direct savings on customs declaration fees, customs duties and VAT paid to HM Government via HMRC. We continue to enjoy an excellent working relationship with our clients and expect healthy growth in the number of new sites operating Webware as more and more traders recognise the need to submit electronic declarations timely and correctly to HMRC, whilst using their own in-house system to help manage their warehouse control and cash flow in these difficult economic times.
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