Customs is a niche topic. Businesses of all sizes have been puzzled by customs queries over the last few months due to Brexit. Given the shortage of resource with sufficient customs experience in the UK, businesses are turning to external advisors for help.
Small and medium-sized enterprises (SMEs) often have far less of a budget than bigger companies, but have just as great a requirement for support. So when the list of questions is endless but the budget is limited, how can businesses make the most of this budget?
This article explores actions that can be taken to ensure this budget is spent in an impactful way.
One way to ensure that the budget is spent effectively is to avoid common mistakes. Some of them are listed below.
Engaging an advisor too late when the problem is too big
It is much easier to prevent a problem from occurring than to re-actively rectify a mistake. Customs duty liabilities often crystalise when the goods cross the border. Reclaims can only be made in limited situations. HMRC will look back three years during a customs compliance audit, which means any historic customs duty underpayments will be payable if identified, with penalties. Therefore, waiting until the customs duty exposure is unmanageable and then seeking an advisor’s help will cost more to the business than if advice is sought at the planning stage, or when a business intends to make changes to its supply chain that could potentially have custom simplifications.
Investing in generic training that does not address the business’ needs
Many businesses are investing in training for their staff with obtaining a certificate as the aim. There are numerous free sources of information on the basic principles of customs, so businesses may be better off spending money on helping staff to gain skills that cannot be gained from training courses. For example, spending customs budget on a workshop with a customs advisor which is specifically designed for your business will ensure that staff’s valuable time, as well as the business’ limited budget, is spent in a way that generates maximum impact.
Protecting the health of a business’ customs function is comparable to that of an individual’s health. Most people would seek advice from a specialist rather than getting generic health advice when they are sick. Similarly, generic customs training has their limits. When the customs issue is complex, it is often much more cost effective to engage a customs advisor to resolve it in a timely manner.
Being too ambitious with what the budget can achieve
It is recommended to have a targeted approach focusing on the quality of the solution the budget covers, rather than the quantity. Some businesses may wish to address all the queries they have from the start. Whilst the list of queries may be long, some are more urgent than others. It is always a good idea to discuss this with your advisor before spreading the budget across all queries and answering none of them to a sufficient level of detail. Fixing the fundamental issues within a business may result in the other queries fixing themselves overtime.
3 Tips on How to Ask For Help
Another way to ensure that the budget is spent effectively is to consider the 3 tips below.
#1 Ensure staff knows when they should ask for help on customs matters
As discussed above, it is easier to fix a mistake early on, rather than waiting for the mistake to be identified by HMRC during a compliance audit. In order for this to happen, businesses need to ensure that their staff is aware of when they need to seek advice on customs matters.
For example, someone within the business may receive requests from EU customers asking them to making a statement on origin to indicate that products have preferential origin. Before they put this statement on origin on a commercial document, the business must be certain that it holds evidence that the goods actually have preferential status.
The evidence gathering process can be a complex and time consuming task. As such, internal processes and controls should be present within the business, covering situations like this, to ensure the business is acting compliantly.
#2 Describe the problem and agree an outcome before spending
Businesses should properly research and consider what they potentially need help with, what they want to achieve and what they are willing to pay for that level of support. For example, spending on fixing a problem that has very little significance is not an effective use of the budget and draws attention from the more pressing point.
Explaining clearly what the business wants, having supporting materials, approving the budget once there is a business case can all help with ensuring that money is spent on the most urgent queries.
#3 Think long term
It is important to be aware that customs legislation and guidance are constantly evolving. The advice received this month may not be valid in a few weeks if the legislative landscape changes. When engaging an advisor, consider whether the business can build a long term relationship with them. This will ensure that the business works with someone who understands the history and the needs of the business, which reduces the time spent on going over the same background information with a different advisor each time.
This article was written by Jessica Yang, Director (JY XBorder Consulting Ltd) and Toby Spink, Director (BKR Consultants Limited). Please get in touch with Toby or Jessica if you have any questions.
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