Essential guide to understanding legal issues for importers

Importing doesn't have to be difficult and can be relatively straightforward. After all, you are the customer: most of the burden of making sales, and delivering the goods, usually falls on the supplier.

You should make sure you know your legal, customs and licensing obligations. You can minimise the risk of problems by checking out your supplier and ensuring you have the right contract with anyone you deal with.

Brexit means that there are significant changes from 1 January 2021, particularly for imports from EU countries.

The supplier's legal environment

UK import restrictions

Product requirements

The supply contract

Using an import agent

Import VAT and duty

1. The supplier's legal environment

Establish what normal commercial practice in the supplier's country is

• Find out what payment procedures and credit terms are typically used.
• Assess your chances of enforcing your legal rights in the local courts in case of a dispute.
• Find out what experience other importers have of dealing with suppliers in that country. You can ask your local chamber of commerce for information.

Investigate the supplier's reputation and creditworthiness

• It may be difficult to make checks such as whether the supplier has good quality control. You may want to visit the supplier to look at their working practices and build a relationship.
• Consider running a credit check on the supplier. International business reports are available from many companies such as Experian and Dun & Bradstreet.

Investigate any legal restrictions the supplier will need to comply with

• For example, the supplier may need an export licence for their product. Obtaining the licence could delay delivery, add to costs, or even prove impossible.
• If your supplier is breaching local laws, you might not be able to enforce a purchase contract. You could face legal action yourself if your business becomes involved in an illegal transaction.
• The supplier is likely to try to pass on the cost of any local taxes.

Consider taking advice

• Useful sources of advice can include your trade association, the British diplomatic missions and the foreign country's representatives in the UK.

2. UK import restrictions

Check whether you need an import licence for the product you are buying

• You need an import licence for some goods, including diamonds and military or dangerous goods, such as firearms and some chemicals.
• You usually need a licence to import plants, agricultural products, some food and animals.
• You may need an import licence for some other products, or there may be a quota limiting the total volume of imports of a particular kind.

Check whether there are any other restrictions on the import of the product

• Illegal drugs, and some chemicals used in their manufacture, are controlled by the Home Office.
• You must register if you import more than one tonne of chemicals per year.
• You may need approval from the Health & Safety Executive to import dangerous products.
• Imports of food, plants or live animals generally need to conform with UK safety regulations.
• Timber products and packaging may need to be licensed and inspected.
• Radio communications equipment may need licensing.
• From time to time, the UK government may order sanctions, restricting imports of some or all products from a particular country.

Check what UK taxes there will be

• These may include VAT, import duty and excise duty (see VAT and duty).

Brexit means changes to the rules and procedures for importing from the EU

• You need to follow broadly the same import process whatever country you are importing from, including imports from the EU.
• Special rules apply for Northern Ireland.

Consider taking advice

• Your trade association, freight forwarder or legal adviser can help.

3. Product requirements

Check whether there are any specific safety regulations covering the product

• Some safety regulations are legal requirements.
• For example, fireworks for sale to the public must meet the relevant British Standard; nightwear and children's clothing must comply with safety standards; and all children's toys require specific product marking.
• You may want to ensure that products you import meet relevant safety standards, even if this is not a legal requirement. Failing to do so is likely to significantly weaken your defence if the goods harm someone.

Assess whether the product meets the general safety requirement

• Goods must be as safe as people are reasonably entitled to expect. If the goods are as safe as similar UK products, they are likely to meet this requirement.
• You may want to have a sample safety tested. Consider contacting your local Trading Standards office or the British Standards Institution.
• Large suppliers may have already done this themselves and marked their product (eg with the British Standards kitemark). However, some unscrupulous suppliers simply mark their products without having them tested.

Consider your responsibility for product safety

• If you import a product, you could be held liable for any harm or loss caused if it is unsafe.
• As part of the supply contract, you may want to ask the supplier to indemnify you against any claim for damages as a result of a faulty product.
• You are legally required to take reasonable steps to ensure that any product you sell is safe, regardless of who produces the product or where it comes from.

Make sure labelling and packaging meets legal requirements

• Products must be labelled in English (though other languages may be used as well).
• Labels must use metric weights and measures.
• Labelling must not be misleading.
• You may need to include safety information on the label and appropriate safety instructions.
• Check environmental labelling requirements.
• Larger businesses may be required to recycle a percentage of the packaging materials used.

Check that the product does not infringe intellectual property rights

• For example, another business might hold a patent for a particular product. They could take legal action against you if you import a product that infringes on their rights.
• The owner of a trademark can take action to stop you sourcing their goods from a cheaper supplier and reselling them in the UK.
• You could face prosecution, or be sued, if you import counterfeit goods.

Investigate any requirements for the particular product

• For example, there are rules on the labelling and packaging of food products. Your trade association should be able to advise you.

4. The supply contract

Cover all the basics as in any other purchase contract

• For example, what you are purchasing, what quality and quantity you require, and what the price is.
• Tell the supplier about any UK regulations or standards that you require the product to meet.
• Ask the supplier to indemnify you against any legal action caused by defective goods. This will not stop you being prosecuted or sued, but could cover some of the costs (provided the supplier remains solvent).

Agree the terms of delivery

• Negotiate responsibility for each stage of delivery, insurance and customs clearance.
• Use the internationally recognised 'Incoterms' which set out exactly what each party's responsibilities are.

Agree the payment method

• You may be able to negotiate payment on account once a supplier trusts you, particularly if you are buying from a supplier within the EU.
• Many suppliers will require an alternative payment method, such as by letter of credit, which protects them if you do not pay.

Anticipate potential problems

• Consider whether you need goods to arrive on time. For example, if you need them to keep your production process running, or to supply to your customer by an agreed date.
• Agree what will happen if deliveries are late, incomplete or contain faulty goods. Returning the goods may not be a practical option.

Agree how disputes will be handled

• Aim to negotiate that UK law will apply.
• Agree a dispute resolution procedure that can be used rather than going to court. For example, the contract might name a particular arbitration organisation.

Set out what you have agreed in a written contract

• You may want to use a lawyer to draft a suitable contract, particularly if you do not have a previous import purchase contract to use as a model.
• Use a lawyer with experience of import contracts and ideally with experience of the country you are buying from.

5. Using an agent

Decide whether you want to use an agent

• You may have negotiated for the supplier to clear the goods through the UK port and deliver them to your premises. If so, you will not need an agent.
• You may be responsible for customs clearance and for onward delivery from the UK port to your premises. Many importers find it easier to use an agent to handle this.

Ensure that responsibilities are clearly agreed

• Make sure the supplier knows what agent you will be using and what their responsibilities will be.

Establish clear limits to the agent's authority to act for you

• You might be liable for the actions of your agent.

Check any potential legal obligations to your agent

• Within the UK and EU you have specific obligations to any individual (rather than company) who acts as your agent. You may face a claim if their earnings are lower than expected, or if you terminate the agency agreement.
• You need to take advice on the legal position if you will be using an agent in a non-EU country.
• Make sure you have a written agreement with anyone who acts as your agent. A lawyer can prepare an agreement that will help protect you.

6. Import VAT and duty

Make arrangements for VAT

• VAT on imports is generally charged at the same rate as is used within the UK.
• You can usually account for import VAT on your VAT return. This means you do not need to pay the VAT upfront and then recover it.
• You must have an 'EORI' number and include your VAT registration number on any customs declaration.
• If you are not registered for VAT, or the goods are not for business use, you have to pay import VAT and cannot reclaim it.

Check what import duty you must pay

• Duty is typically around 5-10%, but can vary widely depending on the product and country of origin.
• Experienced traders can apply for Authorised Economic Operator (AEO) status, an internationally recognised quality mark. AEO status offers benefits such as fewer customs inspections, less paperwork and faster customs clearance.

Check whether any excise duty is payable

• Excise duty is payable on products such as alcohol and tobacco.
• Any excise duty is payable whether goods are coming from within the EU or not.

Note

The law is complex. This factsheet reflects our understanding of the basic legal position as known at the last update. Obtain legal advice on your own specific circumstances and check whether any relevant rules have changed.