List of Inter-Company Terms / Inco-Terms
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Calculating the costs is a must before arranging to import any goods into the UK. Although it doesn't sound like anything important and wouldn't be anything that UK Customs would be interested in, the 'Terms of Sale' or 'Inco-Terms' between the seller and you is not only something that must be clarified at the time of purchase, but something that must also be clearly marked on your paperwork. Why? All is explained below. ukimports
The 'Total Value' of your goods liable for Import Duty and/or VAT depends on the 'Terms of Sale' or 'Inter-company Terms (Inco-Terms), between yourself, the importer (or buyer) and the exporter (or seller), and clearly outlines as to who is paying for what.
When buying any goods, you would usually pay either an all-in price, one which includes the cost of shipping to the UK. Or alternatively, there could be the situation whereby the price you pay, only covers the cost of the goods and then you may have to pay the seller an extra charge for shipping them to the UK. Or, perhaps you are just paying the seller for the cost of the goods and you're sorting out the shipping costs out yourself, with the company who has shipped them from the country of origin to the UK port. These 3 options are 3 different examples of 'Inco-terms' (or 'Terms of Sale') and perhaps, are the most commonly used 'Inco-Terms', (although there are many more), and they each affect what Customs deem as the value of your goods on which import duty and / or VAT will be paid (if applicable).
UK Customs see that the total value of your goods as the original purchase price, as well as any of the following:
- Collection/Delivery costs from the shipper to the port of export, as well as the shipping cost to the UK of arrival
- The cost of any specialised packaging
- Any additional Insurance taken out to cover your goods during transit
If the seller absorbed these costs, then they will not be added to you Customs declaration (Form C88), however, if you paid for them, then you will have to pay import duty and / or VAT on them (if applicable).
So, what needs to be written on your paperwork? Well, Inco-Terms are shown in a 3-letter format, as follows: ukimports