The customs invoice is one of the most important documents when bringing goods into the UK. It is therefore important to understand what this document is and what role it plays in the overall importation process.
Further guidance on importing goods into the UK can be found in our related articles including how to register a business for trading, which commodity codes are needed to classify goods to be imported, which licences and certificates will be needed, how to make declarations for goods to clear UK customs, and paying the right import VAT and duties.
What is a customs invoice?
In broad terms, a customs invoice is a document that enables the import and export of goods. Also known as a pro forma or shipping invoice, the customs invoice is very similar to a commercial invoice, where both types of invoice help cross-border shipments to clear UK customs. However, customs invoices or pro forma invoices are usually used for customs purposes only, often where unsold goods are being shipped. These are typically used by high-volume importers and exporters, although they can also be used for shipments where the contents are gifts or samples. In contrast, commercial invoices are used where sold goods are being shipped, and are typically used by the likes of smaller eCommerce merchants.
As with commercial invoices, the customs invoice is the mandatory customs clearance document that must be attached to or sent with a freight shipment, and serves as the foundation for all other international shipping documents. The customs invoice will also act as a provisional bill of sale, to be forwarded to the business in the UK purchasing the goods, prior to the goods being shipped. This will allow the purchaser to obtain an import licence, where they are responsible for this in the shipping process, or to set up a documentary credit. Also known as letter of credit, a documentary credit is a method of payment where the buyer’s bank guarantees payment to the seller provided the seller fulfils certain terms.
When it comes to importing large shipments of goods, these will often be paid for on receipt, rather than in advance. The customs invoice will therefore represent the seller’s estimate, in good faith, of the total cost of the imported goods, including any duties and taxes. Unlike the commercial invoice used by smaller online merchants, a customs invoice is not a request for final payment, but rather an estimate of the valuation of goods to be shipped. A commercial invoice will then be sent after the goods have been delivered and payment falls due.
Importantly, however, customs invoices can often be used as an umbrella term for both pro forma invoices and commercial invoices. Aside from their description, both documents are often identical, and both must contain the relevant information needed for customs clearance.
When is a customs invoice needed?
Once goods are ready to import, the customs invoice will need to be completed to accompany the shipment of imported goods to the UK. This is the paperwork that will be attached to the shipment itself, although additional steps must also be taken for the goods to clear customs. This includes lodging an entry summary declaration while the goods are travelling to the UK, where applicable, as well as filing an import declaration after the goods enter the UK. These customs formalities can be completed by a customs agent or freight forwarder on behalf of an importer, although the customs invoice provides the starting point within this process.
Sending an invoice with an international shipment will allow the UK customs authority to understand the purpose of the shipment, the contents and value of the shipment, and who the shipment is from and for. In this way, it enables the consignment to be correctly assessed based on the information declared. The customs officer will refer to this document to determine if the incoming shipment is allowed to enter the country, and whether additional documentation is needed for clearance, for example, a licence or certificate. The customs invoice will also be used to assess any import duties and taxes due on that shipment.
Customs authorities exist around the world to regulate the flow of goods across any given border. Each country has its own independent customs authority, with its own processes and regulations, although the use of invoices containing key information about a consignment is standard practice. This means that, in order for a shipment to clear UK customs, the sender must attach a customs invoice containing sufficient information to satisfy the authorities.
What should a customs invoice include?
A customs invoice should include all the key information necessary for a shipment to clear UK customs, including:
- The invoice number and date
- Any consignment number for the carrier
- The full names and contact details for both sender and recipient
- The collection and delivery address for the shipment
- The Economic Operators Registration and Identification (EORI) number for both sender and recipient, plus the recipient’s VAT number
- The importer’s full details, if not the same as the recipient, including name, address, phone number, e-mail and EORI number
- The number of items in the shipment
- The total gross and net weight of the shipment, in kilograms or pounds
- The customs commodity code for the items being shipped to the UK*
- A summarised and itemised description of the goods
- The total shipment value in British pounds sterling (GBP)
- An itemised value for each item in the shipment in GBP
- The country of manufacture of the goods, listing separate countries, if applicable
- The reason for import/export of the goods, eg, sales or samples for review
- The total shipping/freight charge
- The terms for delivery, using the appropriate universal Incoterm*
- A declaration of origin statement, where the UK offers a preferential rate of duty on goods, such as from the EU as part of the UK’s post-Brexit deal with Europe*
- An original signature of the person completing the document. They must also print their name and state their position in the company or business.
*The commodity code is the 10-digit tariff number that classifies goods for customs clearance, allowing customs to easily and correctly identify the contents of a shipment. An importer will also need this code to check licences, restrictions and customs charges, where this code dictates the amount of import duty and tax that will fall due on the goods when they arrive in the UK. The trade tariff tool at GOV.UK can be used to find the right commodity code to ensure that goods are classified correctly on any customs invoice or other customs paperwork.
*Incoterms are the standardised abbreviations issued by the International Chamber of Commerce and used in international sales transactions. These will determine exactly who is responsible for what in the supply chain in terms of obligations, risks and costs, including customs charges. For example, when using EXW (Ex Works), the buyer will assume responsibility at the seller’s warehouse and take charge of every detail, from transportation to insurance, while under DDP (Delivered Duty Paid), the seller will burden all of the costs and risks of transport, insurance and customs clearance.
*In relation to the declaration to be signed at the bottom of a customs invoice, this will typically read along the following lines:
- I declare that the information contained in this document is true and correct to the best of my knowledge
- I declare that the products covered by this document are not subject to any export or import prohibitions and restrictions
- I declare, except where otherwise indicated, these products are of UK preferential origin.
What do you do with a customs invoice?
Once completed, the customs invoice must be placed in a shipping envelope on the outside of the parcel or shipment, usually in triplicate, with an original signature on each. A clear copy of the customs invoice must also be retained, both by the business responsible for completing this document and, if different, the recipient of the imported shipment of goods in the UK.
When importing goods into the UK, certain records must be retained by law. The record-keeping responsibilities as an importer include keeping a number of commercial and transport documents on file, including customs invoices. Even though a great deal of trade is conducted electronically, it is still important to have an efficient and robust system of record-keeping. It is also important to know how long to store key customs documents, where records for all traded goods must be kept for a period of 4 years, and for VAT purposes, at least 6 years, making these available to HMRC for inspection on request. Importantly, however, records dating back 10 years may be used as evidence in any criminal investigation.
For UK-based businesses, archived documents can be transferred to a third-party storage specialist. Alternatively, a business can sign up to HMRC’s Management Support System (MSS). This provides import and export data collected on the Customs Handling of Import and Export Freight (CHIEF) system. The CHIEF system is the online platform for processing customs declarations, soon to be replaced by the Customs Declaration Service (CDS). By signing up to the MSS, this can help to reduce the need for an importer to archive customs records.
What format of commercial invoice should be used?
A customs invoice does not have to follow a prescribed format to be valid. However, when importing goods into the UK, the customs invoice will need to be in English. The invoice must also contain certain critical information, including the nature, origin and value of the goods being imported. Before a customs invoice is created, the person responsible for completing this document will therefore need access to all the relevant customs invoice requirements relating to the shipment in question to be able to complete this document fully and accurately.
There are a number of ways in which a customs invoice can be created. For high-volume importers and exporters, they will often have their own online system and software for doing this. Most established international freight forwarders and parcel operators will also have the software for a business to download and complete a customs invoice. The individual creating the invoice will simply need to input the necessary data, and the third party system will then automatically generate the customs invoice and shipping labels on their behalf, based on the information provided. This can then be printed out and signed, to be attached to the shipment.
What are the consequences of getting a customs invoice wrong?
A customs invoice must be completed fully and accurately. If the information inserted on the invoice is too general or vague, this will typically result in a consignment being detained for further examination by UK customs, and so delay the delivery of the goods. This is because a full and accurate description of the goods is essential for customs and freight security purposes. The value of the goods is also essential for import duties and taxes. All sorts of other errors or omissions on the paperwork, no matter how minor, can also cause serious delays.
Where a shipment is held back back by UK customs, this can have serious repercussions for an importer, including storage costs, rearranged transport costs and even the loss of a valuable buyer if they are not prepared to wait until any paperwork issues have been resolved.
Importantly, even if the customs invoice itself is completed correctly, delays may still arise in relation to errors or omissions around any electronic declarations, such as the entry summary declaration or import declaration. Equally, use of the customs invoice does not relieve other documentary requirements for shipments that are subject to licensing or restrictions. Any business wanting to bring goods into the UK must be fully aware of any customs formalities, regulations and requirements that might apply to their shipment before proceeding.
By seeking expert advice, and having an agent or intermediary to handle any paperwork and electronic submissions needed to clear UK customs, this can help to minimise the likelihood of problems arising and maximise the prospects of a shipment being cleared without delay.
Customs invoice FAQs
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Legal disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
