Rob Harness, Co-Lead of our Retail & Hospitality Group, sat down with Simon Sutcliffe, founding partner of Customs and International Trade advisory firm Aesica, to explore some of the issues relevant to CFOs of retail businesses today.

Let’s start with a topic that’s been on the minds of several of our clients over the last year – US tariffs. How are UK retailers adapting to the fallout from the Trump administration’s trade policies?

Where retailers have been purchasing stock from their UK wholesalers, they may have not seen much difference, other than potential price rises or stock being supplied to them by wholesalers that is of a different origin. However, where those retailers sell onwards into the US the effect is likely to have been more profound.

More than ever before retailers are having to interrogate their suppliers to find out the true ‘origin’ of their goods (not just the place of despatch). Additionally, they are having to discover if the goods they are subsequently exporting have undergone any form of transformation (and the extent of that transformation) in other countries.

There is an increased need for retailers to fully understand their supply chains from the point of acquisition of raw materials to the subsequent manufacturing and despatch of the goods by their suppliers to them.

Clearly Brexit has complicated many UK retailers’ trade with the EU. To what extent are post-Brexit changes continuing to have an impact?

Some businesses still haven’t got to grips with the international manner in which we now trade with the EU. They are often ignoring the rules on origin, overseas VAT registrations, customs establishment rules, not completing customs documentation correctly or using the reliefs and suspensions that they are entitled to use and as they would use in the wider international markets.

Some goods face regulatory challenges such as CE marking and safety legislation – before the goods are permitted to be sold – which is often confusing and voluminous and as a result businesses often fall foul of these.

Northern Ireland, with its role in both the UK and EU, presents even more challenges under the Windsor Framework agreement and there are a number of schemes and authorisations required that can often be overlooked or forgotten about when moving goods to or through the province.

It sounds like there are plenty of opportunity for things to go wrong. How often do customs audits typically take place, and what can CFOs do to prepare their organisations for one?

The vast majority of Customs and International Trade (CIT) inspections/visits/audits are triggered by a set of risk parameters input by HMRC. HMRC use the CDS/MSS system to interrogate the details of all imports and exports undertaken by a particular business under their EORI number. This very same itinerary is available to businesses and can be subscribed to directly from HMRC for a very nominal cost – usually between £250 and £500, although from March 2026, HMRC are due to make this available free of charge – which is great news. It lists lots of useful customs details on a simple Excel spreadsheet such as import dates, the port used, exporter, importer, agent, origin, values, duty rates, Movement Reference Number (MRN), and the description of the goods. It’s a tool that all businesses should use as the basis not only for preparing for an audit but for good and effective day-to-day financial governance. If a business claims a preference on imported goods, they are importing from a related entity, or they move sensitive goods from sensitive source countries, then they will potentially face a CIT visit.

Complementing the CDS data, businesses should hold copies of all their customs declarations and associated paperwork – this is not optional; it is required by law. HMRC will identify any potential discrepancies via CDS and then ask to see copies of the relevant customs paperwork. Stating that the agent holds all the documentation, and the business cannot provide/find it, will result in penalties for the business – not the agent. Once a business has had problems identified by HMRC they may continually check the details of movements via CDS and revisit until they are satisfied that the compliance issue has been resolved. If not, they can impose penalties and, in some instances, seek a customs financial guarantee to be put in place.

Holding a systematic and regular internal ‘health check’ of all the customs processes and the importation/exportation chain will identify any issues before HMRC become involved. This gives the business time to rectify any problems and demonstrates to HMRC good internal customs governance.

What are the top three mistakes that you see retailers make in relation to customs duty issues?

Leaving all the customs details to a freight agent or customs broker to complete; not seeking a binding SLA or contract with the shipping agent; and not keeping copies of their own customs records.

What opportunities exist for retailers when it comes to customs duties? For example, are there any underutilised reliefs or regimes that retailers should be considering?

Businesses should look at the benefits of the customs special procedures including Inward Processing (relief) (IP) and Outward Processing Relief (OPR). These reliefs allow goods to move internationally, to be processed, repaired and further manufactured, with import taxes suspended. These reliefs can save time and money as they relate to real customs duty savings. They also provide a solution to the thorny issue of being able to legitimately reclaim/offset Import VAT on goods that an importer doesn’t own, because they may be undertaking a repair or further processing before despatching the item back to the owner.

Other special procedures that can be used to improve the duty cost efficiencies of a supply chain are customs (“bonded”) warehouses and Freeports. These allow goods to be held in duty suspension on arrival and are useful if the final destination of the product is unknown. Virtually all jurisdictions operate variants of these customs special procedures (albeit sometimes under another name), so using them to assist a supply chain issue is highly advisable.

Are there any ways in which retailers can optimise their duty spend through strategic sourcing or restructuring their supply chain?

The origin of goods has always been an important customs issue. However, over the last five years, with the signing of various new trade agreements around the world and latterly the impact of President Trump’s trade policy, it has come into pin-sharp focus. Customs authorities are now alive to the need for the correct origin to be applied to goods, whether they are subject to a preference or not. There is a marked difference between place of despatch and origin.

The key to making effective duty savings is to fully understand the origin of the goods imported, the raw materials and processing that those goods have undergone. This is especially important in the steel and aluminium industries with the US ‘melt and pour’ requirements. These then should be tied into any extant trade agreement to determine if the items meet preferential or non-preferential origin and how that status is calculated.

Care should be taken not to radically alter a supply chain to chase a benefit in the short term. Trading relationships can turn quickly from disadvantageous to advantageous and vice versa.

Simply transhipping goods to seek to minimise duty liabilities and seeking to disguise origin will only result in punitive action – especially in the US. For example, selecting products that can be certified as of ‘Indian origin’ may be beneficial compared with goods of Chinese origin given the gradual implementation of the UK-India Free Trade Agreement (FTA). Goods imported of Indian origin will retain that origin when moved though the UK or EU inwards to the US if no substantial processing is done in these intervening jurisdictions. Inserting a customs warehouse into the chain may enable further savings.

Hence, making a supply chain efficient calls in all the customs components: understanding beneficial origin advantages of the products, using customs regimes, valuation, and commodity codes.

In terms of classification and valuation risks, what do CFOs need to be aware of when importing goods from overseas?

Accuracy. Commodity Codes are exceptionally important to ensure that the imported goods are correctly classified from a customs perspective. This ensures that a business pays customs duty at the correct rate and does not overpay or underpay. These codes also indicate if the goods are subject to other customs measures such as quotas, licences, exemptions, and restrictions from particular source countries. Hence, having an accurate commodity code can mean the difference between extra customs responsibilities and costs and reduced duty rates.

Likewise, customs valuation is important to ensure that imported goods are correctly valued when an ad valorem customs duty is applied. The value on the accompanying customs commercial invoice does not always determine that this is the correct value for customs purposes. There are factors such as trading between related entities, the existence of a transfer pricing (TP) policy and situations where there is ‘no sale’ or where conditions on that sale are applied. The customs value cannot be arbitrary and must be methodically calculated. Hence, this is why customs authorities frown upon pro forma invoices being used as a basis for a customs value.

To sum up, what are the top three customs-related questions CFOs should be asking their supply chain or finance teams right now?

Do we have copies of all our import and export documentation (are we signed up to CDS/MSS to get an itinerary of all our movements)?

How much is our customs duty liability each month and how do we know that this figure is accurate?

When is the last time we carried out an internal audit/check on our customs processes, and do we have control of our imported products (or does ‘stuff’ just arrive unannounced at our business premises)?

If you have any questions about the issues raised please get it touch with your usual Blick Rothenberg contact or Rob using the form below.