The Fashion Industry & Customs

Looking for the perfect customs fit?
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Compliance is always the hot topic when it comes to customs and fashion. Project and Implementation Manager Victoria Cooke reveals her insights on achieving high level customs compliance and explains how a specialised solutions provider like Customs Support elevates the goods flow of clients in fashion and retail.

The customs challenges faced in the fashion world

Customs processes are not ‘one size fits all’, and neither is the fashion industry. Trends come and go, new materials come in, shopping habits change, the list is endless. Not only is the industry constantly changing, the umbrella term of ‘fashion’ covers a huge range of products. We’re talking about everything from clothes, jewellery, shoes, and the millions of variations within each of those groups. This leads to unique customs & trade challenges to companies in fashion.

Challenge one: The large variety of products

Complications with customs clearance & payable duties

From a customs perspective, this translates into hundreds of commodity codes that items can be classified into, and to make things more complicated, there are variations between territories. 
Being clear on goods classification is a big challenge for the global industry. The difference of just one number can mean a significant increase for your payable duties, or even delays at the border if you mis-classify a product. 

Luckily, at Customs Support we have a dedicated team of classification specialists whose sole focus is to look through our clients product data and make sure it is ready for clearance. In our Maldon office alone, we did more than 7.5 million UK classifications and 5.6 million US classifications in 2023. Imagine trying to do that volume without technology or clean data; it would be impossible! So, how do we do it?

The benefits of digital customs solutions

Your digital product data presents opportunities to digitalise & streamline your customs process. We can help with a range of digital solutions, that can bring you the following benefits:  

  • Prevention of customs interventions & supply chain disruptions
    We have an advanced planning and optimisation (APO) app which allows us to process large amounts of data and quality check it before it goes into our duty managementsystem. This quality check is vital as we can highlight any discrepancies before they become a big problem that involves a customs intervention, like getting stuck at the border.
  • Efficient processing of large volumes of customs data 
    Our APO app also has an auto-classification tool, where it can allocate a commodity code using the data provided by the importer. This tool in particular has saved our clients crucial amounts of time and money, improving the overall flow of their supply chains and warehouse costs. As fashion is such a vast array of products, we don’t solely rely on this automation in the customs process; checks are still made by our specialists on the integrity of the data.
  • Convenience & control resulting from data integration
    Our APO system offers several benefits, including shipment tracking and seamless integration with surrounding systems using EDI connections. More than 40 of our clients enjoy the ease of automatic transactions whenever their warehouse systems update.

It gives our clients and us fantastic visibility over the whole supply chain. Not only in real time, but also from a reporting point of view. We can filter and collect data from warehouses and ERP (enterprise resource planning) systems, track the duty status of goods and more. The system’s ability to knit (or weave) together information from different places is extremely useful in some cases. For example, we have a client who exports to Ireland. They send us the file from their ERP system, our system matches up the stock records with what is held in the duty management system and then completes the entry file. This is then automatically sent to all the parties who need visibility of the entry for the movement.

Looking for the perfect customs fit?

victoria cooke
Victoria Cooke
Project & Implementation Manager

Challenge two: Fashion trends & returns

The demand for high supply chain flexibility

Brexit created unique compliance requirements for your goods flow

Demand for fashion items comes and goes. Sometimes you need the items in the UK, other times they are held here and then exported to another distribution centre in the EU.  

In recent years, the topic of Brexit has been unavoidable. Where a brand could move goods throughout the UK and EU without too many headaches, there is now a customs element to it that cannot be ignored.

Obviously, that has come with a learning curve. For example, one misconception we have seen with our fashion clients is importing samples. When you claim an item as a sample to HMRC, it must be consumed or destroyed after use and have no commercial value. It cannot finish its purpose as a sample and then be put in a clearance sale. Technically, you are selling an item that has not been released into free circulation.

Another relevant characteristic to customs is the processing of returns. Some of our clients exporting returned goods were finding that they were paying duty again on the return. That is three lots of duty when you consider the import duty on the other side, which may or may not have been reclaimed. 

In cases like these, where the products are held in the UK then exported into the EU, you don’t want to overpay on duties, but you also don’t want to be locked into a complicated procedure which will delay you moving your goods – domestically or internationally.

Our customs solutions

For UK retailers

Simplified customs procedures

We work with many retailers using simplified customs procedures, meaning that we only enter a small dataset on the  import clearance and reconcile everything at the end of the month. 
This means that you can bring your goods in quicker, and there are also cash flow and accounting benefits when it comes to paying your import duty – even if you pay it at the time of reconciliation.

Customs warehousing

Using a procedure like customs warehousing is a way to suspend paying duty until you need the goods to enter free circulation. The real benefit of customs warehousing is again that flexibility of what you can do next. If the goods go to the UK market, you can pay the duty as normal. If you want to export them, then you don’t pay the duty and simply export them. You can even repeat this process in the EU.  

Duty reclaims

We have built a system around the particular challenge of exporting returned items, avoiding unnecessary duty payments. About 50% of our retail clients save money with us this way! What brands often need is help with waiving and reclaiming duty under the right circumstances. If you are not compliant when doing this, then there will be a problem when HMRC comes to audit the thousands of movements you’ve done. It’s a real fear that retailers have, and one we help to alleviate.

European network for seamless clearances

In addition to our UK-wide services, we also provide efficient end-to-end customs clearancebetween the UK and the EU through our partner offices. This doesn’t only benefit you because of the clean transfer of import and export data, it’s also beneficial because we can match movements on both sides of the border. This is key when you face duty reclaims or waivers during returns or need a chain of custody during an audit.

Minimal disruption, maximum compliance

One of the core functions we do for our clients is meeting trade compliance regulations.  A key area in which we achieve this compliance is updating clients’ tariff codes. HMRC will send out the updated changes, we then run a report on all the products that are affected/assigned to the old commodity code and then we advise the client on what those changes mean for them."

This could mean changes to duty rates (positively or negatively), preferential agreements, or rules surrounding preference. Obviously, these can have a big impact on your margins, so you need to know about and plan for the change. And you do need to act very quickly sometimes. This gives you control over your payable duties and avoids unexpected surprises.

For example, we had a client who had a large amount of goods held under bond. Their product was duty-free preference from India, but this was being removed and a duty rate would be applicable. We quickly worked with them to ascertain that the goods were meant for the UK as the final destination, and released the goods from bond before the import duty became live.

Other ways in which we help with compliance are our close connections with authorities and visibility on changing circumstances. We are always at ACITA, we’re members of the Institute of Export, and we are in position to receive information quickly and to ask the right people for guidance when we need it.

Calling all fashion brands!

If you are from a fashion or retail brand and you think ‘okay, where do I start?’, here is a simple overview of how we can welcome you onboard.

The first thing we do is a customs health check, which we call a customs compliance scan. This is where we look into what you are doing, where there are shortfalls in terms of procedures and compliance, and create an action plan so that we can reduce your risk and create opportunities to save money. Already within a week we can share with you our findings and actionable next steps! 

Partnering with a specialist provider like us will allow you to unlock efficiencies and strategic insights that enhance your supply chain operations, whilst we tailor make solutions just for you. 

Customs Support Rotterdam HQ