For a company, growing their business through international trade is one of the key drivers of growth. However, this growth can create ‘hidden risks’ if it is not managed properly, exposing weaknesses in the business and putting hard-earned profits at risk.
Global Trade Today spoke to one of these businesses, anonymously, about their experiences and the solutions to solve this.
When growth creates ‘hidden risk’
This medium‑sized UK business engaged the Chartered Institute of Export & International Trade after a period of rapid international expansion that exposed weaknesses in its customs operations.
As the company began importing from more markets and exporting to new destinations, customs activity became more complex and internal processes struggled to keep up, they said.
On imports, the business was facing unexpectedly high duty, Value Added Tax (VAT) and clearance charges. Goods were arriving from new markets, but the team did not know whether preferential tariff treatment could be claimed under UK trade agreements.
On exports, shipments were being delayed or stopped at the border. Intermediaries frequently queried the accuracy of information provided in customs clearance instructions.
Root cause
The root cause was a lack of technical customs expertise. Commodity codes and rules of origin were not fully understood; documentation was frequently “amended at short notice”, the business said, with “reactive processes rather than planned”.
The consequences were significant.
Import delays resulted in demurrage charges and falling profit margins, while delays at the border caused customer dissatisfaction, placing contracts at risk.
Crucially, the business said it lacked visibility of its true costs, which made decisions harder to make.
A structured customs health check
As part of its services, the Chartered Institute delivered a comprehensive customs health check.
One of the Chartered Institute’s consultants spent two days on-site, reviewing the end-to-end customs operation. Everything the company did – from Incoterms, to documentation and record-keeping, to classification and rules of origin procedures – was put under consideration.
The review mirrored what HMRC would expect to see during a formal audit, the consultant told us.
This “enabled risks and gaps to be identified quickly”, with practical solutions offered to each problem.
Immediate actions included strengthening the clearance instructions given to agents, using postponed VAT accounting to improve cash flow, improving the accuracy of commodity code classification using the UK Trade Tariff and introducing clearer internal processes to reduce delays.
A tailored procedures and training plan was also developed, embedding customs knowledge within the business regardless of staff changes.
During the review, the adviser identified opportunities to claim reduced or zero duty preference where goods meet specific origin rules contained in free trade deals.
A declaration review allowed the business to reclaim overpaid duties, while also identifying underpayments that required voluntary disclosure to HMRC.
Benefits
The engagement delivered immediate “financial benefits”, the business said, “securing duty savings and reducing future duty exposure reduced through improved processes”.
Where issues were uncovered, voluntary disclosures were accepted by HMRC without penalties.
When HMRC requested a customs audit shortly afterwards, the business was fully prepared, saying they felt “supported throughout the entire process”, and passing this audit with no recommendations for significant improvement.
Beyond compliance and cost savings, the emotional impact was equally important.
The team moved from working in a frantic, reactive way to operating with confidence and control; trusting their processes and knowing expert support was available should issues arise.
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