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CLIENT PROFILE
Our Client
A highly innovative and industry-leading sportswear brand with global revenues exceeding $1 billion. Goods are designed and manufactured in factories around the globe, with a high percentage of sales in the UK, EU and US markets.
Client Confidentiality Statement
We collaborate with clients on highly confidential matters. To protect their privacy, the identities of our clients have been altered in our case studies, while the projects and scopes of work remain authentic.
This ensures we can share the impact of our work without compromising client confidentiality.
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THE BRIEF
Duty Recovery
Despite having already worked with one of the so called “big-4” as part of their post-BREXIT strategy, the business presented what initially appeared as an isolated query on the eligibility of a specific product to obtain preferential treatment when imported into the UK.
Whilst left unaddressed, this query had resulted in 7-figure sums of import duty being paid on imported goods, which had not been budgeted for and was believed to have been mitigated as part of their post-BREXIT planning.
As such, BKR was asked to provide a second opinion and advise on potential strategies to both reclaim and avoid these duties on future imports.
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THE SCOPE
Origin Decision
A decision on whether the product met the preferential rules of origin and was eligible for preferential treatment in the UK was hugely significant and had to be addressed prior to any further discussions on duty mitigation and reclaims.
On the basis a negative outcome would have prevented any further discussions on duty recovery, a modular approach was opted for which would allow the scope of the project to be reviewed after the initial decision on eligibility.
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THE RESULTS
Supply Chain Restructuring
A second review of the preferential origin determination concluded that the product in question would be eligible for preferential treatment in the UK. However, a crucial point overlooked in the assessment undertaken by a separate party was the incompatibility between the proof of origin procedures and the businesses supply chain.
Feedback to this affect was provided to senior management representatives which concluded with a decision to both re-structure the existing supply chain, in addition to undertaking a large administrative exercise to retrospectively obtain proof of origin for goods previously imported at the full tariff rate and file for reimbursement of unnecessarily paid import duties.
As a result of the faith and trust placed in BKR’s recommendations by business representatives, significant strategic changes were adopted. As a result, the business now operates a significantly healthier and more compliant customs operation within the UK and Europe.
Some of the actions and results of these decisions were:
Legal Verification
Engagement with both UK and overseas customs authorities to establish alignment on proof of origin procedures and allow factory representatives to obtain retrospective proof of origin.
Successful £5 million Reclaim
Preparation of the large-scale duty reclaim schedule which was subsequently accepted by HMRC officials and resulted in the successful recovery of over £5million in unnecessarily paid import duties.
Mitigation of Import Duties
Newly crafted proof of origin procedures ensured import duty would no longer be paid on qualifying preferential goods, therefore mitigating the risk of reoccurrences.
Proof of Concept for a UK-DC
Longer-term strategic recommendations resulted in a decision to implement a UK Distribution Centre. The proof of concept and advisory provided by BKR advisors was instrumental in this decision.
Legal Verification
Engagement with both UK and overseas customs authorities to establish alignment on proof of origin procedures and allow factory representatives to obtain retrospective proof of origin.
Successful £5 million Reclaim
Preparation of the large-scale duty reclaim schedule which was subsequently accepted by HMRC officials and resulted in the successful recovery of over £5million in unnecessarily paid import duties.
Mitigation of Import Duties
Newly crafted proof of origin procedures ensured import duty would no longer be paid on qualifying preferential goods, therefore mitigating the risk of reoccurrences.
Proof of Concept for a UK-DC
Longer-term strategic recommendations resulted in a decision to implement a UK Distribution Centre. The proof of concept and advisory provided by BKR advisors was instrumental in this decision.
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OUR SUPPORT
Smarter Customs Strategy Solutions
This case study represents one of many strategy and duty optimisation projects delivered by the BKR team.
Whilst this case study focuses on an example related to preferential origin, over payments in import duty can be attributed to a number of reasons, including and not limited to, misclassification of goods, overvaluation of goods, misuse of customs procedures or simply errors on the part of the customs declarant.
If you are concerned you may have previously overpaid in import duty or want to know if there are strategies to reduce your current expenditure, book a consultation with one of our advisors today.
Let us know a little bit about how we can help and one of our customs experts will be in touch to arrange a consultation at the next mutually convenient date.
Contact us using the details below, or simply fill out the contact form:
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