Customs & International Trade case studies
Case Study 1
Our client: a high street retailer with overseas operations
The challenge: our client was restructuring its supply chain to improve logistics and cut out third party wholesalers.
we helped the client understand the customs duty implications of changes to the physical flows and recommended alternatives to minimise the duty burden. In addition to we examined the feasibility of using customs duty reliefs and planning structures. We recommended the use of First Sale For Export structures to enable a lower value to be used for the imports into the EU and consequently to reduce the customs duty due. We also looked further into the supply chain beyond the client entity to ensure that suppliers and joint venture entities/franchisees had sought to minimise the customs duty impacting on their transactions.
Benefit to client
In addition to reducing the customs duty cost for the client’s imports, the review of the wider supply chain enabled the client to ensure that customs duties in the overall supply chain were minimised, leaving more profit to be shared amongst the entities involved.
Case Study 2
Our client: - a manufacturer of luxury goods
The challenge: The Senior Accounting Regulations require the CFO to attest to the fact that the business has robust tax accounting processes to ensure the accuracy of tax returns. This includes customs duty and in common with many businesses, it was established that the CFO had a much lower level of visibility over this area.
We held a workshop with relevant stakeholders within the business to establish the nature of any procedures in place to manage imports. This involved mapping out the supply chain and product lifecycle to determine points at which customs duty decisions were made and provided a report summarising findings and providing recommendations on what the business would need to do to put a robust framework in place to ensure that the procedures are appropriate for the activities. Following on from this we helped the business to draft appropriate procedures and instructions for freight forwarders and to consider an appropriate training programme for staff to enable them to carry out the responsibilities detailed in the procedures.
Benefit to Client
Our work will enable the CFO to meet the SAO sign off requirements for customs duties. It will also afford the business a much higher level of transparency and accuracy in the area of customs duty leading to wider use of reliefs with a subsequent reduction in costs.
Case study 3
Our client – a major pharmaceutical company
The challenge – the R&D activities carried out by pharmaceutical companies frequently involve the movement of products cross border during the development and clinical trial phases of the product cycle. These transactions are not sales but rather a movement of own goods. Although there is no sale of the product it is still necessary to attach a value to the transactions for customs (and other tax) purposes.
We spent time having detailed discussions with the relevant areas of the business to determine the nature of the activities carried out and the tangible and intangible costs involved in the process. This enabled us to determine an appropriate way of valuing the transactions for customs duty purposes so that this value could be used when the products were imported into numerous locations worldwide. Once an appropriate method had been devised we negotiated with the tax authorities and assisted the client in rolling out the methodology to ensure the business understood the importance of using the agreed approach.
Benefit to client
The client now has the comfort of knowing that it has an automated process in place to value the transactions appropriately and satisfy both customs duty and transfer pricing requirements, reducing the risk of additional tax liabilities and penalties being incurred.