Last reviewed 3 February 2022
In this new, regular feature, we follow the journey of a company that is making uncertain and unplanned steps into exporting. As the scenario develops, we join it in finding out about the obstacles of exporting — and the ultimate rewards.
A garden ornament business receives an order
As Yvonne and Martin Sprake, the owners of a garden ornament business, arrived at work a courier handed them a returned item which had been incorrectly addressed. Martin was concerned that this was more wasted money and time, and probably another lost customer. It didn’t happen often, but it was annoying all the same. The business was finally beginning to show a clear profit after two difficult years and they couldn’t afford to waste resources — much less annoy customers.
Orders had been arriving in droves since they started their social media campaign. Spring was around the corner and people were already thinking about improving their gardens. Their attractive ornaments were a straightforward way to brighten up a patio, and the number of garden centres and DIY shops which had ordered was growing every day. Martin was struggling to keep up with the growing demand.
Doing business abroad
Later that morning Yvonne discovered that the customer for the returned item was actually in Plogastel St. Germain in France. The company had never promoted its business abroad or made any attempts to generate foreign business, but just having a website meant that their products were visible around the world.
Unfortunately, they would have to cancel this undelivered order. They didn’t know anything about exporting, but Yvonne felt sure it had become even more difficult to sell to an EU country following Brexit. But then again, she thought, isn’t a French customer’s money as good as anyone else’s? Other businesses sell abroad, so why not at least look into it?
Following a phone call with the customer, Yvonne was determined to fulfil the order. The buyer had turned out to be a DIY and garden centre in Brittany, not actually that far from Plymouth via the ferry route, and the owner seemed keen to sell the products in his three stores. Yvonne started to search Google to find out what was involved in sending goods to France.
Learning to begin exporting
Royal Mail could accept their parcel, it seemed, as could the larger couriers. The paperwork didn’t actually seem too bad at first. She’d need to complete an export declaration called a CN23 which could be done online. One piece of information they needed that she didn’t understand was something called an HS code.
After a little more research, Yvonne was satisfied that she understood the process. An HS code was a classification system of goods. A helpful man on the Government’s export support service had explained what she had to do. He couldn’t tell her the right code to use, but he explained how to find out. There was a place on the government website where the full list of HS codes could be found. If she wasn’t sure, there was help available from Customs but, as it turned out, Yvonne found it easy to find the code for their ornaments, she was confident it was 69 30 90 93 — hand-made ornaments of earthenware. It described the goods perfectly, so it was the only code that would fit.
She also needed something called an EORI number. That turned out to be pretty simple, too. She completed the process online using the company VAT and registration details and the number was issued immediately. Yvonne stored the document showing the number with the company details. She had a feeling she’d be needing it again some time, although in fact it looked surprisingly similar to their VAT number, so she didn’t think she was likely to forget it.
There were strict rules about valuation too, which looked pretty daunting to start with. Six rules to follow! But on closer examination, she found she didn’t have to look beyond the first rule, called the transaction price. In most normal commercial transactions, the price paid was the customs value.
She made a mental note that there could be circumstances when that might not be so straightforward, but that was something to think about on another day.
Statement of origin
Finally, she needed a statement on origin. This was not so easy to understand. Every tariff number had its own rules, apparently. The Government website said they could declare their goods as being of UK origin if there had been a change to the tariff heading. That was easy enough. They started with a huge lump of clay and ended up with garden ornaments. Again, there was help available from HMRC if she wasn’t sure, but the rule was clear, she decided. And, as she could declare the goods as of “UK origin”, the customer wouldn’t have to pay the 6% French import duty that would have applied.
Becoming an exporter
The courier’s website explained that sending a parcel to a business in France was easily arranged on a basis of something called DAP (Incoterms). This meant that the company paid for the parcel to be delivered, but the customer had to pay local duties and VAT before the parcel could be released. They didn’t have to charge VAT on the order, so she’d have to arrange a partial refund on the payment. And local duties wouldn’t apply because the goods were of UK origin. The whole thing was quite satisfactory.
And that was all she had to do! She wondered why they hadn’t thought of exporting before. After all, if a customer could find them, how much more could they achieve when they really tried?
Today was the day that Sprake’s Garden Ornaments Ltd became an exporter.