Understanding Regime 40 and Regime 42: A Guide for UK Importers
As a UK importer, navigating the complex world of customs and duties can be daunting, especially when it comes to understanding the different customs regimes available. Two key regimes that can help streamline your imports are Regime 40 and Regime 42. These regimes are part of the UK’s customs framework, offering specific benefits for businesses involved in importing goods.
Here’s an informal breakdown of each, so you can make sense of what they mean and how they might benefit your business.
—
What is Regime 40?
Regime 40 refers to the Customs Freight Simplified Procedures (CFSP), a process designed to make it easier for importers to move goods through customs with less paperwork and administrative hassle. It’s particularly useful for businesses that import goods regularly and want to streamline the clearance process.
Key Features of Regime 40:
– Simplified Customs Declarations: Under Regime 40, importers can make simplified declarations, allowing for quicker processing times compared to standard import procedures. This reduces the need for extensive paperwork upfront.
– Delayed Duty Payments: Instead of paying import duties and VAT at the time of entry, you can pay them later, typically on a monthly basis. This can significantly improve cash flow, as you don’t need to tie up funds in customs payments immediately.
– Quicker Movement of Goods: Goods can be moved to your premises or warehouse without waiting for customs clearance, as long as you’ve submitted your simplified declarations. This can lead to faster turnaround times and improved supply chain efficiency.
Who Can Use Regime 40?
Regime 40 is generally aimed at businesses with a track record of importing goods regularly, so it’s not ideal for one-off or infrequent importers. You’ll need to register for CFSP with HMRC, and you must ensure that your internal systems for submitting simplified declarations are up to scratch.
—
What is Regime 42?
Regime 42 relates to the Customs Warehousing procedure. This regime allows businesses to import goods and store them in a customs-approved warehouse without having to pay customs duties and VAT right away. The key benefit is the deferral of duties until the goods are removed from the warehouse and enter free circulation within the UK.
Key Features of Regime 42:
– Duty Deferral: With Regime 42, you can delay the payment of duties and taxes until the goods leave the warehouse, making it much easier to manage your cash flow, especially for large shipments.
– Stock Control: Goods in a customs warehouse aren’t technically considered to be in the UK for customs purposes, so duties and VAT are deferred until you either re-export the goods or bring them into the UK market.
– Flexibility: If your business is dealing with a wide range of goods that may not be sold immediately, this regime gives you time to distribute products or decide how to move forward with them without the pressure of immediate customs costs.
Who Can Use Regime 42?
If you import goods in bulk and are looking to store them before selling or distributing them, Regime 42 could be highly beneficial. You’ll need a customs-approved warehouse and the ability to keep accurate records of the goods held. Regime 42 is typically used by businesses in industries like retail, manufacturing, and logistics.
—
When Should UK Importers Use Regime 40 or Regime 42?
While both regimes offer significant benefits, the decision to use Regime 40 or Regime 42 depends on your business’s needs.
– Regime 40 (Simplified Procedures) is best if you’re looking to simplify your customs declaration process and reduce the time your goods spend waiting for clearance. It’s ideal for businesses that import goods frequently and want to improve cash flow by delaying duty payments.
– Regime 42 (Customs Warehousing) is a good choice if you need to store large quantities of goods for an extended period before bringing them into the UK market. This regime helps you avoid upfront duty payments and gives you flexibility with how and when you sell or distribute your imported goods.
—
Final Thoughts
Both Regime 40 and Regime 42 offer significant advantages for UK importers, particularly when it comes to improving cash flow and simplifying administrative processes. Depending on the nature of your business, these regimes can help reduce costs, speed up the import process, and provide more flexibility with how you handle your goods.
Before applying for either regime, make sure to assess your business needs carefully and ensure you meet all the requirements for registration. The right regime can make a world of difference in terms of both efficiency and profitability.
If you’re unsure about which regime is best for you don’t hesitate to call our experts on +44 (0) 208 004 4441
