Why Your Freight Forwarder Is Not Your Customs Tax Advisor

Written By Angus Hirst

Many businesses across the UK operate under a dangerous assumption: they believe that because they pay a freight forwarder to move their goods, they have also paid for their customs compliance. While freight forwarders are essential partners in the logistics chain, there is a fundamental legal and professional gap between moving a box and managing a tax obligation.

At Readyset, we frequently see businesses facing HMRC audits and heavy penalties because they didn’t understand where their forwarder’s responsibility ends and their own liability begins. In the eyes of HMRC, the importer of record is always the one carrying the risk.

The Legal Reality: Direct vs Indirect Representation

To understand why your forwarder isn't an advisor, you first have to understand the capacity in which they act. Most freight forwarders in the UK act as Direct Representatives. This is a crucial legal distinction.

When a forwarder acts as a direct representative, they are simply acting on your instructions. They take the data you provide—or the data they assume is correct based on your invoice—and they type it into the customs declaration system. Legally, any errors made on that declaration are the sole responsibility of your business. If the forwarder makes a mistake with a commodity code or a valuation, HMRC will not go to the forwarder for the unpaid duty; they will come to you.

Freight forwarders are logistics specialists. Their business model is built on volume and speed. They are experts at booking containers, managing shipping routes, and ensuring that a truck gets from A to B. However, they are not tax consultants. They generally do not have the time or the remit to perform a forensic review of your product classifications or to assess whether you are eligible for duty relief schemes that could save your business thousands of pounds.

The Problem with Commodity Code Assumptions

One of the biggest risks in relying on a forwarder is the selection of Commodity Codes. These ten-digit numbers determine the rate of duty and VAT you pay, as well as any licensing requirements.

In many cases, a forwarder will look at a commercial invoice, see a vague description like "electrical parts," and pick a code that seems to fit. If that code is incorrect, you could be underpaying duty, which leads to penalties, or overpaying duty, which is a direct hit to your profits.

A professional customs consultant like Readyset takes a different approach. We look at the technical specifications of your product, the materials used, and its intended function. We ensure that your classification is legally robust. A forwarder is paid to get the goods through the port; we are paid to ensure the entry stands up to an HMRC audit three years later.

Missing Out on Duty Relief and Special Procedures

Freight forwarders typically follow the path of least resistance. This means they will often clear goods as a standard import, where duty and VAT are paid immediately. While this is the fastest way to get goods out of the port, it is often the most expensive.

There are numerous HMRC "Special Procedures" designed to help UK businesses stay competitive, such as:

Forwarders rarely suggest these schemes because they require specific authorisations and complex record-keeping. At Readyset, we act as your advisor to identify which of these schemes fits your business model. We help you apply for the authorisations and, more importantly, we set up the systems to manage them. Without an independent advisor, your business might be losing tens of thousands of pounds every year in taxes that you aren't legally required to pay.

The Middleman Issue and Data Accuracy

When you use a forwarder, you are often one step removed from the actual data being sent to HMRC. Many businesses never even see their own MSS (Management Support System) data.

Forwarders often use sub-agents or third-party software to file declarations. This creates a telephone game where information gets lost or misinterpreted. For example, a Rule of Origin might be ignored, meaning you pay full duty on a product that should have been duty-free under a Trade and Cooperation Agreement.

As your customs partner, Readyset performs monthly audits of your trade data. We look at every entry made in your name. We check for consistency in valuations, currency conversions, and the use of CPC (Customs Procedure Codes). This level of oversight is something a logistics provider simply cannot offer.

HMRC Audits: When the Bill Arrives

HMRC has the power to audit your customs records up to four years after an import has taken place. If they find that a forwarder has been using the wrong codes or failing to declare the correct information on your behalf, they will issue a C18 Demand Note.

This demand note for unpaid duty comes with interest and potential penalties. At this point, telling HMRC that my freight forwarder did it is not a valid defence. You are expected to have "reasonable care" over your customs affairs. Having an independent consultant like Readyset provides evidence of that reasonable care. We prepare you for audits before they happen, ensuring your paperwork is flawless and your compliance is watertight.

Why a Local Liverpool Partner Makes a Difference

Based at 40 Rodney Street, Readyset understands the specific challenges facing businesses in the North West and the Liverpool City Region. With the development of the Liverpool Freeport and the increasing complexity of the Port of Liverpool’s operations, having a local partner who can sit down with you and review your strategy is invaluable.

A forwarder might be based at a hub in another part of the country, managing thousands of accounts. We offer a personal, hands-on service. We don't just send you a generic newsletter; we provide specific advice tailored to your products and your supply chain. We bridge the gap between your logistics and your tax obligations, ensuring that your business is not just moving goods, but moving them intelligently.

Conclusion: Securing Your Supply Chain

In 2026, customs compliance is no longer a "back-office" task. It is a critical part of your financial health and your corporate reputation. While your freight forwarder is a vital part of your business, they cannot be your only line of defence.

By working with Readyset, you gain the specialised knowledge required to navigate HMRC’s complex rules. We help you achieve AEO status, manage Freeport benefits, and implement duty relief schemes that a forwarder would never mention. Don't leave your compliance to chance—ensure you have a dedicated customs advisor who is looking out for your bottom line

Angus Hirst
Previous

The 5 Red Flags in your Customs Agent’s Performance