Customs: Cost Centre or Value Creator? | Why Smart Businesses Are Rethinking Customs in the Supply Chain

For many boardrooms, customs is still seen as a cost centre, a necessary function to get goods through the border. But what if that perception is costing your business money? 

As global supply chains grow more complex, the real opportunities lie not just in avoiding penalties, but in optimising duty management, using special procedures, and leveraging trade agreements to drive down the cost of sales. Yet these opportunities often go unnoticed by the C-suite. 

The Hidden Value in Duty You Don’t Pay 

Many businesses measure customs by the cost of compliance, not the value of avoidance. If a team is operating Inward Processing and mitigating £400,000 in duty per year, that is a direct improvement to gross margin. But this comes with risk, and risk mitigation requires investment in expertise, systems, and oversight. Without that, a single error can erase years of savings and end up in duty demands, penalties and fines. 

The most valuable duty is often the duty you never have to pay, provided your compliance is watertight. 

The ROI Challenge: Quantifying Customs Performance 

One of the biggest barriers to investment in customs is the difficulty in proving return on investment. Finance leaders often view the department as administrative rather than strategic. A useful metric to change that conversation is Duty Under Management (DUM). 

Duty Under Management is defined as the total duty paid plus the total duty saved (through free trade agreements or special procedures) for the past three years (the full audit window by HMRC). This measure reveals the scale of customs responsibility and the potential value at stake. 

For example, a business paying £2 million in duties and saving £1 million through procedures annually has £3 million under management. A five per cent compliance risk on that figure is significant, but so is the opportunity to improve it. By calculating DUM, leaders can see customs for what it is: a lever for both risk management and cost efficiency. 

The Complexity Dividend: Why Investment Pays Off 

Complexity often drives opportunity. Rules of origin can feel like red tape, but when managed correctly, they directly reduce the cost of sales by allowing duty-free trade under free trade agreements.  

Classification errors alone can also cost businesses millions of pounds each year, and avoiding them requires specialised knowledge and technology. Tools like the TariffTel classification platform, which is backed by classification experts and designed to support teams with the necessary accuracy and auditability to prevent costly misclassification mistakes.  

Investing in customs capability is not about adding headcount or bureaucracy. It is about unlocking value from existing trade flows. Every percentage point saved on import duties goes straight to the bottom line, and few other areas of a business can deliver that kind of direct financial impact.  

One area where both risk and reward are especially pronounced is customs classification. This is a foundational part of trade that influences everything from duty rates to compliance outcomes. Elizabeth Davies, Head of Customs Compliance & Classification at TariffTel says,

“Inaccurate classification is one of the most common, and costly, pitfalls in trade compliance. When customs is treated purely as a back-office function, businesses miss critical opportunities for savings and expose themselves to significant risk. Embedding classification accuracy into your processes from the start, supported by the right technology that gears you up for accuracy, doesn’t just prevent errors; it creates a foundation for scalable, strategic trade operations.”

When It Goes Wrong 

Even the most established businesses can face serious consequences when customs is neglected or under-resourced. One large manufacturing company recently experienced an HMRC audit that uncovered significant process failures, leading to special measures where HMRC attended board meetings until issues were rectified. In another case, a Senior Accounting Officer who signed off on customs controls was held personally accountable for inaccuracies in the declarations, illustrating the very real personal liability attached to these responsibilities. 

These examples show that underinvestment in customs is not just a financial risk but a reputational and governance issue. They underline why proactive oversight and professional guidance are essential to protect both the business and its leaders. 

From Compliance to Strategy: A C-Suite Conversation 

Customs should be discussed alongside tax, finance, and procurement at the C-suite level. Supply chain teams often focus on getting goods in on time, which is critical, but cost and compliance performance deserve equal visibility. 

Regular reviews, data-driven oversight, and the use of analytical tools such as CAT360 can help transform customs from a reactive task into a proactive value driver. Businesses that invest in digital visibility and skilled review are not just protecting themselves from risk; they are positioning customs as a function that contributes to growth. 

The Takeaway 

The risks highlighted above reinforce the importance of proactive investment and strategic oversight. When managed correctly, customs shifts from a reactive compliance burden to a source of competitive advantage and measurable financial benefit. 

Customs does not have to be a cost centre. With the right structure, data, and oversight, it becomes a value creator that improves margins, protects compliance, and strengthens commercial agility. The first step is to understand your Duty Under Management and start measuring customs not by cost, but by opportunity.