As most international traders know, when they export their goods there has to be a formal customs declaration. Many exporters, and importers, have never completed a customs declaration due to using a freight forwarder or customs broker to complete these on their behalf and many don’t understand that as the declaration is in their name, they are responsible for its accuracy.
In this issue we focus on one of the most basic pieces of information that is always required on a declaration - the tariff code, also known as a product code or an HS number. Exporters have a legal responsibility to classify the correct code to their goods as this code identifies the goods and defines any restrictions, requirements or charges that will apply.
You must only use a tariff number that you entirely confident is correct. HMRC may ask you to explain your choice, so ideally you should to keep on file any information used in making our decision. Do not guess the number, and don’t be tempted to use a code that attracts less duty or avoids restrictions or select a code your customer or supplier wants you to use. It is your declaration and you are legally responsible for it. False declarations can lead to serious punishments.
What are commodity codes?
Commodity codes are also known as trade tariff or HS codes and are used by customs authorities around the world to classify and track goods movements when you are importing or exporting them.
When you make your import or export declaration the specific Commodity Codes for your goods will help you work out:
- what rate of duty and import VAT you should pay
- whether the duty is suspended
- whether you need a licence to move your goods
- if your goods are covered by Agricultural Policy, anti-dumping duties, or tariff quotas
What does a commodity code look like?
Commodity codes are made up of 8, 10 or 14 digits
- First six digits indicate the specific Harmonized System code for your product and is made up of the Chapter number, heading and subheading number of the product. This is globally recognised and was set by the World Customs Organization.
- The eight-digit code is used for export declarations
- The ten-digit code is used for imports
- The final four are used when importing goods which attract additional measures such as excise or anti-dumping duty
How do you work out your Commodity Codes
The trade tariff tool allows you to find the right code by narrowing your search using information such as what your product is, how it is used and what it is used for, what it’s made from, how it’s made and how it’s packaged - so make sure you know these details before you start.
If you can’t find the commodity code you’re looking for, you can ask HMRC for informal advice on the most suitable code for your product. You will need to email them separately for each product and include the following information
- A description of the product
- The materials it’s made from
- What it’s used for
- How it’s presented or packaged
- hard to classify and informal advice is not suitable for you or your business
- a new type of product (this will be the first time the product will have ever been classified)
If you are bringing goods into Northern Ireland from outside the UK and EU, and they are at risk of entering the EU, you should use Northern Ireland Online Tariff instead of the one referred to above.
How we can help
By attending this course we will ensure you:
- Are aware of what a commodity code is and what it is used for
- Understand the process of how to classify goods
- Successfully classify a range of goods
- Understand the importance of getting your commodity codes correct.