Commodity codes or Harmonised System codes (HS Codes)
Find more about Customs guide on Commodity Codes.
As a freight forwarder I can’t count the number of times we have been given the wrong code or none at all.
Why is it important?
On import there are many reasons you should consider-
- You gave the wrong code to the forwarder – describing the wrong goods.
- The forwarder was given the wrong code and you don’t pay enough Duty.
- The wrong code is used and this avoids specific import checks.
- You gave the wrong code to the forwarder and pay too much Duty.
Errors like this will be tied to your VAT/EORI number – you will be checked by Customs if it happens too often.
Customs may select your goods for physical checking and potentially they may seize them in the event of a major infraction.
For Exports the reasons are quite similar:
- The wrong commodity code to the forwarder will describe the wrong goods
- Customs need the opportunity to check certain goods.
- Giving the wrong code to the forwarder may avoid licences required
- By giving the wrong code you could leave yourself liable to fines from Customs.
Shouldn’t my freight forwarder do all this? That’s what I pay them for…
You can ask your freight forwarder to do this, many will be receptive and happy to provide as they want to either win or keep your business.
Ultimately it is the responsibility of the importer or exporter to ensure the correct information is passed to Customs – that would be the view of Customs in the event of an audit. They will NOT accept the excuse of ‘the freight forwarder did this’ or ‘I didn’t tell them to do it that way’.
Remember that freight forwarders often do not physically see your goods, so if you give them a description the agent will try their best to classify for you. Take a look at what you are paying your forwarder for clearance – in the UK this can be as low.
In some instances, the freight forwarder will refuse to find the code for you – and for the reasons I’ve states this is to protect them from liability.
If you’re not sure, then you should get as much guidance as possible:
- Check with HMRC in the link at the top of this article
- Ask your forwarder to also independently check – they should also check with HMRC.
- View a list of commodity codes online (link below).
- Get a BTI (links below)
On most imports, for goods without licence requirements or from sanctioned countries, will not be physically checked by Customs or have any paperwork examined at port of arrival.
Customs will visit you and perform an audit checking documents on imports/exports for a period of time (usually the last 3 years) but will notify you beforehand of this intention.
Customs will ask you to produce copy documents relating to very likely all your imports – you should retain copies given to you by your freight forwarder for at least 3 years.
Can I get a better Duty rate?
You can discuss with Customs and argue for a Binding Tariff Information (BTI) decision. There may be a few occasions where you believe your product falls in a different code to the regularly accepted one but you’ll need to be able to demonstrate why this may be.
This can be the case for new inventions or products with multiple functions which may unfairly be classified to a particular section of the tariff. It may be that they could be classified under a lower rate.
I recommend to get a decision on how your goods are classified in case Customs require explanation.
The Customs website has an article which is often referenced with regards to VAT payable on Jaffa Cakes
Whilst this is related only to VAT, and as you would expect to be able to sell your product cheaper without VAT, this was a big advantage to United Biscuits.
What if my freight forwarder does not ask me or follow my instructions?
The forwarder should be a member of BIFA or another similar respected organisation. If the forwarder refuses to do so you should aim to first escalate within the forwarder’s team, then if that fails you can notify Customs directly and submit appropriate evidence, BIFA can also be of some assistance in the event you have a dispute with one of its members.
You’ll need to check local regulations in regards to other European based forwarders.
If I paid too much Duty, can I claim this back?
Yes, as long as you can provide evidence to support a claim.
Customs will need:
- A copy of a BTI, even retrospectively obtained.
- Full technical description including photos if possible.
- Full explanation from you on why or for what reason you are claiming a refund of part or all Duty
- A revised calculation usually in the form of an amended C88 with calculations provided if done by a manual form.
Customs may not entertain a refund below around GBP 10.00 although the importer can still make a claim. Importers cannot normally reclaim VAT from Customs in this way, unless they paid on deposit as in the case of temporary admission.
Useful Links:
- UK Customs tariff
- You can apply for a BTI on the UK Customs website
- You can apply for a BTI on the EU website
- You can claim repayment of import Duty on UK Customs website
- A quick check list for understanding EORI.
**Note: Information I provide in this post is not legally binding in any way**
