All UK businesses must declare any exports to HM Revenue & Customs (HMRC) to ensure that any import VAT, duty, excise or levies due on them under UK and European law are collected.
HMRC uses commodity codes found in the UK Integrated Trade Tariff (the Tariff) to classify individual products. Classification of commodities is necessary for export declarations as well as Intrastat returns. How different goods are classified largely determines what duties and controls apply to them.
Other government departments also rely on Tariff classification for licences and other documents.
Please remember that it is your responsibility to get your commodity code and licences right, even if you use an agent. HM Revenue & Customs can fine you, seize your goods and delay their release from customs if you export goods with the wrong code or licence.
Commodity codes are also used to determine the appropriate import duties payable in your buyer’s country and to secure preferential duty rates where there are Free Trade Agreements or Economic Partnership Agreements in place.
2. Classifying your goods
In order to classify your goods you’ll need to make use of the Integrated Tariff of the UK - commonly known as the Tariff. This is a large document containing a product coding system which provides a comprehensive guide to importing and exporting. You can buy it in binder form or access it online. Volume 2 of the Tariff contains a list of commodity codes that HMRC uses to determine the class under which exports and imports are entered.
Use the online Trade Tariff to search for commodity codes.
Once you have found the correct codes, the Trade Tariff lists other things you may need to export your goods, for example:
- export licences or any special regulations for your goods (called ‘measures’)
- exemptions from licences etc in certain countries
- customs procedures that apply to your goods
You should contact the Tariff classification service helpline if you can’t find your goods in the Trade Tariff - Telephone: 01702 366077
3. Duties payable in third countries
If you’re trading with a third country outside the EU you can access their tariffs via the European Commission Market Access Database. This database allows you search for a product code based on your product description. It also gives important tariff information as applicable in third countries. Search the Market Access Database website.
4. Preferential duty rates
High level trade agreements between countries mean importers and exporters can pay less or no duty on certain goods traded with these countries. EU member states have multiple Free Trade Agreements (FTAs) or Economic Partnership Agreements (EPAs) in place with third countries and with blocs of countries acting together under bilateral or regional agreements of their own.
In general, agreements enable preferential importing and/or exporting conditions to be placed on goods that meet prescribed rules of origin and other criteria and it is important that you use the appropriate commodity code for your goods.
If you export goods, you can benefit from reduced or nil rates of duty on products destined for countries that have a preferential arrangement with the EU. Find out whether your exports are eligible for export preferences and how to manage export preferences.
FTAs and EPAs are constantly evolving, with countries graduating from one scheme to another, being de-graduated and/or products being removed or added to the list of preferences and/or being restricted under temporary or permanent limits or tariff quotas. As a result, those whose businesses are likely to be affected are advised to keep abreast of developments.