BrexitDuty CalculationHS CodesImport

How to classify your goods if there is a ‘No Brexit’?

By 3rd October 2018 No Comments

The UK Government recently released information with regards to product classification post-Brexit and whilst this guidance will change depending on the actual outcome of negotiations it is a good place to start for anyone who is concerned about this. We have summarised this information below.

Regardless of the outcome, SimplyDuty will continue to offer and develop product/HS Code classification tools for our customers, along with our duty and tax calculator/APIs.

UK Government Guidance

It is unlikely that the UK will exit the EU via a ‘no deal’ scenario as both parties wish to secure a negotiated outcome. However, being prepared is key, so the government has to look at what would happen should the outcome not go as expected.

They have been working on plans to ensure readiness to cope with all scenarios for the last two years, including a ‘no deal’ result, come March 2019 and have produced a series of technical notices to explain what businesses would need to do in a ‘no deal’ situation. This way they can be fully prepared, with the government doing all possible to ensure an orderly exit.

This technical notice is just one available, covering the movement of goods between the UK and the EU after exit. It is recommended that it should be read alongside the notice entitled ‘Trading with the EU if there’s no Brexit deal and Trade Agreement Continuity’.

Should the UK depart the EU with no agreement, then EU goods will be treated as goods from elsewhere in the world are treated now, until such a time as a preferential trading agreement can be established’.

This notice looks at how businesses will identify goods, establishing which duties and rules apply under the declaration process (see the ‘Trading with the EU if there’s no Brexit deal’ notice).

It is very relevant to companies that trade predominantly with the EU, where there are currently no tariffs on UK exports or imports to or from the EU and where the declaration process does not apply.

Before 29 March 2019

Currently, the UK is a member of the European Union, its Single Market and Customs Union. It applies the EU’s Common Customs Tariff (CCT) at the external EU border.

  • For goods moving between EU countries, there are no customs duties or routine interventions during the movement of goods.
  • For goods entering the EU’s Customs Territory from the rest of the world (“third country goods”), an import declaration will be required. Customs formalities and checks will be carried out and duties must be paid.
  • Imports from a country where the EU has a free trade agreement may obtain preferential rates of duty and rules of origin.
  • Imports from a country where the EU does not have a free trade agreement will be subject to the EU’s Most Favoured Nation (MFN) rates of duty and non-preferential rules of origin.

After March 2019 if there’s no deal

When the UK leaves the EU it will depart the single market and Customs Union.

If a ‘no deal’ situation occurs, goods traded between the UK and the EU after 29 March 2019 will be treated as third country goods.

  • For UK exports to the EU, the EU will require payment of duty at the rate set via the EU’s CCT.
  • For goods imported to the UK from the EU, the UK will require payment of duty at the rate set by the UK Government.

Businesses should also take account of the following:

  • The Cross-Border Trade Bill will allow the UK to set its own tariff once it leaves the EU.
  • In a ‘no deal’ scenario, trade with the EU will be on non-preferential, WTO terms.
  • The EU will apply MFN rates to goods imported into the EU from the UK.
  • The UK will apply its MFN rates to goods imported into the UK from the EU.
  • The UK will offer unilateral preferences to developing countries, and to transition all EU Free Trade Agreements for day 1 in order to ensure continuity.
  • The UK Trade Tariff will be made available free on GOV.UK.
  • The UK does not intend to immediately change the classification of goods in a “no deal” scenario.

If your business imports goods into the UK from the EU or exports to the EU, you would now have to comply with all customs procedures.

Establishing a UK Trade Tariff

The Cross-Border Trade Bill provides the powers for HM Treasury to establish a new UK trade tariff.
The importer must use the tariff to decide the correct classification of their goods. This will result in a numeric commodity code which will be listed in the Tariff with the rate of import duty applicable.
The Tariff will also set out import procedures i.e. how the value of goods is calculated, and which forms, codes, and procedures should be used. The UK Trade Tariff will replace the EU CCT for imports to the UK.

UK Commodity Codes

Commodity codes in the EU are 10 digits long for imports, and 8 digits long for exports. The UK will remain a participating country in this system.

Northern Irish businesses importing and exporting to Ireland

The UK government states that it will respect their relationship with Ireland via the Belfast Agreement. If a ‘no deal’ situation exists, the Irish government would need to discuss arrangements.

For full details please refer to:

UK Government No Brexit Deal Product Classification Guidance