Tariff Classification and Ruling

All goods imported/exported need to be classified – an 8 digit commodity code for exports and 10 digit code for imports. Using a commodity code without being certain it is correct can cause issues (additional Duty/goods being delayed whilst clarification is sought) and adherence to import and export regulations.

If you import/export goods, you are responsible for ensuring the correct commodity code is used for all items shipped. The classification of imported goods is crucial for determining applicable tariffs, duties, and other regulations. The process involves assigning imported goods to the correct Harmonized System (HS)/COMMODITY code. Classifying imported goods involves a careful examination of the product’s characteristics and a detailed reading of the HS nomenclature.

MGC can assist as appropriate, and we can contact the HMRC classification team to validate the tariff number agreed with the supplier / customer. However, this would not be a legally binding with HMRC. For a 100% guarantee, then an Advance Ruling will be required (please see below).

 

Classifying Imported Goods

  • Material Composition: What is the product made of? (e.g., wood, metal, plastic)

  • Function: What is the product’s intended use?
  • Manufacturing Process: How was the product made?
  • Physical Form: What is the product’s shape, size, and appearance?
  • Legal Definition: Does the product have a specific legal definition that impacts its classification?

Applying for an Advance Tariff Ruling Decision From HMRC

Ensuring your goods are correctly classified is an important consideration when importing/exporting goods. HMRC can carry out audits on commodity codes and additional duty/penalties can be issued for errors. Whilst using a code suggested by a supplier or Customs broker is the easy route, best practice involves requesting an Advanced Tariff Ruling from HMRC, these being specific to your goods, based on information you provide and is legally binding within (for exports from or imports to) the UK.

The benefits of an Advanced Tariff Ruling Decision from HMRC – often called a “Binding Tariff Agreement” – are primarily centred around certainty and risk mitigation for importers and exporters.

Key Benefits
  • Certainty on Customs Duty – An Advanced Tariff Ruling provides a legally binding decision from HMRC on the correct tariff classification for your goods. This eliminates the risk of unexpected duty assessments or penalties due to incorrect classification. This is particularly valuable for complex or novel products where classification is uncertain.
  • Reduced Compliance Costs – Knowing the correct tariff classification upfront simplifies customs declarations and reduces the administrative burden. This translates to cost savings in time and resources, particularly when preparing customs declarations at the border.
  • Improved Cash Flow – Predictable duty payments improve cash flow forecasting and management. Businesses can budget more accurately knowing their customs liabilities in advance.
Other Key Benefits
  • Competitive Advantage – Certainty on import costs offers a competitive edge, allowing businesses to accurately price their goods and plan their operations with confidence.
  • Faster Customs Clearance – Accurate and pre-approved classifications often expedite the customs clearance process, leading to quicker delivery times.
  • Protection Against Disputes – The Advanced Tariff Ruling provides legal protection against future challenges from HMRC regarding the tariff classification of your goods, provided the goods remain consistent with the tariff ruling description.
  • Planning & Investment – Knowing the exact tariff helps with long-term business planning, investment decisions, and strategic sourcing.
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At MGC Import Export Consultants Ltd, we take pride in delivering high quality customer service. As an independently run business that focuses on our clients, with value-add support services, we offer flexible global logistics solutions along with consultancy services and training for all aspects of international trade.

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