The Importance of Understanding the Tariff

The export trade of goods that can have customs and excise duty applied to them is based on what is called the Integrated Tariff of the United Kingdom, or Tariff for short. Every type of goods that your business trades with international customers that are within or outside of the European Union (EU) has a corresponding number that identifies it for the purposes of customs and excise duty.

The Tariff itself is the result of all EU Member States standardising the way they identify goods that move between their countries. A single system is now in place that integrates the Tariffs of all EU Member States.

The Tariff is constantly updated with new products and their corresponding Commodity Codes. These codes are usually referred to as the CN code of the goods and should be included on all the documentation that accompanies all your international shipments. The main document to include the CN code on is the Single Administrative Document or SAD that is often called form C88.

It is important that your international business understands in detail how the Tariff operates and how to use it to accurately identify the goods you trade with other countries. Any mistakes in the classification of any goods could mean your business will pay too much customs or excise duty. Your business can subscribe to an email newsletter that can keep your business up-to-date with the latest changes to the Tariff. These are called ‘Stop Press’ updates and are available on the HM Revenue & Customs (HMRC) website.

The Tariff

The Tariff is available in a number of formats your business can use including: printed directories, an online database you can access via the HMRC website or the Business Link website and CD ROM. Subscriptions to the CD ROM and printed versions of the Tariff are available from the HM Stationery Office website.

HM Revenue & Customs can help you not only use the Tariff effectively, but also help with any classification issues you may have with any of the goods you want to move to an international customer, or bring into the UK. You can call the HMRC Tariff Classification Service Enquiry Line on: 01702 366 077 during normal office hours. Note you are limited to enquiring about three Commodity Codes. The information you are given over the phone is not a binding definition, so double-check with the Tariff yourself.

Commodity Codes and the Tariff

The purpose of the Tariff is to generate a Commodity Code for each of the goods you are moving to an international customer. The Commodity Code itself is either an eight digit code for goods exported outside of the EU or between EU Member States, or a ten-digit code for goods imported from outside the EU.

TARIC and the Tariff

The TARIC (Tariff Intégré Communautaire) is closely associated with the Tariff. The TARIC itself is a database that is maintained by all EU Member States and is the source of the CN codes that the Tariff enables you to identify for each of the goods you export to your customers.

The Tariff and the Law

It is your business’s responsibility to properly classify each of the goods you will be exporting or importing across international borders. Your business is not compelled to own a copy of the Tariff, but your business must use a recognised copy to generate the CN codes your goods need. Note that if you incorrectly classify your goods, the HMRC may fine your business. In some cases this could mean the seizure of your goods.

If you are in anyway not sure of how to use the Tariff’s classification you can apply for what is called Binding Tariff Information (BTI). BTI is the HMRC’s decision about the classification of your goods. If you want to apply for this you should complete form C103. BTI is also available electronically. The HMRC website has more detailed information.