Don’t get your Brexit commodity codes wrong
- Jan 8, 2021 | Richard Asquith
With the UK now out of the Customs Union since the start of January 2021, you will have to learn about commodity codes. If you cannot accurately match your goods to the right code, you will be paying the wrong duties – if not following rules of origin– and won't be able to ship your goods as you need the numbers for customs declarations.
The UK is using the standard global six-digit format; the EU will be requiring its 8 digits minimum (see below).
The commodity codes now have to be included in the customs declaration that you will need to provide to clear any goods through UK or EU customs. This will make clear how much taxes – VAT and tariffs - you should be paying.
How do commodity codes work?
Commodity codes are made up with a range of digits that identify a particular product. They specify the type of product, materials used and the production method as follows:
- HS Code digits: It starts with the global standard – Harmonised System, or HS code, – which is a minimum of six digits. The UK is using this format since January 2021.
- EU additional digits: The EU has added up to a further 8 – making potentially 14. These extra EU numbers include: 2 digits CN heading (Combined Nomenclature); 2 digits TARIC (Integrated Tariff of the European Communities) Subheading. 10 digits is the most common. But it is possible to add 4 more under the additional TARIC code.
How to find out the right commodity code
Most tax authorities publish online their commodity codes for you to match to your products. The UK has a Trade Tariff tool online. You can use the UK’s HMRC’s Tariff Classification Service to get non-legally binding classification advice. HMRC will respond to your email within five working days. The EU member states have various similar tools.
Avalara can help with automated HS code identification
Assigning these codes to all product types for EU and any country can be time consuming and expensive. This is particularly the case for ecommerce suppliers with small package cross-border shipments. Contact Avalara. Additionally, the information required to determine the correct tariff code is often missing or not easily available, and therefore true import costs are not often well understood. Avalara has a fully automated system for low-cost classification, and will ensure you do not over pay any taxes.
Need help with your UK VAT compliance?
Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.