We’re finding that HMRC is, quite rightly, checking into the origin of imports, including those coming through clearing agents. If you are claiming ‘importer’s knowledge’ for your preferential origin status make sure you have all the information HMRC requires.
It is important to remember that the importer of record is actually responsible for paying any duty and ensuring that they have all the information needed to prove to HMRC that the classifications on the import documentation is correct.
Claiming preferential origin status, which can reduce the cost of importing goods, is quite straightforward and can be done using ‘importer’s knowledge’. However, it is really important to remember that the business claiming preferential status for the goods under ‘importer’s knowledge’ needs to know the following information about the imports in order to satisfy HMRC:
- the commodity code
- a brief description of the production process (including the origin of the goods used)
- if the origin criterion was ‘wholly obtained’, the applicable category (such as harvesting, mining, or fishing and the place of production)
- if the origin was based on ‘sufficiently worked or processed’ give one of the following:
- the value of the product as well as the value of all the non-originating or, as appropriate to establish compliance with the value requirement, originating materials used in the production
- the weight of the product as well as the weight of the relevant non-originating or, as appropriate to establish compliance with the weight requirement, originating materials used in the product
- a list of all the non-originating materials including their commodity code (in 2, 4 or 6 digit format depending on the origin criteria)
- if the goods have been altered or transformed
- any additional information that will help verify the origin of the goods, if HMRC asks for it.
If you or the person receiving your goods cannot give this information for commercial reasons you should use an origin declaration. Information is available on the requirements relating to proving originating status claiming a reduced rate of customs duty for trade between the United Kingdom and Europe, and there is also guidance available about getting proof of origin for your goods.
It is crucial to get this right. This year, we have seen companies face fines in excess of £400,000, due to lack of understand and using ‘importer’s knowledge’ via a clearing agent without having the required information about the goods. This will ultimately close the business. Ignorance of the requirements is not an acceptable excuse and the time and cost of dealing with audits can be huge.
There are several ways to avoid such a potential catastrophe, every business should educate itself with some training about international trade requirements. We have half day courses available which will give you a thorough understanding of the overall requirements and processes that you’ll need to think about, in particular our half day training on How to Apply Trade Agreements and Rules of Origin.
Alternatively, you can outsource your import processes to a well-qualified company and ensure that you check their experience and ask for examples of clients who might have similar needs to yours so that you know you will get all the information that you need to address any subsequent enquiries from HMRC. Our CDS service undertakes declarations for many businesses. We ensure that we are focused on providing a responsive service which provides customers with all the information they will need for any HMRC enquiry in a clear and straightforward manner.
Trading internationally is a brilliant way to look to grow your business but make sure that you are operating with full information about HMRC requirements so that you don’t get any nasty surprises when you are audited on your import or export documentation.
If you are concerned about your declarations and would like to ensure you are prepared properly to answer any queries from HMRC please do just contact our helpdesk on 0115 727 0018.
