A UK manufacturer was selling goods to a buyer in Germany. The product had been made in the UK, sent to Switzerland for some additional processing, and then shipped on to the German customer. The seller believed the goods met the rules of origin requirements to qualify for zero tariffs under a free trade agreement. The Swiss customs authorities disagreed — and have since notified their German counterparts.
The good news? It appears to have been an honest mistake rather than deliberate misdeclaration. The not-so-good news? In customs compliance, honest mistakes still carry real financial consequences. And with new UK regulations now holding exporters directly liable for origin errors, the stakes have never been higher.
Here’s what happened, why it went wrong, and — crucially — how it could have been done correctly all along.
The goods followed this route:
| What happened | Origin status |
| 1. Yarn sourced from Germany, imported into UK | Non-originating material |
| 2. Substantial processing in UK – enough to confir origin | Goods become UK-origin |
| 3. Sent to Switzerland for further processing | Processing insufficient to change origin – still UK-origin |
| 4. Shipped directly from Switzerland to Germany, declared as Swiss (CH) origin | Incorrect declaration – goods are UK-origin, not CH-origin |
The goods were declared as Swiss-origin on the export from Switzerland to Germany. This meant the preference claim was assessed under the Switzerland–EU Free Trade Agreement — and it failed, for two distinct reasons.
Origin is determined by where substantial processing occurs. The UK processing was sufficient to confer UK origin. The subsequent Swiss processing was not sufficient to change that origin. So regardless of where the goods were shipped from, they were (and remained) UK-origin goods.
This is the part that catches many businesses off guard. Even if a manufacturer knows their goods are UK-origin, that doesn’t automatically help in a Switzerland-to-EU shipment. The Switzerland–EU FTA uses the Pan-Euro-Mediterranean (PEM) Convention for cumulation of origin — and the UK is not part of that framework in this context. There is no mechanism for Swiss customs to recognise UK processing as contributing to Swiss origin. The goods simply do not qualify for Swiss preference.
In short: the goods were UK-origin goods passing through Switzerland — not Swiss-origin goods. The CH-origin declaration was incorrect, and Swiss customs were right to deny it.
The goods are UK-origin, the UK has a free trade agreement with the EU, so surely a TCA preference claim would work?
Unfortunately, not on this supply chain. The UK–EU TCA contains what’s known as a direct transport rule (sometimes called the non-alteration rule). It requires that UK-origin goods travel directly to the EU without undergoing processing operations in a third country. Because the goods were sent to Switzerland for processing — even processing that wasn’t enough to change origin — the direct transport condition is no longer met.
So on this supply chain, neither the Switzerland–EU FTA nor the UK–EU TCA would support a valid preference claim. The German buyer would be liable for full MFN (Most Favoured Nation) duties.
Because Swiss customs has denied the claim and notified the German Zoll, the German importer should expect:
And it’s not just the importer at risk. Since February 2024, UK exporters face direct liability under the Customs (Preferential Trade Arrangements: Error in Evidence of Origin) Regulations 2024. UK sellers who issue incorrect origin statements can now be fined up to £1,000 per material mistake. The onus is firmly on the exporter to get it right.
Here’s the good news: there is a perfectly compliant version of this supply chain — and it isn’t much more complex than what was actually done.
The cleanest solution. Finished goods go straight from the UK manufacturer to the German buyer. UK origin is established, the direct transport rule is satisfied, and TCA preference can be claimed. Simple, clean, and fully compliant.
If the Swiss processing step genuinely adds value that the customer requires, the manufacturer can use Outward Processing Relief (OPR) — a HMRC-authorised customs procedure that allows goods to be temporarily exported for processing and reimported with duty calculated only on the value added abroad, rather than the full goods value.
Under this route, the goods would return to the UK after Swiss processing (still UK-origin, provided the Swiss work didn’t change origin), and then be exported directly from the UK to Germany under the TCA. The supply chain looks like this:
The critical point is that OPR must be declared at the point of export to Switzerland — it cannot usually be applied retrospectively. Planning ahead is essential.
The compliant version of this supply chain was always available. The duty exposure arose not from the structure itself, but from the missing step of reimporting to the UK before the final export to Germany.
Rules of origin are one of the most misunderstood areas of customs compliance — and the consequences of getting them wrong can be significant. A few key lessons from this case:
If you’re a UK manufacturer with a supply chain that involves third-country processing before export to the EU — or if you’re unsure whether your origin declarations are correct — the best time to review this is now, before customs authorities do it for you.
If an error has already occurred, voluntary disclosure to the relevant customs authority (HMRC or the importing country’s customs) is almost always the right course of action. It demonstrates good faith and typically results in lower penalties than a discovered non-compliance.
Our origin consultancy team can review your supply chain, assess your rules of origin position under the TCA and other FTAs, and identify any risk before it becomes a problem.
Our Helpdesk gives you direct access to experienced international trade specialists — by phone or email. Whether it’s a quick check or a thorny compliance issue, we’re here to help.
We offer training courses in international trade covering rules of origin, customs procedures, FTAs, OPR, and more — from half-day introductions to in-depth programmes tailored to your business.
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