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Commodity Codes: What Are They and Why Do We Need Them?

Commodity Codes, all your questions answered..

What is a Commodity Code?

Commodity codes, sometimes referred to as trade tariff commodity codes form an essential part of the customs entry which is required when items are transported from outside the EU to the UK and vice versa. A ten-digit number is allocated to all goods from something as small as a drawing pin to larger pieces such as a jumbo jet engine. Every item will fall under a separate code, with each commodity code then dictating the customs duty payable on importation. The commodity code will also alert you to any restrictions for the transportation of that item.

 

What Does the Commodity Code Tell Us?

  • The duty and VAT ratings you'll be charged for your goods when imported into the UK
  • Whether your product requires an import or export licence 
  • Whether additional anti-dumping duties apply 
  • Whether you can apply for preferential duty rating (General System of Preference aka GSP)

 

Why Do I Need a Commodity Code?

If you have ever imported goods to the UK from outside the EU, it is likely that you will have been required to pay customs duty before collecting your goods. This charge is calculated from a percentage of the total value of your product. Your duty rating directly affects how much you will have to pay at customs when you import, and therefore HMRC requires you to declare an accurate commodity code to allow them to give correct classification on said product. If you give an inaccurate code, this can in turn give you an inaccurate duty rating.

It is imperative that you find your correct product code as further consequences can follow:

 

  • You could be asked to pay an outstanding duty or VAT on customs entry 
  • You may have to pay interest on the late settlement of customs duties and import VAT
  • Your goods may be delayed or seized by customs and you'll run into far larger costs and fines than what you would be paying if your goods were correctly declared

 

Worried About Getting the Correct Commodity Code?

After reading the above it can be understandably daunting when knowing which commodity code to choose for your specific needs. There are thousands of codes to choose from but there are excellent tools online to make the classification process more straightforward for you.

  •        Trade Tariff Lookup Tool - The best place to start is the trade tariff lookup tool. This allows you to quite literally try and find your specific item using HMRC’s built-in search engine which narrows down information based on what your product is, what it’s made from and so on.
  •    Email HMRC – If you are still struggling, you can email the Tariff Classification Service at classification.enquiries@hmrc.gsi.gov.uk and one of their expert officers will respond to you within three working days.

 

If you have any more worries or general queries about commodity codes, we at Tudor International Freight are always more than happy to help. You can contact us directly via telephone at +44 (0) 113 250 1155 or via email at sales@tudorfreight.com 

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