Alinea Customs Briefing When an overseas supplier provides a US Harmonized Tariff Schedule (HTS) code, and fails to classify to the UK Global Tariff on import into the UK, the importing company will be required to provide accurate product classification, and vice-versa for exports moving from the UK to the US.
A Shared Starting Point, but Not a Shared Code
The World Customs Organization (WCO) Harmonized System (HS) provides a common international framework for classifying goods to six digits. Beyond that level, each country or customs territory applies its own national subdivisions. The US HTS and the UK Trade Tariff therefore diverge after six digits. This is a fundamental reason why imports from the US may be held at the UK border. In many cases corporate procurement and logistics departments be advised to adhere to their auditor’s request for the supplier to provide the UK classification, whereas certain brands may only classify goods to the US HTS register. Indeed, this requirement may form an underlying part of their contract of sale with their supplier. Underlying this issue may also be the requirement to modernise either company’s inventory management and Enterprise Resource Planning (ERP) system – which may not support inter-regional classification.
Responsibilities of the UK Customs Broker
Within the United Kingdom, it is standard procedure for a company to appoint a customs broker is in accordance with section 21 (a) of the Taxation (Cross-Border) Trade Act 2018, as direct representative.
21 Customs agents
(1)A person (“the principal”) may appoint any other person (a “Customs agent”) to act on the principal’s behalf for the purposes of this Part, and—
(a)the agent may make Customs declarations in the name of the principal (and in that case the agent acts as a “direct agent”),
A direct representative must act in accordance with the written instructions of the company that they represent. This is likely to also be a requirement of their professional indemnity insurers. They must also exercise reasonable skill and care in accordance with the demands of the profession.
Due to this – a customs broker will not automatically classify an importer’s goods if they are rejected as incorrect by HMRC CDS – the UK’s digital customs clearance system, unless they hold standing instructions from their client to do so. Instead, they will report the error to their client, with a request for the correct classification. They may choose to provide a link or recommendation to their client of where to review the data in the UK Trade Tariff.
Corporate Reputation and Why the Distinction Matters
The commodity code declared determines the duty, import VAT and any trade measures that apply to the goods, including quotas, licensing requirements, trade remedies and preferential tariff treatment.
An incorrect code can result in the overpayment or underpayment of duty, delays at the border and, in some cases, penalties or post-clearance demands.
These issues are often most acute when a shipment is already awaiting clearance- in many cases the documents for customs clearance may only be sent to the broker one or two days in advance of the arrival. Queries can pass back and forth between the supplier, the importer, the logistics team and the customs broker, each holding only part of the information required.
Therefore, it is advisable to hold a standing data file across regions, supported by a statement of procedures. Delays in customs clearance can cause damage to corporate reputation, delay fulfilment of orders, and may also impact sales, and profitability due to transport and storage costs.
How Alinea Customs Can Help
Alinea Customs helps importers bridge the gap between overseas product data and UK tariff classification. We can also liaise with our partnered licensed customs brokers in the US to provide commercial advisory addressing inter-regional trade compliance, for example – addressing areas unique to certain sectors such as the requirements for the Manufacturer Identification Code (MID) for textiles.
Our classification and customs consultancy services can help you to:
- review existing overseas codes alongside the available product information;
- identify the details needed to determine the appropriate UK commodity code;
- liase with licenced US customs brokers when shipping to the US;
- understand the associated duty liabilities and declaration requirements;
- coordinate classification and supporting documentation with your customs clearance process; and
- align international ERP systems;
- strengthen your approach to classification for future shipments.
Accurate tariff classification is determined by the description, composition and function of the goods, assessed against the UK Trade Tariff and its interpretative rules, and in certain cases relevant case law. Alinea Customs work closely with organisations – from fashion, footwear and textiles, to industrial organisations, to align a product description or bill of materials, with accurate tariff classification, and can also assist with origin determination.
Whether managing a comprehensive inventory classification review to ensure accurate classification and inter-regional compliance, or resolving an urgent shipment classification query, Alinea Customs provides practical customs brokerage and consultancy services tailored to business needs.
Contact Alinea Customs today to discuss customs classification requirements and explore practical solutions to support regulatory compliance, mitigate risks, and facilitate the efficient movement of international shipments.
Contact customs@alineacustoms.com for further information.
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