Calculating duty correctly
By Louise Gearey - 13 September 2018
Duty is paid when goods are brought into a country or trading area. Rates of duty are different for different commodities and different origin countries. The harmonised system is used to classify traded products and the tariffs that apply to each when they are imported into the EU. This system is developed and managed by the World Customs Organisation (WCO).
The Meursing table is used to determine which tariff code, and therefore how much duty, is applicable to goods when importing them into the EU. For example: the EU classifies confectionary and bakery products, food preparations and more as “composite agrigoods”. They are not just defined as “sweets” or “biscuits” but have additional requirements based on the percentages of their ingredients. This is called the additional code and depends on the level of four things in your product:
- sucrose (including invert sugar)
- milk fat
- milk protein
Problems arise if nutritional labelling is used to determine these codes as the testing is completely different. This could mean the company will under pay duty which customs will later demand.
Confusion commonly occurs when dealing with starch/glucose. The Meursing table states that the figure should be based on “starch, its degradation products i.e. all polymers of glucose and the glucose determined as glucose and expressed as starch. However, where a product contains a mixture of glucose and fructose only the glucose in excess of the fructose content found should be included in the calculation.” The starch/glucose and sucrose figures will be incorrect if the codes are determined using the nutritional label.
If you export food products to the EU after Brexit and there is no free-trade agreement with the EU then British exports will face EU import duties under this system.
Why should I routinely test products?
As the importer you are responsible for the correct tariff classification of your goods. If HMRC find that the tariff codes are incorrectly declared, and therefore the duty paid is incorrect, they will investigate that product and those similar to it. Unless you have evidence that that product, and similar products, have been correctly classified you can be charged three years of duty on all the products.
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