Many UK businesses assume that because there’s a trade deal in place, goods move duty-free automatically. Then an import arrives at Dover or Felixstowe with a duty bill attached. The reason is usually rules of origin. A trade agreement only removes or reduces tariffs on goods that count as “originating” under that agreement, and you need proof. Our customs clearance team can help you check a claim, and this guide covers the basics UK importers and exporters need to know.
Why rules of origin matter
The UK has trade agreements with the EU and a number of other countries. Under each one, preferential rates of duty, often zero, apply only to goods that meet that agreement’s rules of origin. HMRC’s guidance on the UK-EU Trade and Cooperation Agreement (TCA) is clear that to export tariff-free, goods must meet the UK-EU preferential rules of origin.
Two points catch people out. First, the rules differ from agreement to agreement, so goods that qualify under one deal may not qualify under another. Second, HMRC notes that if your materials or suppliers change, the origin of your product can change too, so you need to check every time you claim a preference.
How goods qualify as originating
Wholly obtained goods
These are goods produced entirely in one country covered by the agreement, without using materials from anywhere else.
Sufficiently worked or processed goods
Most manufactured goods use at least some imported materials. They can still qualify if they’ve been sufficiently worked or processed, which is judged against a product-specific rule linked to the goods’ commodity code. HMRC describes three main types of rule:
- Value added. The value of non-originating materials used must not exceed a set percentage of the ex-works price of the product.
- Change of tariff classification. The finished goods must have a different commodity code from the imported materials used to make them.
- Specific process. The product must be made from particular materials or through particular processes.
Some minimal operations, listed in each agreement, count as insufficient processing and won’t give goods origin on their own.
Tolerance and cumulation
The general tolerance rule lets manufacturers use a limited amount of non-originating material, up to a set weight or percentage of the ex-works price, without losing origin. Cumulation lets you treat materials or processing from a partner country as your own. Under the TCA, for example, materials originating in the EU can count as UK originating, and once a product gains originating status it’s treated as 100% originating.
Goods must also arrive in the same state they left. They can pass through or be stored in other countries, provided they stay under customs supervision.
Claiming the preference on UK imports and exports
For UK-EU trade, preference is usually claimed in one of two ways:
- A statement on origin made by the exporter on an invoice or other commercial document. One statement can cover multiple shipments of identical products to the same customer under the same contract for up to 12 months.
- Importer’s knowledge, where the importer holds information showing the goods are originating.
Under the TCA, both importers and exporters must keep records for at least 4 years. If HMRC or EU customs checks a claim and it can’t be supported, the importer becomes liable for the full rate of duty. Getting the Incoterms right also matters, as they set out which party is responsible for duties and paperwork.
Checking the rules for your products
HMRC directs traders to classify their goods first, then use the UK Trade Tariff tool and select “rules of origin” to see the rule for their commodity code and which types of proof can be used. If you’re unsure about classification or the rule that applies, that’s the point to speak to a customs broker.
Frequently asked questions
Do all goods traded between the UK and EU qualify for zero tariffs?
No. Zero or reduced tariffs under the Trade and Cooperation Agreement only apply to goods that meet the UK-EU preferential rules of origin and are supported by a valid claim. Goods made with a high proportion of materials from outside the UK and EU may not qualify and could attract the full rate of duty.
What is a statement on origin?
A statement on origin is a declaration made by the exporter, usually on the commercial invoice, confirming the goods meet the rules of origin. Under the UK-EU agreement, one statement can cover multiple shipments of identical products to the same customer under the same contract for up to 12 months.
How long do I need to keep rules of origin records?
For trade under the UK-EU Trade and Cooperation Agreement, HMRC guidance says importers and exporters must keep records for at least 4 years. Importers count from the date of importation and exporters from when the statement on origin was issued. Check the record-keeping rules for any other agreement you trade under.
Speak to our customs team
If you’re not sure whether your goods qualify for a preferential rate, give us a call on 01304 759200 or drop us a message and we’ll look at your products and paperwork and help you claim the right rate on your declarations.