14 January 2021: Despite the last minute conclusion of EU-UK Trade and Cooperation Agreement (TCA), companies that trade between the UK and the EU face many new customs rules and regulations.
Following the end of the transition period for the United Kingdom’s withdrawal from the EU, the TCA stipulates that no tariffs or quotas apply to trade between the two – as long as goods “originate” in either the EU or the UK.
However, this means that businesses moving manufactured goods between the UK and the EU will need to understand the complex rules around origin, often for the first time.
Under the Rules of Origin process, the importer of goods pays any customs duties but can rely on a ‘statement of origin’ from the exporter. Therefore, the rules on origin will be relevant to anyone who trades in goods, including manufacturers buying in components, suppliers and retailers.
Where a product contains components from different countries, then complex and product-specific “rules of origin” are used to determine where the end-product is deemed to originate.
The professional body for Chartered Accountants, the ICAEW, has set out some helpful information here.
Under the new rules, the exporter can provide evidence of origin in a self-declaration – just a simple and standard declaration on the commercial invoice (or other commercial document) accompanying the shipment. See below for more details.
Alternatively, the importer can rely on information it has received itself that evidences the origin of the goods, and the evidence must be kept for four years. If challenged by a Tax Authority and satisfactory evidence of the origin of the goods cannot be provided, tariffs may apply and penalties may also be charged for incorrect declarations. Investigations can go back three years.
For many UK businesses it will be clear that everything they export definitely originates from the UK, or for EU businesses – the EU. However, the TCA warns that the growing complexity and global nature of supply chains meant some companies could have products that need more careful consideration.
There is also guidance from HMRC, the UK Tax Authority, here.
Turning now to the practicalities. The TCA helpfully sets out the words to be used in making the declaration. It is not complicated, but like most formalities, it needs to be followed exactly.
The text of the statement on origin (Annex ORIG 4 of the TCA)
(Period: from ………………… to ………………… [footnote 1])
The exporter of the products covered by this document (Exporter Reference No … [footnote 2] declares that, except where otherwise clearly indicated, these products are of … [footnote 3] preferential origin.
…………………………………………………………… [footnote 4]
(Place and date)
(Name of the exporter)
1. If the Statement on origin is completed for multiple shipments of identical originating products within the meaning of point (b) of Article ORIG.19(4) [Statement on Origin] of this Agreement, indicate the period for which the Statement on origin is to apply. That period shall not exceed 12 months. All importations of the product must occur within the period indicated. If a period is not applicable, the field may be left blank.
2. Indicate the reference number by which the exporter is identified. For the Union exporter, this will be the number assigned in accordance with the laws and regulations of the Union. For the United Kingdom exporter, this will be the number assigned in accordance with the laws and regulations applicable within the United Kingdom. Where the exporter has not been assigned a number, this field may be left blank.
3. Indicate the origin of the product: the United Kingdom or the European Union.
4. Place and date may be omitted if the information is contained on the document itself.
Finally, if you want to read the TCA yourself, all 1448 pages of it, and available in all the EU languages, the link to the English language text is here.