Calculating duty correctly

13 September 2018 | Reviewed on 10 June 2021 | Louise Gearey, FSC Group Manager

Starting with the basics, duty is paid when goods are brought into a country or trading area. Rates of duty vary from commodity to commodity and from country to country.

What is the Harmonised System?

The Harmonised Commodity Description and Coding System, also known as the Harmonised System (HS) of tariff nomenclature is an internationally standardised system of names and numbers used to classify traded products and the tariffs that apply to each when they are imported.

Each country can set their own tariffs within this system. The Harmonised System is developed and managed by the World Customs Organisation (WCO) and, since the UK has left the EU, businesses within this country now use this system – having moved away from the slightly more complex EU Combined Nomenclature (CN) which is a further development of the Harmonised System.

This means when exporting into the EU, UK businesses must still adhere to the EU system. Within the CN certain codes also require a Meusring/Additional code which is obtained from the Meursing table. It is used to determine which additional 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:

Calculating duty correctly

sucrose (including invert sugar)
starch/glucose
milk fat
milk protein

Problems arise if nutritional labelling is used to determine these codes as the testing is completely different. This could mean that the company will underpay 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.

Why should I routinely test products?

The importers are responsible for the correct tariff classification of their goods but often rely on their supplier to provide this information. If Customs authorities find that the tariff codes are incorrectly declared it can have a number of effects. 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. Licences will be invalid, therefore, even if there is no duty payable this can cause goods to be majorly delayed in transit.

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About Louise Gearey

Louise Gearey is the Food Specification and Control Group Manager in the Chemistry Department at Campden BRI. In this role she manages the examination and analysis of formal samples submitted by the Rural Payments Agency (exports) and HM Revenue & Customs (imports). This involves the visual assessment, testing and reporting on goods in order to ensure their correct classification against published standards, international/EC standards utilising internationally recognised procedures and validated methodologies.

Over the last 20 years many thousands of samples of all types of foods have been submitted to Campden BRI. Products being imported into, or exported from the UK require classification in accordance with the HM Customs & Excise Integrated Tariff of the United Kingdom. This is based on the internationally agreed system of classification known as the Harmonised Commodity Description and Coding System of the Customs Co-operation Council, which provides a systematic classification system for all goods in international trade.

Louise has been formally trained in Tariff Classification by HM Revenue & Customs and has a wide knowledge of this area in addition to her scientific expertise. She has extensive experience in the provision of expert advice for cases involving legal proceedings.