UK preferential origin claims - how to get it right every time
“UK Preferential Origin”… does this term sound familiar?
Preferential origin is complex and contains a web of origin rules and clauses which can be easy to misinterpret. Did you know that in a recent study of ours, around 50% of exporters found the preferential terms of Free Trade Agreements (FTAs) difficult to understand? Check out these 10 RED FLAGS to look out for on your commercial invoices and export documents. If any of these strike a chord, get in touch with our team of experts who can help you ensure that your preferential origin claims are compliant for making those cost-saving declarations.
The UK does not hold an FTA with the country of export. Preferential origin is only applicable under the use of a Free Trade Agreement (FTA). Claiming for preferential origin duty rates to a country for which there is no FTA in place will not provide any benefits and could cause delays to your shipments.
ACTION POINT: Ensure that your preferential origin declarations are only included for exports under a UK Free Trade Agreement. Get in touch and we can help you identify those FTAs which may work best for your business or find out more about our service.
ACTION POINT: Ensure that your preferential origin declarations are only included for exports under a UK Free Trade Agreement. Get in touch and we can help you identify those FTAs which may work best for your business or find out more about our service.
You are shipping from the UK and claiming preferential duty rates on goods of non-UK origin. Goods shipping from the UK under preferential origin status must be of UK origin. They must also satisfy other rules of origin outlined in the FTA. The rules are complex and there is no "one size fits all’ approach to applying your goods among FTAs. Remember, since Brexit, you cannot claim preference on goods of EU origin. If your goods are not made in the UK, you cannot claim preferential duty rates.
ACTION POINT: Not sure whether your goods class as UK origin? Contact our team of experts in rules of origin for advice.
ACTION POINT: Not sure whether your goods class as UK origin? Contact our team of experts in rules of origin for advice.
A generic preferential statement on origin appears on all your invoices inputted by your internal systems. The statement on origin should only appear on your commercial invoices if preference is being claimed.
ACTION POINT: Check the relevant section of the FTA for the correct method of obtaining preferential origin. This may be a statement of origin, an EUR1 or an alternative template. Can’t find it? Get in touch with our FTA Utilisation Service team.
ACTION POINT: Check the relevant section of the FTA for the correct method of obtaining preferential origin. This may be a statement of origin, an EUR1 or an alternative template. Can’t find it? Get in touch with our FTA Utilisation Service team.
The wording of the statement on origin on your invoice is the same for all exports. The exact wording of the statement on origin differs per FTA so should be amended each time you make a claim to a different import country. For example, does it require an original signature? Does it require an approved exporter number?
ACTION POINT: Ensure the wording of the preference statement is amended according to the country of import and invoice value. If you need assistance, contact our team and ask for a Genesis validation on your invoice.
ACTION POINT: Ensure the wording of the preference statement is amended according to the country of import and invoice value. If you need assistance, contact our team and ask for a Genesis validation on your invoice.
Your commodity codes have not been reviewed recently. Commodity codes are regularly updated on the trade tariff website, and some are often removed, replaced or combined with others. Why is this important for preferential origin claims? Commodity codes directly affect the import duties related to the specific product, and the rules of origin applicable. These differ from trade agreement to trade agreement and product to product.
ACTION POINT: Review the commodity codes applied to your goods annually by using the Trade Tariff site on gov.uk.
ACTION POINT: Review the commodity codes applied to your goods annually by using the Trade Tariff site on gov.uk.
Your Incoterms remain the same across all exports. Did you know that Incoterms dictate whether you or your buyer pays the import duties? Whether using Ex-works, Delivered Duty paid or Free Carrier, the responsibility for payment of preferential import duties (if applicable) depends on the Incoterm declared on the invoice.
ACTION POINT: Review your Incoterms. Don’t assume that you should use the same Incoterm for every shipment. Avoid using Ex-works to ensure that you can access all declarations in case of a HMRC audit. Business West regularly run training courses on Incoterms (and exports/imports) should you need to learn more.
ACTION POINT: Review your Incoterms. Don’t assume that you should use the same Incoterm for every shipment. Avoid using Ex-works to ensure that you can access all declarations in case of a HMRC audit. Business West regularly run training courses on Incoterms (and exports/imports) should you need to learn more.
You are using a Certificate of Origin to apply for preferential duty rates. A Certificate of Origin is a non-preferential document, which is not for use under an FTA. Its purpose is to declare the actual country of manufacture of a product, and will not serve to reduce duty rates in preferential terms. The correct documentation for obtaining preferential origin status is outlined in the FTA.
ACTION POINT: Review your documentation requirements and understand the correct method for obtaining preferential duty rates under the FTA for which you are exporting under. This could be a statement on origin, an EUR1 or another origin certificate. Contact our expert team for help.
ACTION POINT: Review your documentation requirements and understand the correct method for obtaining preferential duty rates under the FTA for which you are exporting under. This could be a statement on origin, an EUR1 or another origin certificate. Contact our expert team for help.
You are a non-manufacturing trading company exporting goods under preference without holding sufficient proof of preferential origin.
If you are not the manufacturer of the goods you are exporting, you must hold sufficient documentation to prove the goods’ origin from your suppliers. Did you know that these supplier declarations are often required to be in specific formats outlined in the FTA?
ACTION POINT: Conduct an internal audit in preparation for external HMRC audits. If you need help identifying the supplier declaration template get in touch.
If you are not the manufacturer of the goods you are exporting, you must hold sufficient documentation to prove the goods’ origin from your suppliers. Did you know that these supplier declarations are often required to be in specific formats outlined in the FTA?
ACTION POINT: Conduct an internal audit in preparation for external HMRC audits. If you need help identifying the supplier declaration template get in touch.
You are a UK manufacturer exporting goods under preference, but have not checked the rules of origin within the appropriate FTA. You should not assume that your goods qualify for preferential origin based on the fact they are made in the UK alone. The rules for qualifying differ per product and per FTA.
ACTION POINT: Check the FTA’s origin rules and clauses to be sure that your preferential claims are compliant each time you ship to a new country.
ACTION POINT: Check the FTA’s origin rules and clauses to be sure that your preferential claims are compliant each time you ship to a new country.
Your goods are not shipped directly to the country of import. Preferential origin is contingent upon the goods shipping directly from the UK to the country of import. If the goods clear customs elsewhere, they will not be able to obtain preferential duty rates.
ACTION POINT: Check your shipment routes and commercial invoices to ensure that if you are claiming preference, your shipments are direct only.
ACTION POINT: Check your shipment routes and commercial invoices to ensure that if you are claiming preference, your shipments are direct only.
Download our helpful "red flag" guide
If any of the above "red flags" are familiar and you need help and guidance on how to navigate these complex situations, then our Free Trade Utilisation team experts are here to help. Contact them today for advice or find out more about our FTA Utilisation service.