How Would Additional Customs Duties Affect Your Sales Or Supply Chain?

As 31 October approaches, there is a strong possibility that the UK is heading towards a No-Deal Brexit and all that this might entail.

While there is still no certainty around what Brexit will mean, businesses may with little or no experience of tariffs and customs duties will need to consider the implications for pricing, purchasing decisions and contracts. We have collated a series of 5 short articles which cover the areas that should be considered and provided useful links for further reading. In this third article we ask:

How would additional customs duties affect your sales or supply chain?

Understand the different commodity codes of your major imports and exports and the tariff rates that would apply if there is no deal.

Tariffs, or customs duties as they are known in the UK, are a tax levied on imports. There are no tariffs on trade wholly within the EU customs union, but if the UK leaves the EU without a deal they will apply to UK-EU trade. Currently the UK’s trade with the rest of the world is subject to EU tariff rates. After the UK leaves the EU, tariffs will depend on trade agreements the UK has negotiated, which can differ from country to country, or on World Trade Organisation (WTO) rules. WTO rules stipulate “most favoured nation” tariff rates, which apply where a preferential tariff has not been negotiated. Tariffs can be significant for certain items. Equally, some items have zero tariffs under WTO rules. The rate of customs duty (tariffs) depends on three elements:

  1. The type of goods (their commodity code).
  2. The country they are being imported into.
  3. Where they are judged to have “originated”.

Points to consider include:

  • How you will identify the commodity codes that apply and ensure they’re available in systems that will need to use them.
  • Whether “binding tariff information” decisions could help provide certainty for major classes of item. For imports to the UK, these are provided by HMRC.
  • Whether a ‘preferential tariff’, “most favoured nation tariff”, or “tariff rate quota” applies.
  • The “proof of origin” you will need to provide to be eligible for any preferential tariff.
  • The rate of excise duty that applies, in addition to any customs duties, to alcohol, tobacco or certain energy products.

Useful links:

Temporary rates of customs duty (tariffs) on imports after a no-deal Brexit.

Exporting after Brexit if there’s no deal – country by country.

Use Market Access Map to identify customs tariffs, tariff rate quotas, trade remedies, regulatory requirements and preferential regimes applicable to your product.