Rules of Origin are a standard feature in trade agreements, and while the UK and EU's agreement sounds great on the surface, many companies are facing issues with red tape due to complexity of the rules and the deeply interconnected nature of UK-EU supply chains and logistics networks.
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The preferential rate of duty only applies to 'qualifying goods' where you can accurately document and prove origin. Different products and materials are subject to different minimum percentages of origin, measured by value or weight and some processes incur exclusions while others do not. Additionally, Processed and manufactured goods often contain components and materials from around the world making this even more complicated and requiring substantial paperwork.
Goods do not have to wholly originate from the UK or EU to qualify for the rule of origin. Products manufactured in the UK or EU using some materials and components imported from around the world can still qualify. The rules for qualification depend on the product and its components.
Even if your goods meet the rules of origin requirements, but you do not have the correct paperwork to prove it, you will still need to pay customs duty. It is worth noting that low value consignments below £135/€150 going between the UK and EU are exempt from customs duty and do not have to comply with the rules of origin.
The rules of origin apply to goods being exported from the area that they classify as originating. For example a company whos products comply with the rules of origin for originating in the EU, can export their goods to the UK tariff-free. However, the goods cannot then be re-exported to the EU without paying tariffs – unless they have undergone sufficient processing in the UK. This is causing a major problem for some businesses, and many believe it is an oversight from the rushed agreement.
To reduce the pressure on businesses and reduce the disruption to trade, the Government introduced a waiver that means, until the end of 2021, businesses can claim the rules of origin preferential duty rates for goods imported from the EU to the UK and vise versa without needing to hold a supplier’s declaration at the time you are claiming preference for goods . But the importer must be confident that the goods meet the rules of origin, and you must make every effort to obtain supplier’s declarations retrospectively.
The Importer has to declare they hold proof that the goods comply with the rules of origin, this proof can either be:
If the importer is making a claim using their own knowledge, no statement on origin has to be provided by the exporter or producer.
The statement on origin must be provided on an invoice, or any other commercial document (excluding a bill of lading), and describe the originating product in sufficient detail to enable its identification.
To declare importers knowledge you will need to hold documents that cover:
Have you read our full guide for post-Brexit e-commerce? Download it here
We recommend that you seek professional advice for claiming preferential rates for your business. There are some great companies that specialise in handling rules of origin requirements for businesses.
You can also find the government guidance: