Commodity Codes
International trade involves a complex web of regulations and standards, amongst which commodity codes play a pivotal administrative role.
A Commodity Code is a specific code used in international trade to classify goods for import and export. It’s part of a system that is aligned with the global Harmonised System (HS), which standardises the classification of traded products worldwide.
Understanding these terms is crucial for any British-based businesses that are engaged in importing and exporting goods.
Table of Contents
What is a Commodity Code?
A Commodity Code is a numeric code used internationally to classify goods being traded. In the UK, commodity codes are based on the so-called harmonised system (HS), a global nomenclature developed by the World Customs Organization (WCO). These codes help in identifying products and determining the applicable tariffs, taxes and import/export restrictions. As such, they function as customs codes in numerous locations around the world.
The term Tariff Code is often used interchangeably with ‘commodity code’, a tariff code is specifically used to identify the customs duties and taxes applicable to a particular item. In a British context, these types of customs codes are crucial for calculating the correct import duty and whether VAT would apply.
Commodity Code Structure
The commodity code system plays a crucial role in international trade and customs processes. The UK’s system aligns closely with the international Harmonised System (HS) but includes additional digits for more specific classifications. Here’s an overview of how commodity codes work in the UK:
- Harmonised System (HS) Basis: The UK’s commodity code system is based on the HS, a globally standardised system of names and numbers for classifying traded products developed by the WCO. It starts with the HS code structure, which includes a 6-digit code representing the chapter, heading, and sub-heading of the product.
- UK Tariff Codes (8 to 10 digits): The UK extends the 6-digit HS code with additional digits for more precise classification. These codes are typically 8 to 10 digits long. The first 6 digits are the HS code, and the additional digits. For example, UK imports are categorised using all 10 digits of the commodity code, whereas exports are classified using only the first 8 digits.
Commodity Codes Checker: Finding Customs Codes in the UK
UK importers can find the correct commodity codes for their goods by using the UK Trade Tariff tool available on the GOV.UK website: https://www.gov.uk/trade-tariff.
Accessing it allows users to search for commodity codes based on the standard description of their goods. It is essential to provide a detailed and accurate description to find the most appropriate code, since some goods may fall into more than one official category.
To start, importers should identify the broad category that their product falls into and then refine their search using specific product characteristics.
SECTION | CATEGORY | CHAPTERS |
---|---|---|
1 | Animal & Animal Products | 1-5 |
2 | Vegetable Products | 6-14 |
3 | Animal or Vegetable Fats | 15 |
4 | Prepared Foodstuffs | 16-24 |
5 | Mineral Products | 25-27 |
6 | Chemicals & Allied Industries | 28-38 |
7 | Plastics / Rubbers | 39-40 |
8 | Raw Hides, Skins, Leather, & Furs | 41-43 |
9 | Wood & Wood Products | 44-46 |
10 | Pulp of Wood or of Other Fibrous Material | 47-49 |
11 | Textiles | 50-63 |
12 | Footwear / Headgear | 64-67 |
13 | Stone / Glass | 68-70 |
14 | Natural or Cultured Pearls | 71 |
15 | Base Metals | 72-83 |
16 | Machinery / Electrical | 84-85 |
17 | Transportation | 86-89 |
18 | Precision Instruments | 90-92 |
19 | Arms and Ammunition | 93 |
20 | Miscellaneous Manufactured Articles | 94-96 |
21 | Works of Art | 97-98 |
It’s important to note that the same product might have different codes based on factors like material, function or end-use. Overall, the commodity codes lookup process is not designed to catch people out, but it can take some expertise to get right the first time. If you are new to the tariff code lookup process or using the online commodity code checker, then it can be helpful to seek expert assistance, especially if you plan on importing the same class of goods again and again in the future with repeat orders.
If there is any uncertainty about the correct classification with the commodity code finder, importers can request a Binding Tariff Information (BTI) ruling from HMRC. A BTI provides legal certainty about the correct classification of goods, regardless of what a prior tariff code search has yielded. Importantly, it is valid for three years.
At Barrington Freight, we specialise in making your importing and exporting straightforward. From customs clearance to finding the right commodity codes, our expert team is here to assist. Don’t let the complexities of global trade hold you back. Reach out to Barrington Freight for efficient and reliable shipping solutions.
Importance of Commodity Codes in International Trade
The accurate use of commodity code numbers is vital for several reasons. Firstly, they ensure that businesses pay the correct amount of taxes and duties, avoiding overpayment or penalties for underpayment. Commodity codes also facilitate the smooth clearance of goods through international borders, reducing delays and potential legal issues.
For customs authorities and governments, commodity codes provide a standardised method for monitoring and controlling the movement of goods between countries or trading blocs. They are essential for enforcing trade policies, import/export restrictions and international trade agreements. For instance, certain goods might be subject to trade embargoes or special regulations, and the correct classification ensures compliance with these rules.
Additionally, commodity codes are crucial for gathering trade statistics. Governments and international organisations use this data to analyse trade patterns, negotiate trade agreements and make policy decisions. Perhaps more importantly from a commercial perspective, businesses also use this information for market research and strategic planning.
Role of Freight Forwarding and Customs Clearance Agents
These days, freight forwarding and customs clearance agents play a crucial role in helping British importers, particularly with respect to commodity codes. For one thing, freight forwarders manage the transportation of goods from the seller to the buyer, coordinating with various carriers and handling cross-border logistical challenges. Part of their service often includes advising clients on the correct classification of goods without the need to refer to the government’s commodity code checker. It may also mean being able to get help with obtaining an EORI number which is needed to make the customs declarations themselves.
Customs clearance agents specialise in facilitating the passage of goods through customs, typically dealing with customs-related matters once goods have arrived in the UK from overseas or vice versa. At Barrington Freight, we offer the distinct advantage of having our customs clearance work and our freight forwarding services provided in-house by the same team which can help to speed up liaison and ensure goods aren’t held up unnecessarily.
Are you looking for expert guidance on commodity codes or need assistance with importing and exporting? With over 35 years of experience in the industry, we have the expertise and knowledge to help you navigate through the complexities of international trade. Contact us now for professional advice and support!
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