IMPORTERS KNOWLEDGE

Some trade agreements between the UK and other countries allow a preferential rate of duty to be claimed on the basis of importers knowledge. These agreements include EU, Japan and Australia. 

If you or your agent have claimed importers knowledge for one or more of your imports because there was no statement of origin available at the time of import from your supplier which met required format, but you claimed preference in order to access a lower duty rate, then it is essential you build sufficient evidence for future audit purposes. 

Preference claims to importers knowledge can be identified on all CDS import entries through the use of code U112 in Data Element 2/3. 

Any reductions to import duty are subject to post-clearance audit by HMRC. They usually audit such activity within 3 years of the import occurring. If they find a preference claim is invalid, they will demand the duty to be repaid for all historic imports. 

By claiming importers knowledge, you are confirming that you are able to prove the goods met the preferential rules of origin associated with the specific trade agreement applicable. 

Evidence must outline the following: 

• Details of the production process or site location for products wholly obtained (harvested, fished or mined) 
• Confirmation any production met minimum processing rules, and depending on the applicable preference rule for the goods, the percentage of non-originating materials value. 
• Any other supporting information to prove your goods qualify for preference such as production certificates, site audits, quality checks and information on the provenance.  

If you are in doubt about the evidence you will be able to provide, our consulting team are able to provide specialist support in this area and can work with you to obtain origin rulings with HMRC to ensure such preference claims are valid. 

Please note customs agents are not liable in the event that HMRC deem a claim to importers knowledge is invalid. It is the importer who will be asked to pay any outstanding debts. 

In order to determine if goods have met the preferential rules of origin, you must follow the following logic: 

1. Identify the applicable trade agreement (e.g. UK – EU TCA) 
2. Identify the tariff code for the goods 
3. Consult minimum processing requirements outlined in the trade agreement 
4. Consult the preferential rules of origin outlined in the trade agreement
5. Work out what evidence is available to demonstrate minimum processing and preference rules for each specific product has been met 

If you do not follow the above procedure, or are unable to obtain evidence to substantiate the above analysis, then you are likely liable to pay the full third country duty rate on the goods.