In some trade agreements, an importer can claim a preference duty rate using information the importer holds that confirm the origin of the goods. This is known as ‘importers knowledge’ and can be used as an alternative to an exporter origin declaration

However, the compliance requirement on the importer is heavy, and the method can easily be mistaken if there is an assumption on the part of the importer that goods being delivered from a country are originating from that country under preference conditions (compliant with a free trade agreement).

Example:

An importer that has exported technology to enable production of products in an EU member state for return to the UK post-production, could have enough information on the product, production methods and source of materials to enable the use of Importers’ Knowledge at import into the UK.

Depending on the rules of the trade agreement being implemented at import, the UK importer may be required to hold the following compliance records for HMRC audit:

• The commodity code of the goods.
• A brief description of the production process (including the origin of the goods or materials used).
• If the origin of the product for import is based on production materials being ‘wholly obtained’ (that is, if using the UK EU TCA, the materials that are used in production are wholly obtained from EU member states), the category for the goods would need to be recorded.
• If the origin was based on ‘sufficiently worked or processed’ one of the following must be evidenced and recorded:
• The value of the product as well as the value of all the non-originating materials used in production (if any are used) to establish compliance with the value requirement of evidencing originating materials used in the production process.
• The weight of the product as well as the weight of any non-originating materials (if relevant) to establish compliance with the weight requirement of originating materials used in the product.
• A list of all the non-originating materials, including their commodity code (in two, four or six-digit format, depending on the origin criteria).
• Whether the goods have been altered or transformed.
• If asked by HMRC, any additional information that will help verify the origin of the goods.

Importers’ Knowledge and the EU UK Trade Cooperation Agreement

Importers bear the burden of holding compliance evidence at import if preference is being claimed. If Importers Knowledge is used, the importer must have the relevant detailed information given above.

Important indicators on an import declaration that confirm the type of evidence that the importer holds when importing to preference duty rates using the EU UK TCA.

Document code given in box 44 of the import entry:

• U110 + U111 indicates that an exporter preference statement has been used as evidence.
• U112 indicates that importers knowledge has been used as evidence.

For clarity

For compliance purposes, the onus for evidence rests on the importer, as the origin information must be held by the importer in the UK at the time of importing using preference. 

If an import declaration is made to Importers Knowledge and the evidence is not seen to have been in place at the point of import during HMRC audit, the liability for duty and any penalty will fall to the importer.

When importing using an exporters declaration as compliance evidence, the onus falls on the exporter declaring preference applicability, and HMRC have a recourse in regulation to enable requesting the supporting evidence from the authorities in the exporter’s country. There is no regulatory method for HMRC to request this information if the UK importer has declared to Importers Knowledge.

Understanding Origin & Preference

Understanding Free Trade Agreements

The Export Course – 2 days