When it comes to importing or exporting to and from the UK, commodity codes are a vital component of the process. These codes help to categorise goods and give sellers vital information about them, such as whether you need a license to sell those goods and also how much import VAT they will owe. Finding these codes can be complicated. Fortunately, the HMRC have created a tool you can use to find the commodity code for your products.
What Is A Commodity Code?
As stated in the introduction, a commodity code is a code that allows sellers to categorise their goods. This allows the products to go through customs much more efficiently and will make filling in declarations and other paperwork much simpler.
This code allows sellers and customs agents to work out what rate of import VAT should be paid, whether the duty is suspended, and whether sellers will need a license to distribute the goods. The code will vary in length but it is usually a 10-digit code. The first 6 are the HS code which are recognised globally, and then the last 4 are country-specific.
So How Do You Find Out The Commodity Code For Your Products?
Luckily, the HMRC have devised a tool that is free to use and allows sellers to find the commodity code for their products. Here’s how to use the tool:
Step 1: Search For Your Product
This is the first stage of the process. Try entering the name of your product in the search bar. If your exact product doesn’t come up it is worth trying to search what the product is made from.
Step 2: Choose A Section
Upon completing the search you will be required to choose a section for your product. You should choose the section that best describes your product.
Step 3: Choose A Subheading
After choosing your broad category you will be presented with more specific subheadings. Once again, you should choose the one that best reflects your product.
Step 4: Check The Footnotes
After completing all the above steps you will then be presented with some footnotes which should describe your products. If they do not, you must have selected incorrectly for one of the previous steps.
All being well, at this point you should have your commodity code. Typically you will get one for importing and one for exporting. Each section is responsible for a section of the code (eg the first step will give you the first 2 digits of your code). From this point you will be advised on whether you need a license or any supporting paperwork for moving the product in question.
What If You Think Your Code Is Incorrect?
HMRC have recognised that there are many goods that are hard to classify. They do offer special guidance on hard to specify goods and an A-Z of classified goods which you can use to try and find your product.
If you cannot find the right commodity code for your goods, you can contact HMRC for advice or for a decision on your goods. For informal advice, you can also contact their Tariff Classification service – this service will offer you non-legally binding advice.
Conclusion
If you are a business who participates in cross border e-commerce, or importing of any kind, we would be more than happy to help you find your commodity codes. We can also help you register for UK VAT, the UK VAT deferral scheme, file your UK and EU VAT returns, and help you comply with VAT in case your account faces any issues.
At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through this post-Brexit period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
