What does it mean to have EU preferential origin?
When you are processing the import clearance for your shipments, you need to calculate the UK import duty and VAT that will be paid to customs. The standard rate of duty depends on your goods classification and the resulting commodity code.
Following Brexit, the majority of goods imported from the EU are allowed preferential origin, which is where the duty is either reduced or waived.
For this to apply, your goods need to meet certain conditions. It is important to note that your goods being manufactured or processed in the EU does not automatically mean preferential origin, and that the conditions can vary from country to country.
You can learn more about the risks of assuming preferential origin from Senior Customs Consultant Nicola Haynes in this article on determining preferential origin in the UK.
How do you prove EU preferential origin with a REX statement?
For shipments with a value over GBP 5500 / EUR 6000 that meet the criteria for preferential origin, you need to show a Registered Exporter (REX) statement to claim the relief.
Your REX statement should appear on your invoice using the following format:
DECLARATION OF ORIGIN
"The exporter of the products covered by this document (customs authorisation N° **********) declares that, unless otherwise stated, these products are goods of ** origin"
Your customs broker must declare full duty if this statement is not on your paperwork.
Are there other ways to declare preferential origin from the EU?
You may have come across the term “importer’s knowledge” when declaring EU preferential origin. This is often used for shipments under the REX statement threshold of GBP 5500 / EUR 6000, but should not be used instead of origin statements.
By declaring “importer’s knowledge”, you are confirming to HMRC that you know for certain that the goods are of preferential origin. This should only be used when you have full visibility of the shipper’s operation, such as when they are another branch of your company.
Is it enough to just have a REX statement?
Following the requirement for REX statements to claim EU preferential origin, many exporters in the European Union have only added these at the request of their buyers in the UK.
The problem with this is that your goods may not meet the criteria for preference, even though the REX statement is present on your paperwork.
Although your seller is responsible for following the correct procedures before putting origin statements on export paperwork, you as the importer will be liable for the import duty and VAT if the goods do not meet preferential origin when assessed during an audit from HMRC.
Depending on how much you import, the retrospective bill could be catastrophic to your business, and there is no guarantee that your seller will accept any liability or help you to resolve the situation.
If you would like some peace of mind when it comes to claiming EU preferential origin, contact one of our customs consultants for a quick scan. We will help you to identify your risks of noncompliance so that you can fix any issues before they become a problem.
