“Isn’t EU Trade supposed to be free?”; a valid question from one of Falsum’s Analytics Clients.
The short answer is ‘yes’. EU to UK imports should be cleared under the UK-EU TCA at 0.00% Customs Duty. However, the real answer is as complicated and as nuanced as you would expect.
The Problem for UK Importers
The UK-EU TCA is not automatically applied
The crucial factor is this; the preferential tariff available to UK Importers under the UK-EU TCA is not automatically applied.
In fact, the Customs Agent has to make an active decision to apply the preferential tariff (Box 36 of the C88/SAD). The use of the preferential tariff is predicated on providing sufficient supporting evidence at the point of import.
Some Customs Agents will not apply the preferential tariff without the correct supporting documentation. Neither in the absence of sufficient information.
Misapplied Customs Duties
With that in mind, it’s possible for EU-Origin goods that should enter the UK tariff-free to be cleared with full Customs Duties & Import VAT applied. Ouch.
Our real-world Client data suggests 1-in-7 EU-UK shipments are overpaying Border Taxes.
Indirect Shipment & Origin
Part of the issue is the ‘indirect shipment’ of products. That’s to say, goods that have economic origin in a 3rd-Country, are shipped to an intermediary country, before being used or consumed in the UK.
In this instance, many UK-specific Free Trade Agreements (FTAs) do not apply & import tariffs are due. We’re into Rules of Origin (RoO) territory now.
If you think you’ve overpaid, you’ve probably overpaid.
Checking Your real Customs Duty exposure
There’s only one way to really if your business has overpaid Customs Duties & import VAT since Brexit; request your MSS Data from HMRC.
MSS Data is a log of all import declarations made on your business’s behalf throughout the UK. By analysing the matrix of product, origin, dispatch, value & tax in an MSS Data Report, a Trader can understand the Border Taxes paid against the Border Taxes that should have been due.
Reclaiming Your Overpaid Border Tax
Traders are entitled to reclaim all of their overpaid Customs Duty up to 3 years from the date of clearance. Tax Authorities administer a clear process for Customs Duty and Import VAT reclaims. The steps for a Trader to reclaim overpaid Customs Duty.
The Duty Management Tool
For many Traders, the administrative time burden of navigating the Duty Reclaim process rarely results in a good return on investment. However, the Falsum Labs DMT is a ‘managed service’ designed to make get the greatest value back to your business:
- Falsum request the MSS Data on your behalf
- Falsum pay HMRC directly for the MSS Data access
- MSS Data is provided directly to Falsum for analysis
- The Duty Management Tool (DMT) runs a fully-automated Customs Duty analysis
- The Duty Management Portal (DMP) gathers evidence and generates supporting legal documentation on behalf of Traders
We estimate the Duty Management Tool saves an average of 147 minutes per Consignment reclaim.
Our Duty Management Tool (DMT) can process your MSS data in minutes. The DMT establishes your Border Tax over-exposure and begins the automated Duty Reclaim process on your behalf.
