Page 8 - Industrial Technology EXTRA - Brexit Briefing

BREXIT BRIEFING

sourced from outside the UK or EU without production records, supported by a
EXAMPLE 4: AUTOMOTIVE PRODUCTION affecting the rule of origin. supplier’s declaration if required. If we look
l A diesel engine manufactured in the UK at a 50% MaxNOM rule, for instance, if you’ve
Similarly, in agri-food goods where you have got parts and components that are less than
a rule of origin that means the goods have to 50% and the rest of the value is made up of
be wholly produced, if you still have to profit, labour, manufacturing costs, then

source some of that product from outside the you’re not really going to need a supplier’s
UK or EU, provided that its less than 15% by declaration. It’s only where you’re exceeding
weight of the final product, that will not affect the 50% that you would need a supplier’s
the rule of origin. declaration to evidence that.

There are some exceptions to manufactured EXAMPLE 5: FOOD AND BEVERAGE

goods. Textile and clothing products
classified under HS50-63 are subject to l A mixture of drive fruit and nuts produced
in the UK
specific tolerance thresholds, when are

u HS code: 8408 detailed in Notes 7 and 8 of Annex ORIG-1.

u Product: Diesel engine
Tolerances are an important tool for rules of
u Origin rule: MaxNOM 50%
origin, because where in some instances it
l Maximum 50% non-originating content might not look as though you will meet the
(parts) rules of origin, being able to factor in

l However, with cumulation, EU content can tolerances might be enough to sway the
be counted as originating product to classify as being of UK origin. u HS code: 0813.50
l If less than 50% of the ex-works price is of u Origin rule: Production in which i) all the
non-UK or EU materials then it will qualify Let’s consider the production in the UK of materials of Capter 8 used are wholly
as UK origin mixed fruit and nuts, with an HS code of obtained, and ii) the total weight of non-
l The finished product can be exported to 0813.50. The rule requires the nuts and fruit originating materials of headings 17.01
the EU as a UK originating product to be grown in the UK, but with the tolerance and 17.02 does not exceed 20% of the
rule you can have 15% of the weight made weight of the product
up of non-originating fruit. So you can bring l Rule requires the nuts and fruit to be
Let’s now consider the manufacture of a in nuts and fruit from outside the UK or EU, grown in the UK
diesel engine with the HS code of 8408. and provided it makes up less than 15% of l The tolerance rule permits the use of non-
Under cumulation, any EU content can be the weight the finished product would still originating ingredients
counted as originating, but in addition parts meet the rule of origin. l Total weight of the non-originating fruit or
from all over the world can be incorporated nuts cannot exceed 15% of the net weight
into the engine, and as long as that is less Evidence of origin of the finished product
than 50% of the ex-works price, the engine Evidence of origin is different for wholly
will qualify as a product of UK origin. produced goods and sufficiently transformed
goods. For wholly produced goods, there But care must be taken because this is
Tolerances needs to be a statement of where the goods something that HMRC will look at and will try
One of things to consider in the rules of have been grown or reared. For fish, the to work out which parts are of UK origin and
origin is tolerances, which can be used to vessel used has to be registered in the which are not. If you’ve not got a supplier’s
maintain rule of origin even when some parts beneficiary country and has to sail under its declaration and you need to have one, then
have to be sourced from outside of the UK or flag or an EU member state. it’s something you need to put in place.
EU. For example, where we are looking at There is a transitional period at the moment
manufactured goods under the sufficiently With sufficient transformation, evidence whereby, if you’re using existing suppliers,
transformed rules, up to 10% by value can be would include the bill of materials or you don’t necessarily need to have the
supplier’s declaration from day one, but it is
something HMRC will be looking at going
forward.

I expect that there will be quite a lot of activity
in terms of mutual assistance to get things
up and running and to get everything
evidenced properly. So you could find that
your company is visited by HMRC in the
medium term, to check origin and to check
you’re doing things correctly.

There are two types of supplier’s declaration.
One is a single declaration that covers one
consignment – eg an annual consignment
from a particular supplier. The other is a long-
term declaration which covers a period of up
to 12 months (which can be back dated).
This is the back-up information that you will
need should HRMC decide to audit.

8 WINTER 2021 – INDUSTRIAL TECHNOLOGY EXTRA