Different Class: New Varying Approaches to Customs Administration from UK and EU

July 1, 2020

A touch of CLASS: simplifying access to customs tariff data

CLASS – short for Classification Information System – is the new single point access search facility from the European Commission. It provides access to tariff classification data of goods entering or leaving the EU and is the latest step in developing an integrated approach to managing customs information and procedures.  When goods are declared at an EU entry point, they must be classified and declared on customs transit documents either according to the Combined Nomenclature (“CN”), or a Member State’s domestic classification.  CLASS provides easy access to the correct rate of customs duty and details of any non-tariff measures that apply. It also provides:

  • Conclusions of the Customs Code Committees
  • Classification regulations
  • Rulings of the European Court of Justice
  • The CN and accompanying explanatory notes
  • TARIC information (TARif Intégré Communautaire” – Integrated Tariff of the European Communities)

Using CLASS should save businesses significant time in obtaining the required customs information without having to rely on multiple resources across different locations, formats, and languages.  Time saving means reduced administration and cost as well as swifter supply chain decision making and ultimately a more efficient goods shipping process.

A new UK global tariff

By coincidence, the UK government almost simultaneously to the launch of CLASS announced the blueprint for the UK Global Tariff (“UKGT”).  UKGT is the UK’s replacement for the EU’s Common External Tariff once the Brexit transition period has ended (currently expected to be 31 December 2020).  UKGT, which applies duty values in UK pounds instead of Euros, should make it simpler and cheaper for businesses to import goods into the UK from overseas. It features a reduction and simplification of over 6,000 tariff categories and rates (e.g. rounding rates to whole percentages), and a lower tariff regime than the EU’s Common External Tariff, including total elimination of tariffs on a wide range of goods.  The goal is to ease customs administration for business, expand consumer choice, and enhance competitiveness for UK businesses trading globally.  A controversial measure is the abandonment of the EU Measuring table, which removes over 13,000 tariff variations on food products that the government views as unnecessary. Remaining tariffs will be targeted to support specific strategic industries such as agriculture, automotive and fishing, where the UK is considered competitive, and are also intended to enhance competitiveness and the uptake of “green” energies and associated products.

The simplifications heralded by UKGT may offset the anticipated increase in customs administration costs to UK businesses post-Brexit.  What is less clear is whether the strategic amendments undertaken to import tariffs will harm UK businesses as their products may not be subject to commensurate low rates on entry to EU countries, especially if there is a “No Deal” outcome to ongoing UK-EU trade negotiations.  What is clear, however, is that all these changes should prompt any businesses seeking to import/export goods to/from the UK from next year to review their supply chains and re-examine the impact on their sales prices and profit margins.  Since import VAT is calculated on duty-inclusive prices, there may also be consequences in import VAT accounting and cash flow.   

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Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates.
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