EU-UK due diligence on Rules of Origin
HMRC and the EU Customs Authorities have begun to focus on verifying that goods traded between the UK and EU under the Trade and Cooperation Agreement (TCA) meet the relevant rule of origin to qualify for duty free access to the UK or EU. Since Brexit we initially saw a few verifications by the customs authorities that tended to focus on ensuring that a statement of origin was held by the importer at the time of import. However, subsequently, we are seeing an increase in detailed verification audits of suppliers where the customs authorities require to see evidence held by the supplier that the goods exported under the TCA do indeed meet all the requirements of the rule of origin and that that the statement on origin has been correctly issued. Where this is found not to be the case we have seen customs authorities refuse the preference claims already made and assess the importer for the duty relating to that product.
Both countries have introduced additional auditing processes to ascertain the origin of imports, leading to an increase in requests from both customs authorities to audit relevant importers and their suppliers.
Businesses are advised to thoroughly assess statements on origin and to conduct their own due diligence of suppliers and wider supply chains. Businesses need to be aware that rules of origin are complex, as these could be distinguished by value rules, change of tariff heading rules, process rules or a combination of these. It is therefore essential to ensure that the rules of origin for each product are correctly understood by the supplier and that statements on origin are only issued by exporters when evidence of meeting the rule of origin is held.