Digitising Supply Chains
Follow Us:
Classification of goods is significant from a customs point of view. It has an impact on customs duties, excise duties, import VAT, import and export restrictions and more. For this reason, the importance of correct classification cannot be underestimated.
Companies often neglect their classification or do not have a robust process to classify their products, which might result in significant costs, e.g. wrong amount of duty being paid or improper use of free trade agreements. We have helped companies who were struggling to achieve only 60% to 70% classification compliance to reach 100%.
Classifying products accurately requires knowledge and obtaining the necessary information on the essential characteristics for customs. We address these requirements directly. At the heart of TariffTel is the knowledge, master tables built and maintained by our highly skilled team, enabling non-technical people to understand quickly what information is needed. Once the information is fed into TariffTel, a tariff code is automatically assigned.
We corrected a tariff code for shoes for our customer, misclassified due to missing information. When classifying footwear you need to classify by type of footwear, parts of footwear and the materials in footwear that the “upper” and “sole” are made from. Other characteristics such as whether the shoe covers the ankle, the size, the height of the heel, and whether it’s intended for men or women all need to be factored in. The main issue with our customer’s shoes was with leather uppers being misclassified under textile or plastic/rubber uppers. They were overpaying duty by 9% on one footwear product leading to a significant overpayment of £120,000.
Poor compliance leads to higher occurrences of duty over payments. How compliant are you?
Continuing from our first blog in this series “Time to Take Control” now we will focus on the importance and value of Supplier Engagement.
Having to look up tariff codes, product by product, is time consuming and often impractical. The invoice description rarely details all the essential characteristics and late changes in fabric or material composition can further complicate the process. Subsequently, raising queries on suppliers to provide key product information is flawed when there are manual processes, inter-departmental communication and data silos to contend with.
Why not get your suppliers involved in the classification process, logging on to their own dashboards and helping you to classify products before they are shipped, reducing import clearance delays?
TariffTel Enterprise engages with your suppliers to obtain information on products to ensure the correct classification, including variations by product size, net weight, fabric composition, product images and other supporting documentation. In addition, TariffTel captures unit costs including those at product set item level, country of origin, country of manufacture and country of origin of fibres.
By engaging suppliers directly via online portals, queries, questions and validation, TariffTel can obtain the essential characteristics systematically. Adopting our principles ensures accurate classification and compliance (look out for our next blog on this).
Companies should invest in a strategy for a robust and auditable classification model which is fundamental to trading internationally.
A common theme we have experienced is importers and exporters have minimal control or visibility of their customs classification process. In some cases, classification is outsourced so there is an over reliance on a supplier, customs broker or third party to classify products. This can lead to the incorrect assignment of tariff codes which ultimately results in poor compliance and duty overpayments.
We have identified several opportunities that will provide both efficiency and cost benefits to supply chain and classification procedures. In a series of blogs, we will delve into the following key areas to improve your classification process, costs and compliance:
The world is getting smaller and this is true for internet shopping (B2C) too, but is the consumer getting a raw deal?
The doorbell rings and your package has arrived – you got a great deal online and have been eagerly awaiting the delivery. But before you can get your hands on it, the courier explains to you that you have to hand over cash to cover import taxes. “But I’ve already paid the shipping and I’ve got no cash on me!”, you protest. The couriers card machine isn’t working and he’s not in the mood – this is a regular occurrence for him.
If you’re looking to expand your business to overseas consumers and expect repeat sales, make sure they know what it’s really going to cost them and even better include all the costs at checkout.
For B2C (Business-to-Consumer) companies around the globe, striving to provide the best possible service to their customers, should they be looking to sell their products DDP?
DDP – Delivered Duty Paid (all costs and responsibilities are with the seller/shipper).
You would think that anti stress balls and shapes would be easy to classify and would probably fall under the same tariff code. However when classifying goods it is important that you read the Explanatory Notes in the WCO Harmonised System and also any Explanatory Notes issued by the customs authorities. A good example is anti stress balls and shapes. According to the EU Explanatory Notes those shaped as balls are classified in a sports/exercise heading 9506.69 while those in shapes such as animals are classified as toys in 9503.
TariffTel™ takes all notes in to consideration when classifying goods enabling you to classify your products stress free.
Around this time of year many companies are placing orders for their Christmas range of products. Many of these products will be in the form of gift sets comprising a reusable container containing a product such as a set of socks etc. It is important to note that the classification rules state that such reusable containers should be classified separately from the products stored within. Follow the rules and quite significant duty savings can be made. Let’s take a look at a sock set stored in a steel tin. 12% duty may be payable on the socks and only 3.20% may be payable on the reusable tin with a possible saving of nearly 9%. If you are importing these types of products in high quantities ensure you obtain the actual value of the container and declare them separately.
TariffTel™ can assist by splitting products into sets and you or your vendor can easily allocate actual values of the container and its contents. Contact us now to find out how we can help or to arrange a demonstration.
It is vitally important to obtain as much information as possible in order to correctly classify the importation of mixing bowls and other kitchenware.
Ensure that your purchase order descriptions include or you obtain, material of manufacture, country or origin, country of despatch and in some instances the construction method. These main “ingredients” will determine whether your mixing bowls will be liable for 0% import duty or as much as 11% and can fall under any one of over 20 different tariff codes.
TariffTel can not only assist with the classification of mixing bowls but also 7000 other kitchen products.
We are pleased to confirm that TariffTel will be a premium exhibitor at C5’ 6th Advanced Forum on Customs Compliance being held at the Grange City Hotel, London 19/20th November 2013.
Held in Partnership with HMRC to discuss the latest changes happening to customs regulations and what you can do to minimise the impact on your own company.
Come and visit us to view and arrange your demonstration of TariffTel, the customs classification tool that can improve compliance and accuracy while reducing costs, and your chance to win an iPad mini.