Morrisons, HMRC and a £4.7m ruling: The cost of an incorrect tariff code

In a landmark ruling last month, HMRC successfully challenged WM Morrison Supermarkets over the declared origin of imported aluminium foil resulting in a £4.7 million liability in unpaid duties and VAT. The implications of this are far-reaching and send a clear signal that the pressure on tariff code accuracy and origin declarations is only going to increase.

It’s leading everyone to the same question: Are you confident in your tariff codes?

The one clear message ringing out from HMRC after this tribunal is that tariff codes have to be accurate or there will be consequences. There’s no doubt about it.

Here, we look at what happened for the tribunal to reach this decision against such a well-known British retailer, and what this means now for everyone else.

The risk of misclassification

At the heart of the Morrisons ruling was a dispute over non-preferential origin. Morrisons had declared the foil as originating in Thailand, based on final-stage processing that included heating, cutting and boxing. In effect, by declaring Thailand as the origin would have exempted the product from the higher anti‑dumping duty according to UK customs laws. HMRC argued that this processing wasn’t substantial enough to transform the product and that the true origin was in fact China, where the core manufacturing took place. The tribunal agreed.

The consequences were severe. The reclassification triggered millions in anti-dumping duties and VAT adjustments. What made the ruling more significant, however, was the reasoning. The tribunal accepted evidence as subtle as supplier website statements suggesting the Thai plant existed to avoid duties. That was enough to demonstrate the processing was not “economically justified.”

This just shows that even minor oversights, or assumptions made without full data traceability and verification, can expose companies to huge financial and reputational risk.

How to ensure tariff codes are accurate

This case underscores a fundamental truth: the cost of getting tariff codes wrong far outweighs the investment in getting them right from the start.

What’s needed is not just an accurate classification, but a defensible classification that will stand up to scrutiny. And that means clear documentation, tracking and storing every key piece of data, every process and every decision that gets you to your final code.

Does your current system provide this?

This is one of the key reasons why our customers choose TariffTel. Accuracy and certainty that every code will stand up should it be questioned, with audit-ready trails and documentation.

TariffTel is built for this purpose. Every classification is grounded in the General Rules of Interpretation (GRIs), Explanatory Notes and WCO guidelines and overseen by experienced customs experts. Every product is aligned with the correct code based on verified product data from the source, including composition, use and origin data, provided by suppliers who know products best.

It all starts with a code

The Morrisons case is a warning. It shows that customs scrutiny is intensifying and that even large companies can get it wrong without the right processes and platform in place. Tariff classification is a strategic function with direct financial impact.

Catch our upcoming webinar “It All Starts with a Code” with the Chartered Institute of Export & International Trade on 21st October at 2pm, where we’ll explore how classification errors happen, what regulators are really looking for, and how to build a system that scales with your business.

Sign up here

If you don’t want to leave your tariff codes to chance and want an assessment of your codes, get in touch with our team. We’ll tell you how we keep retailers such as M&S fully compliant so they don’t run the risk of misclassification.