Entrepreneurship · 19 May 2022

Comprehensive Guide To Commodity Codes

commodity codes

Commodity codes are numbers that are used to classify goods when they are traded internationally. The code determines what the product is, how much it costs, and any special rules that apply to it. You need a commodity code on your goods so that customs can process them correctly and charge the right amount of duty. The code also helps businesses to comply with the law and to avoid paying too much or too little duty.

In this article, we will explain what commodity codes are, how they work, and what you need to know about them. We will also look at how the UK’s departure from the European Union (EU) might affect commodity codes for imports and exports.

What are Commodity Codes?

Simply put, a commodity code is a number that is used to identify a particular product so that it can be taxed correctly. The code is made up of six, eight, or ten digits depending on the level of detail required.

The code determines how much duty you will need to pay on your goods when they are imported into or exported out of the UK. It also provides other important information such as whether your goods are subject to any special rules, such as quotas, or if they are eligible for preferential treatment under a trade agreement.

The code is used by businesses to comply with customs regulations and to avoid paying too much or too little duty. It is also used by government departments to collect statistics on trade.

Commodity codes are classified according to the Harmonized System (HS). The HS is a global system that is used by almost all countries. It is maintained by the World Customs Organization (WCO) and it is updated every five years.

In the UK, commodity codes are also known as Tariff Codes, HS Codes, or simply HS Numbers.

How do Commodity Codes Work?

Commodity codes are necessary because they help authorities correctly identify imports and exports for the purposes of security, tax and statistics.

Each product is assigned a unique code which is used to track it through the supply chain from manufacture to sale. The code also provides information on how the product should be taxed.

In the UK, commodity codes are administered by HM Revenue & Customs (HMRC). They are used to collect statistics on trade, monitor compliance with customs regulations, and charge the correct amount of duty on imported goods.

The code is made up of six, eight, or ten digits. Six-digit codes are used when exporting goods out of the UK to most countries. Eight-digit codes are used when exporting goods to the EU or importing goods from the EU.

Ten-digit codes are used for exporting goods to all other countries and for importing goods from all other countries.

What do the Numbers Mean?

The first two digits of the code identify the chapter in which the product is classified. The next four digits identify the heading under which the product is classified. The last two digits identify the subheading under which the product is classified.

For example, a car with a commodity code of 8701.90.00 would be classified under chapter 87 (vehicles), heading 01 (cars), and subheading 90 (other cars).

The first six digits of the code are known as the HS Code or Tariff Code. The first four digits are known as the HS Chapter Number and the last two digits are known as the HS Subheading Number.

The eight-digit code is made up of the six-digit HS Code plus two additional digits. These additional digits are known as the Commodity Code Supplement (CCS) and they identify the country of origin of the goods.

The ten-digit code is made up of the six-digit HS Code plus four additional digits. These additional digits are known as the Commodity Code Supplement (CCS) and they identify the country of origin of the goods and whether they have been processed or not.

importing and exporting goods

Customs Duties

Customs duties are taxes that are levied on imported goods. The amount of duty that is payable depends on the value of the goods, the country of origin, and the commodity code. Duties are not payable on all goods. For example, there is no duty on most food products, books, and medicines. Furthermore, some goods are subject to special rules, such as quotas or preferential treatment under a trade agreement. It is important that imports and exports have the right commodity codes so that the correct amount of duty is charged.

UK Agricultural Policy

The UK agricultural policy is a system of subsidies and tariffs that are used to support farmers and protect the agricultural industry.

The policy is made up of three parts: the Common Agricultural Policy (CAP), the Rural Development Programme for England (RDPE), and the National Reserve.

The CAP provides financial support to farmers in the form of subsidies. It also sets minimum prices for certain agricultural products and imposes tariffs on imported goods.

The RDPE provides funding for rural development projects, such as environmental protection, infrastructure, and business growth.

The National Reserve is a pool of money that is used to fund emergency measures, such as flood relief or disease control.

Commodity codes play a huge part in ensuring the UK agricultural policy is adhered to because all imports of agricultural products must have the correct commodity code so that they can be correctly taxed. This ensures that foreign products are not unfairly competing with UK products.

UK Anti-Dumping Duties

UK anti-dumping duties are tariffs that are imposed on imported goods that are sold at below market value. The purpose of the tariff is to level the playing field for domestic producers by making imported goods more expensive. The UK has no ability to dictate international business rules but anti-dumping duties mean the UK can take action when another country unfairly sells products in the UK below market value.

Dumping occurs when a company exports a product to another country at a price that is lower than the price of the same product in the company’s home market. This is usually done to gain market share or to get rid of surplus stock. It can be harmful to domestic producers because it can drive down prices and cause job losses.

Commodity codes play an important part in anti-dumping investigations because the code is used to identify all products that are being imported into the country. This means that the authorities can then make sure they are not being sold below market value.

customs checks

What are the Most Effective Anti-Dumping Measures?

The UK has a number of anti-dumping measures that can be used to protect domestic industry. These include tariff quotas and safeguard measures.

Tariff Quotas

Tariff quotas are a type of trade restriction that limits the quantity of a good that can be imported into the country. The purpose of a tariff quota is to protect domestic producers by making it more expensive to import goods that are in high demand.



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