Navigating the post-Brexit rules of origin

27 January, 2022

UK process of sufficient value

If you carry out a specialist process and the value of that process is more than half the value of the finished article, you can declare the product is of UK preferential origin. Understanding this rule has been important for us, as we provide a bespoke lubrication service to our international customers.

Let’s say we import a bearing that costs one Pound, including freight and duty. We carry out a specialist process, using bespoke equipment, to clean and re-lubricate it and the associated cost of cleaning products, heating, lighting, and wages amount to at least one Pound. In this case, the processing value surpasses fifty percent of the value of the finished article, so we can claim UK preferential origin for the relubrication bearings.

There are also processes that do not change the status of imported parts to originating. If we import non-originating bearing components such as rings and retainers (tariff code 84829900) and steel balls (tariff code 84829100), and assemble a complete ball bearing, the tariff code is now 84821010. The first four digits of the tariff code have not changed, and the component parts are non-originating, so we cannot claim preferential origin.

In addition to the above, it is worth bearing in mind that simple processes fall under the heading of ‘Insufficient Production’. Simple assembly, cleaning, polishing, re-packing and labelling are examples. You may import non-originating tabletops and table legs which you sand down, paint and then assemble into a complete table. The cost of your efforts may exceed the cost of the individual parts, but you would not be able to claim preferential origin because your process is classed as a simple process or ‘insufficient production’.

Other examples of insufficient production include the shelling of peanuts and the grating of cheese but there are exceptions. Let us assume that you have a market for cheese that is cut or grated in a very unusual way. If you needed some bespoke machinery just for that process, and this added sufficient value to the UK processing cost, you may have a case for claiming preferential origin.

Life after Brexit?

We’ve been working hard to make life easier for our customers over the past year or two. We now have Authorised Economic Operator status and we are also authorised for Customs (bonded) warehousing and Inward Process Relief. These authorisations allow us to import goods for overseas customers without paying import tariffs. Inward Process Relief has been particularly useful for the import of non-originating bearings from EU customers for re-lubrication.

Before Brexit, it was almost as easy for a UK company to sell to the EU as it was to sell to a UK-based customer. That world already feels like a distant memory. Understanding and navigating the new rules of origin has been key to helping us adjust to this post-Brexit trading arrangement. At times it was confusing and fraught with uncertainty. We’ve certainly had a few late nights rummaging through the ‘Detailed Guidance on the Rules of Origin’. We are grateful for many of our customers who have shown patience through these trying times, and we are grateful that now, after all this time, there finally is life after Brexit.

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