TC09362 - [2024] UKFTT 001071 (TC)

The UK Tariff is based on the Combined Nomenclature (‘CN’) of the European Union, and the Harmonized System developed by the WCO. Prior to the United Kingdom’s departure from the European Union, tariff classification was performed against the CN, contained in Annex I of the European Regulation. A taxpayer was entitled to request BTI from HMRC, determining the correct commodity code. The BTI was binding between the taxpayer and HMRC - and all other EU customs authorities - for a period of three years. Following the departure of the United Kingdom from the European Union, the BTI system was replaced with the ATaR system. BTIs issued across the EU are no longer legally binding on the United Kingdom; but are often considered to be of persuasive value as the EU is one of the WCO Harmonized System’s contracting parties.

The UK Tariff is referred to in reg. 1(2) of the 2020 CT Regulations and made under s 8 of the TCBTA (supra). The UK Tariff classifies goods by reference to a number of “Sections”, “Chapters” and “Headings”, each of which has accompanying notes to aid in interpretation. These notes are contained within the Integrated Tariff, which is laid out in a Statutory Instrument, updated each year. The “Goods Classification Table” is found in Part 3 of the UK Tariff. The Goods Classification Table classifies goods according to their nature, origin or any other factor (s 8(1)(a) of the TCBTA and reg. 2(2) of the 2020 CT Regulations) and gives ten-digit commodity codes to the goods so classified (s 8(1)(b) and reg. 2(3)). These classifications match those used in the CN, which itself is based on the Harmonized System. The first two digits of a commodity code denote the “Chapter” concerned, and the following two digits denote the relevant “Heading”.

Each Chapter of the UK Tariff follows the same structure. Earlier Headings within a Chapter refer to raw materials and later Headings list articles made up of such materials. For example, the earlier Headings in Chapter 40 are concerned with various forms of rubber, while later Headings are concerned with items made of rubber. We accept that it is implicit in such a scheme that an item can only fall within one of the later Headings in a Chapter if it is made of a material which would fall within one of the earlier Headings. This means that the terms of earlier Headings in a particular Chapter can inform what kind of items can fall within later Headings.

The Wetsuits fall to be classified under one of two commodity codes under the UK Tariff: either 4015 9000 00 (if the primary constituent material is considered to be “neoprene”) (the Appellant’s case) or 6113 0010 00 (if the primary constituent material is considered to be “textile”) (HMRC’s case). In determining this appeal, we will need to consider the terms of the UK Tariff as it stood on 27 October 2022 (i.e., the date of the ATaR under appeal).

Classification of goods in the “Goods Classification Table” within the UK Tariff is governed by the GIRs.Rules 1 and 6 of the GIRs provide that:

“1.

The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:

…

6.

For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.”