We see firsthand how critical these codes are for businesses of all sizes. Our TariffTel solution has been designed specifically to make the classification process streamlined and simple to navigate – classification needn’t be a huge burden for businesses.

In this blog, we look at why every product needs a tariff code, the purpose of a tariff code, some common terminology used and also the consequences of getting it wrong.

Why tariff codes matter

Tariff codes are the backbone of international trade. They classify goods in a standardised manner, ensuring compliance with international trade regulations.

Elizabeth Davies, TariffTel Custom Systems Manager, says, “Accurate tariff codes are crucial for determining the correct duties, taxes, and regulations applicable to a product. It’s a non-negotiable in trade today, businesses have to get their tariff codes right every time or they face some quite severe repercussions.”

The job of a tariff code is to determine the tariff rates that apply to the goods, as well as to facilitate trade by enabling customs authorities to identify and track shipments.

But, there are a few variations of a code you may see which can make things confusing. Often you will come across terms such as HS codes, HTS codes, and Tariff/Commodity Codes.

Common tariff terminology explained

What is the difference between the different terms?

HS Codes: HS codes are six-digit codes that classify goods based on their nature, form, and composition. The first two digits of a HS code identify the chapter, the next two digits identify the heading, and the final two digits identify the subheading. Read more about HS codes.

Tariff Codes/Commodity Codes: Tariff codes or commodity codes are classification codes used to determine the customs duty that is applied to a particular product. These codes are ten digits long for imports, eight digits for export, and are used to identify specific products. The HS code makes up the first six digits whilst the final four digits are unique to each country’s tariff system, and they provide additional detail that is specific to that country’s classification systems.

HTS Codes: In the US, the Harmonised Tariff Schedule (HTS) is maintained by the U.S. International Trade Commission (USITC) and is used to determine the tariff rates that apply to goods imported into the United States. The WCO provides the first six digits and the HTS US provides the final four for additional detail. Each country maintains its own Harmonised Tariff Schedule (or similarly named).

What happens when a tariff code is wrong?

A common misconception is that there’s minimal consequences when a tariff code is wrong. The opposite is in fact true. A misclassified product can have far-reaching consequences across a business’ entire supply chain from border delays and fines to damaging relationships with important suppliers.

In our own research, we found that 2 in every 5 tariff codes used is incorrect. This is a staggering figure when you think of the thousands of businesses this applies to.

One of the biggest repercussions of incorrect tariff codes is the under-or-over payment of duty. If a business is found to be paying the wrong amount, they may have to repay the shortfall that should have been paid to customs authorities in the first place. Going through the audit process is complex and time-consuming which takes up a vast amount of resource. Additional costs like conducting internal audits, hiring customs experts or consultants and possibly engaging legal support all add to the complexity of rectifying these situations.

Penalties and fines can be imposed by HMRC as a result which can put a strain on company finances.

Read more about what happens when tariff codes are wrong here.

Support for getting tariff codes right

At TariffTel, our combination of advanced customs data and our unrivalled team expertise creates a precision solution for every business prioritising trade efficiency and growth. Our easy-to-use solution automates the process and puts data at your fingers tips to make classification easier.

We think classification should be made simpler for everyone and have created many resources on our website and blog. Our latest guide is designed to help you understand what data you need about your products, to get the correct tariff code. We’ve called it ‘The devil’s in the data’ and there’s a webinar to watch in partnership with The Institute of Export & International Trade, and a helpful downloadable guide. Get access here.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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Can you tell us more about your journey to becoming a customs administrator?  

I first started out at a shipping company and whilst that might sound like a pretty regular first job, it turned into a fascinating one. As a Shipping Administrator I arranged the shipping for all sorts of strange but amazing items that clients that either bought at auction or had in their attic. Honestly, some of the items that would come through the warehouse were quite unbelievable! One day we had Thor’s Hammer from the Marvel films, then another day we had an R2D2 made by someone’s Grandad from a washing machine. Because of how old some of the items were, they required special licences like CITES or they would be on temporary import.  

I started to become more and more interested in customs. I was interested in the different rules in each country and talking to people from around the world. From the shipping company, I moved to join a customs team as a Customs Officer. From there I learnt about BTI’s, Excise and explanatory notes – it was a big education and I loved it. The role was predominantly classifying the non-food products. From there I joined the TariffTel team where I continue to develop my experience and knowledge within classification, whilst using my administrative skills.   

What does a typical day at work look like for you?  

I don’t have a typical work day which keeps it interesting. I primarily help the classification specialists with research and run reports within TariffTel. Research can range from all sorts of items/garments. I go through BTI’s, ATR’s, Cross rulings and the WCO notes whether they fall in the US and EU/GB tariff. It’s not always the same commodity code for the US and EU/GB either, they could be on separate sides of the tariff which is interesting.  

At the end of each month I run a report within TariffTel which helps our clients manage their suppliers. I give them a breakdown from my data analysis of where their suppliers can improve in using TariffTel to its full potential. We put together guides to help suppliers select the correct item types to streamline the process. Since sending clients these reports, the data is significantly improving.   

What have been some of the most memorable moments in your work?  

The most memorable moment for me is at one of the auction houses I worked with in my shipping days. They did a Goodwood auction which had everything and anything related to cars and bikes. This particular sale had the Banksy 17-ton truck covered in graffiti called Turbo Zone Truck (Laugh Now But One Day We’ll Be In Charge) 2000 valued at £1.5 million. We had big discussions in the office on how we would ship it – would we drive it if it was national? And how much wood would we need for international? 

The Goodwood auctions also include a lot of Formula 1 memorabilia and my husband and I are F1 fans. Two other memorable items that came through the warehouse for shipping were a Ceratanium IWC Pilot’s watch owned by Toto Wolff, head of the Mercedes-AMG Petronas Formula One Team, and a 1:8 scale limited edition model of the 2007 Japanese Grand Prix winning McLaren Mercedes car signed by Lewis Hamilton. These caused a lot of excitement! 

What skills do people value and how can people find out more about the industry?    

I think the courses available at the Institute of Export of International Trade and Customs Academy are good to look at for anyone looking for qualifications in Customs.  

I think showing a genuine interest in the customs industry is important and there should be a balance of flexibility and adaptability in your work because changes in customs can happen quickly.  

What’s the best advice you’ve ever received with regards to work and what impact did it have?  

Mine is never underestimate the value of communication. Communication in a lot of places can be lacking and it’s okay to ask a question if you don’t understand something. Ask for that 1:1 with a colleague or manager to help you understand better or have a conversation with a colleague. It’s not always a comfortable thing to do but actually once you’ve done it a few times, it builds networks and I’ve found in the past people approach me and ask my opinion or clarification. I don’t always have the correct answer, but I will always listen and try to understand.  

What advice do you have for people working in the industry? 

I think communication and listening is a really important part of this industry because it isn’t straight forward. There’s a lot of research, reading and understanding of the Tariff. It’s important to hear other people’s opinion on their interpretation of the tariff. 

What advice do you have for people looking to get started in the industry?  

I think it depends on which area you are interested in. Customs Classification and Customs Clearance goes hand in hand. I started off on the logistical side of customs and I feel because of that, I understand the client’s frustration of moving goods around the world however, on the other hand, on customs classification side there is a lot of reading and research. Having a logical mindset as well is really important.  

What do you do for fun outside of work?  

I have an ex-racer greyhound called Willow, she loves a good walk but also gets bored very quickly if we are walking round the same routes so it encourages me to visit new places. My husband and I can often be found going out for the day with picnics or to find a good pub enroute! 

We look forward to sharing more stories from our talented team. Follow us on LinkedIn to hear more from our team and what they get up to. 

Want to hear more from our team? Here’s our TariffTel Systems Manager Elizabeth Davies talking about her life in and out of work. 

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She has worked in logistics and procurement her whole career, both in industry and since 2021 at TariffTel, and has a lot of expertise to share. She’s always up for a challenge in work and at home and has even pushed herself to compete in a strong woman competition. She’s our strong woman at TariffTel, so let’s get to know Elizabeth a bit more.

Can you tell us more about your journey to becoming a Customs Systems Manager at CORE? 

I joined TariffTel in 2021 as a Customs Classification Specialist and quite quickly extended my role to take on a management position becoming the Customs Systems Manager. My experience working at Siemens prior to this played a part in this as I had a vast amount of experience that was relevant across the whole logistics sector and helped me quickly understand our customer’s challenges and how we could help. Previously, I’d held the roles of Logistics manager, Change Manager and Project Manager at Siemens implementing huge projects that required a lot of concise organisation, communication and planning.

When I had my two children I took a career break and then started my own business in consultation before deciding it was time for a new challenge. That’s when the opportunity at TariffTel came up and I was keen to become more specialised and focused purely on customs which had always greatly interested me. I was able to put my qualifications at the Customs Academy as well as a Diploma in Customs Compliance to good use and work with some fantastic businesses in transforming their classification operations with our unique system and expertise.

What does a typical day look like for you? 

A typical day can be very varied. Our primary focus is to efficiently and effectively support our clients requests and sometimes they can be complex and challenging. The team and I have built strong working relationships with our clients so we can best support their needs and solve the problems we come up against together. For us to do our jobs to our best abilities, it has to be a partnership with our customers and we pride ourselves on being on hand when they need us.

On a day to day basis this manifests itself in different ways. I can be working closely with one customer on a specific topic and supporting the team on research. Or we will regularly all get together in the office as a team to spend valuable time discussing complex classification queries and working out solutions for our customers. The consequences of misclassification can be an inconvenience at best, or at worse, have severe consequences for a business, and we’re the first line of defence for our customers in ensuring they don’t face any of the repercussions when things go wrong.

It’s important that I regularly attend industry events to hear from peers on the challenges they are facing, and share our own perspective on the ever changing world of customs and trade. I recently attended the Customs Compliance Conference which discussed all the big topics in compliance at the moment and we are currently planning to get involved in the Institute of Export & International Trade events this year, as we have done for the last few years.

No day is the same, it keeps me on my toes and makes life interesting. Every day is a school day in classification, we are constantly learning.

What has been your biggest accomplishment while working at TariffTel?

In the last few years I pleased to say I have recruited and developed one of the best, most specialised customs classification teams there is. We have developed strong processes and procedures within the department to ensure our customers’ requirements are always met and exceeded.

And we have some happy customers I’m pleased to say, who have transformed the way they classify products for the better. Boohoo Group PLC is just one of the them and that particular project involved a lot of understanding of the complex US customs regulations which varying significantly to the UK/EU customs controls.

Our team achieved a 100% compliance record on 20,000 SKUs in a short period of time for boohoo. That is something we are very proud of as a team.

What skills do you need to work in customs classification? 

It is essential to have a methodical approach when it comes to classification. It requires someone who is detailed and accurate. Lots of complex reading can be involved and interpretation of data.
It is also essential to be a team player and a good listener as some classification decisions are best reached when discussed at length with others. You must have a detailed understanding and be able to explain your classification opinion.

What’s the best advice you’ve ever received and how has it impacted your career?
That learning never stops and change must be embraced. We must never think we know it all, I am continuously learning every day which makes me more flexible and adaptable. In customs, learning never stops. The regulations and rules are constantly changing so we must change with them and learn to adapt the way we work to encompass them into our thinking.

What do you do out of work for fun?
I am a big fan of the outdoors and fitness. I love to be outside walking or running with my cocker spaniel Henry or paddleboarding down the river with friends. I also like throwing heavy weights around in the gym , I recently did my first Strongwoman competition and have competed in a variety of fitness events over the last 10 years.

We look forward to sharing more stories from our talented team. Follow us on LinkedIn to hear more from our team and what they get up to.

Want to hear more from our team? Here’s our Customs Classification Specialists Julia Granada’s-Gillow talking about her life in and out of work.

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A game-changer for many businesses has been the introduction of a customs classification system such as TariffTel. This solution offers unbeatable accuracy and compliance standards for assigning tariff codes to goods and unprecedented opportunities to streamline operations. Here we look at the impact implementing a customs classification system has had on businesses looking to improve compliance standards and the transformation in operations that they have experienced as a result.

We specifically look at how boohoo group plc transformed their classification approach with TariffTel.

Common challenges businesses face with classification

Data management

Data management is one of the biggest challenges many companies face across their supply chain. Customs classification requires meticulous attention to detail, with accurate and up-to-date information about a product being paramount. Ensuring the seamless flow of data across various systems and platforms while maintaining data integrity can be a daunting task for many businesses. The master data held on each product can vary significantly and gathering it in the first place can be tricky. You may be holding this data on spreadsheets which you need to manually maintain, and it may be recorded ad hoc from the scant information provided by your suppliers or on documentation. This can all lead to data integrity challenges.  When you improve this data capture process at the start of classification using a customs classification solution that makes data capture and storage easy, many of the challenges go away. TariffTel is a unique system, trusted by businesses such as Primark and ASDA, for its innovative approach to engaging with your suppliers. By gathering essential product data at source with suppliers who know your products best, the initial data used to classify can be verified and relied upon. The ‘make-up’ of a product, be it fabric composition, fat or sugar content with food products or metal type with car parts, are all crucial pieces of information that need to be shared and regularly updated on your customs classification system.

Regulatory landscape

Another challenge is navigating the regulatory landscape. Customs regulations are constantly evolving, with new requirements and tariff code updates and changes introduced by the World Customs Organisation regularly. Businesses need to factor in an approach that ensures they keep up to date with these changes and ensure compliance at all times. Being caught out with a tariff code change can have disruptive consequences across your supply chain. One of the main benefits of a solution such as TariffTel is that it is constantly maintained by our customs experts. Any changes to the Tariff are reflected within our system and communicated to clients as soon as the information becomes available, preventing the risk of misclassification.

Assuming one size fits all

Many businesses mistakenly think that a single tariff code can apply universally to a specific product. When in reality, tariff codes are highly detailed and specific, often requiring a thorough understanding of the product’s composition, intended use, and other factors. This is where human input and interpretation of the Harmonised System is vital and why having access to a team of customs classification experts is vital. It is also why AI tools can fail in assigning the correct code as they take a broad-brush approach to the rules, rather than considering every detail which affects the decision like a solution such as TariffTel. Indeed, small variations to a product can affect classification and this nuance is often missed by AI tools which lack the knowledge and interpretive skill gained from the various sources of information involved in classification.

A good example of how this can affect duty costs is the US classification of a woman’s knitted, cropped, blouse-like garment made using cotton. Many AI systems we have tested would classify this garment to heading 6106.10.0010, driving a duty of 19.7%. However, as the garment is cropped it is precluded from this heading, and instead would be classified to 6114.20.0010 where the duty is 10.8%, a notable 8.9% lower than the initial classification. This is the kind of interpretive work which is built into the TariffTel system, where our experienced team utilise not only the Tariff books, but also review the explanatory notes when assigning tariff codes taking into account various construction types and material combinations.

How boohoo transformed their classification with TariffTel

We have supported many businesses in expanding into new overseas markets and one of the those businesses is fashion retailer, boohoo group plc. In 2022, boohoo’s aim was to boost sales in the US and streamline the delivery of its fashion products to their new US distribution centre from the UK which was currently taking 8-10 days to arrive from the UK. Our TariffTel system supported them in their new approach to customs classification, prioritising customs compliance and accuracy.

Their first challenge was to quickly and accurately classify thousands of SKU’s, a complicated task given they stored only partial product master data. Further difficulty lay with the complexities of the US customs controls which vary significantly to the UK.

In a short space of time, the team achieved a 100% compliance record on 20,000 SKUs, transforming the way US operations and classifications were conducted. The initiative reduced transit times, enabling boohoo group to fulfil demand more precisely in the growing US market. Read more about how boohoo transformed classification with TariffTel.

How can a customs classification solution bring change to your business

TariffTel’s combination of customs data and our unrivalled team expertise create a precision solution for every business prioritising trade efficiency and growth.

By leveraging the information already contained within your business and combining our customs experts’ industry knowledge, we offer unbeatable efficiency, accuracy, cost-savings and compliance standards in tariff code classification.

With TariffTel You can:

• Integrate crucial supplier data about your products and collate accurate product master data – this is unique to TariffTel and crucial for accurate classification. Unlike other solutions, TariffTel engages with suppliers to obtain very specific information including variations by product size, net weight, fabric composition, product images and other supporting documentation
• Keep up to date with changing tariff codes. TariffTel provides alerts and notifications the minute your HS codes change due to central updates – never be caught out again with out-dated codes
• Rely on accurate source data for a fully auditable trail. Often teams are faced with classifying items using poor and insufficient data, or relying on codes provided by suppliers. TariffTel enables the capture of relevant data at source and stores information in a centralised, secure data hub, with access to a full audit trail.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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Our Head of Infrastructure and Technology, Tim Ingram-Smith spoke about how technology is having a transformational impact on supply chains and customs procedures at the recent Customs Compliance Conference in London. His discussion covered the state of the industry from a systems integration point of view and examined the steps businesses move through as they transition from manual processes, to simple file exchanges and uploads, through to where the industry is currently in the use of Application Programming Interfaces or APIs.

In this blog post, we’ll delve into how technology integration is reshaping customs classification including a specific example of how our TariffTel system has supported boohoo group PLC in transforming their classification approach. We’ll look at the challenges that come with it and how to navigate integration seamlessly.

Challenges with integration in customs classification

Integrating technology into customs classification processes comes with its fair share of challenges. One significant hurdle is the complexity of data management. Customs classification requires meticulous attention to detail, with accurate and up-to-date information about a product being paramount. Ensuring the seamless flow of data across various systems and platforms while maintaining data integrity can be a daunting task for many businesses whether they are shipping clothes, machine parts or pet supplies. The master data held on each product can vary significantly and is best gathered at source with suppliers, who know your products best. The ‘make-up’ of a product, be it fabric composition, fat or sugar content with food products or metal type with car parts, are all crucial pieces of information that need to be shared and regularly updated on your customs classification system and this level of source detail can prove challenging to collect.

Our TariffTel solution is a centralised auditable system that gathers essential product data from across your supply chain. By leveraging the information already contained within your business and combining our customs experts’ industry knowledge, we offer unbeatable accuracy and compliance standards in tariff code classification knowing the data we’re using is verified and accurate to begin with. Ultimately, accurate classification ensures you pay the correct duty and avoid delays at the border.

Another challenge is navigating the regulatory landscape. Customs regulations are constantly evolving, with new requirements and tariff code updates and changes introduced by the World Customs Organisation regularly. Businesses need to factor in an approach that ensures they keep up to date with these changes and ensure compliance at all times. Being caught out with a tariff code change can have disruptive consequences across your supply chain. One of the main benefits of a solution such as TariffTel is that it is constantly maintained by our customs experts. Any changes to the Tariff are reflected within our system and communicated to clients as soon as the information becomes available, preventing the risk of misclassification.

One final challenge is the cultural shift within an organisation to embrace new technology and a different way of working. This re-education and training on a new system can slow down the integration process and mean it can take time to see the full impact of the new system in action. Sometimes cost overruns and delays occur as technical issues can arise during the integrating process but by involving the full team in the integration process, and planning a thorough on-boarding programme, these delays and additional costs can be minimised.

3 ways to make integrating a new system easier

1) Prioritise quality data: Prioritise data quality by investing in robust data management and security practices. Often teams are faced with classifying items using poor and insufficient data, or relying on codes provided by suppliers. TariffTel enables the capture of relevant data at source and provides storage in a centralised, secure data hub, giving teams access to a full audit trail. By ensuring data accuracy at source with your suppliers, together with completeness of data, and consistency across all sources and systems, you can implement data validation processes that identifies and rectifies errors early on.

2) Thoroughly assessment of needs: Before integrating a new system, it’s important to conduct a comprehensive assessment of your organisation’s specific needs and requirements when it comes to classification. By understanding the types of goods being classified, the volume of transactions, and the regulatory environment in which your business operates, you will be in the best position to ensure your new system is set up for your requirements.

3) Provide comprehensive training: Offer comprehensive training programs to educate employees on your new customs classification system. It’s important to provide a range of support options to suit the different teams involved in the classification process including hands-on training sessions, user manuals, and ongoing support to empower employees (including suppliers) to use the system effectively and confidently. At TariffTel, we’re proud of the access we provide to our customs classification experts who can help with the most complex of classification queries. They are well known amongst all our customers who appreciate their tenacity and skill in finding a solution.

How TariffTel has transformed customs classification for boohoo group plc

We have supported many businesses in expanding into new overseas markets and one of the those businesses is fashion retailer, boohoo group plc. In 2022, boohoo’s aim was to boost sales in the US and streamline the delivery of its fashion products to their new US distribution centre from the UK which was currently taking 8-10 days to arrive from the UK. Our TariffTel system supported them in their new approach to customs classification, prioritising customs compliance and accuracy.

Their first challenge was to quickly and accurately classify thousands of SKU’s, a complicated task given they stored only partial product master data. Further difficulty lay with the complexities of the US customs controls which vary significantly to the UK.

In a short space of time, the team achieved a 100% compliance record on 20,000 SKUs, transforming the way US operations and classifications were conducted. The initiative reduced transit times, enabling boohoo group to fulfil demand more precisely in the growing US market.

Read more about how boohoo transformed classification with TariffTel.

Find out why compliance matters to boohoo group and other businesses in our blog on the impact of greater compliance.

TariffTel’s combination of customs data and our unrivalled team expertise create a precision solution for every business prioritising trade efficiency and growth.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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Often, businesses take a ‘good-enough’ approach to classifying their products not realising that the use of incorrect tariff codes can cost huge amounts in overpaid duty or fines resulting from underpaid duty. Not only that, if your business is found by customs authorities to be using incorrect tariff codes, your shipments can potentially be held at borders, causing unnecessary disruption.

Here we look at 3 big misconceptions in the industry that exist today around tariff codes. We’re de-bunking myths and looking at how technology, like our TariffTel solution, can support businesses in classifying their goods accurately and compliantly, whilst removing some of the hurdles faced during the classification process.

Are you running the risk of incorrect codes?

Many management teams, operations and financial directors have decided it’s not worth it and are now reassessing the way their company classifies goods. They’re reconsidering the inadequate tools and manual processes their team currently uses and transforming their classification process to make incorrect codes a thing of the past. See how boohoo groups plc transformed their approach to classification with TariffTel recently .

Many senior teams have come to the conclusion that:

1) Only by being fully compliant with trade regulations and procedures can a business be sure to safeguard against supply chain disruption including border delays and fines. Compliance comes with accurate tariff codes and to achieve this you need a precise customs classification solution to provide the highest standard in classification
2) The right customs solution can not only provide duty rate assurance, but free up time in the team to focus on growth and explore new trade opportunities
3) There’s a different solution to suit different needs – it’s important to invest in a system that grows as the business grows.

Misconception 1: No Consequences for misclassification

A common misconception is that misclassifying products with inaccurate tariff codes has minimal consequences.

In reality, using incorrect codes can lead to customs delays, fines, or even legal action. Customs authorities scrutinise tariff code accuracy, and errors can impact a company’s reputation and bottom line. It’s crucial for businesses to prioritise the correct classification of goods to avoid potential complications and significant financial risk.

Misclassifying goods may lead to these unexpected consequences if an importer is found non-compliant by the government.

• Repaying underpayments of duty – Underpayments of duty can lead to businesses having to repay the shortfall that should have been initially paid to customs authorities. This is often a meticulous and complex procedure that includes a thorough review of the misclassified products and the subsequent calculation of the correct tariff codes and associated duties, taking up both time and resource from elsewhere in the business. The financial impact of repaying underpayments extends beyond the actual duty amount. There are additional costs associated with conducting internal audits, hiring customs experts or consultants to rectify the misclassification, and possibly engaging legal support to navigate the complex regulatory landscape.
• Associated fines with noncompliance – Customs authorities take tariff code accuracy seriously, and any errors can result in penalties that can put strain on a company’s financial resources. These fines are not just nominal; they can escalate rapidly, especially if the misclassification is considered a deliberate attempt to evade duties.
• Potential loss of Authorized Economic Operator (AEO) status – AEO status is a coveted designation that provides companies with various benefits, including simplified customs procedures and reduced scrutiny. Losing this status could result in increased administrative burdens, longer processing times, and additional costs associated with adhering to standard customs procedures.
• Further audits to ensure future compliance – Following a misclassification of goods, businesses may find themselves subjected to further audits by government authorities to ensure future compliance with customs regulations. This means that customs authorities scrutinise a company’s import and export activities in-depth, aiming to identify any potential irregularities, errors, or intentional noncompliance. These audits typically involve a meticulous examination of the company’s documentation, including customs declarations, invoices, and other relevant records. The impact of these audits is significant. The company may incur additional costs associated with the preparation of documentation, engagement of specialised consultants, and potential legal expenses to navigate the audit process.

Misconception 2: Assuming one size fits all

Many companies run with the belief that a single tariff code can apply universally to a specific product.

In reality, tariff codes are highly detailed and specific, often requiring a thorough understanding of the product’s composition, intended use, and other factors. This is where human input and interpretation of the Harmonised System is vital and why AI tools can fail in assigning the correct code as they take a broad-brush approach to the rules, rather than considering every detail which affects the decision. Indeed, small variations to a product can affect classification and this nuance is often missed by AI tools which lack the knowledge and interpretive skill gained from the various sources of information involved in classification.

A good example of how this can affect duty costs is the US classification of a woman’s, knitted, cropped, blouse-like garment made using cotton. Many AI systems we have tested would classify this garment to heading 6106.10.0010, driving a duty of 19.7%. However, as the garment is cropped it is precluded from this heading, and instead would be classified to 6114.20.0010 where the duty is 10.8%, a notable 8.9% lower than the initial classification. This is the kind of interpretive work which is built into the TariffTel system, where our experienced team utilise not only the Tariff books, but also review the explanatory notes when assigning tariff codes taking into account various construction types and material combinations.

It’s also a common belief that once a tariff code is assigned to a product, it remains constant. However, tariff codes can change regularly due to updates in trade regulations, advancements in technology, or alterations in the product’s characteristics. Failing to regularly review and update tariff codes may lead to non-compliance and financial implications.

David James, Group Supply Chain Director, boohoo PLC, talks to the value of having expert knowledge when classifying, “The TariffTel team’s knowledge of the US classification system is unrivalled and without their team of experts and their TariffTel platform we would not have been able to classify the sheer volume of products we needed to ensure our new US distribution centre could start operating on time.”

Misconception 3: Tariff Codes only affect customs

Tariff codes only affect customs processes, right? Well actually…

Correct tariff classification is pivotal in global trade, as errors can trigger significant disruptions to the whole supply chain. When goods face inspection due to misclassification, the immediate consequences can include delivery delays, customer dissatisfaction, and financial losses. Holding costs rise as warehousing expenses accumulate during extended inspection periods, and this impacts the overall inventory efficiency in your business.

Tensions can arise with suppliers if there are production schedule disruptions, creating a ripple effect on the entire manufacturing process. The consequences of production schedule disruptions extend beyond just the immediate delays. Suppliers often operate on tight schedules, and any deviation from the agreed-upon timelines can strain the relationship. Delays can lead to increased carrying costs for suppliers, affecting their cash flow and overall operational efficiency. Tensions can intensify quickly and lead to challenges with supplier relationships.

Engaging your suppliers with classification can have many benefits, not just resulting in accurate tariff codes.

How TariffTel can support you

TariffTel provides the highest standard in customs classification. A unique system that works across your supply chain to provide unbeatable accuracy, duty rate assurance and cost savings. By leveraging the information already contained within your business and combining our customs experts’ industry knowledge, we offer unbeatable efficiency, accuracy, cost-savings and compliance standards in tariff code classification.

With TariffTel You can:

• Integrate crucial supplier data about your products and collate accurate product master data – this is unique to TariffTel and crucial for accurate classification. Unlike other solutions, TariffTel engages with suppliers to obtain very specific information including variations by product size, net weight, fabric composition, product images and other supporting documentation
• Keep up to date with changing tariff codes. TariffTel provides alerts and notifications the minute your HS codes change due to central updates – never be caught out again with out-dated codes
• Rely on accurate source data for a fully auditable trail. Often teams are faced with classifying items using poor and insufficient data, or relying on codes provided by suppliers. TariffTel enables the capture of relevant data at source and stores information in a centralised, secure data hub, with access to a full audit trail.

You can read more about TariffTel here. If you’d like to speak to an expert on our team please get in touch.

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We have supported many businesses in expanding into new overseas markets and one of the those businesses is fashion retailer, boohoo Group. In 2022, boohoo Group’s aim was to boost sales in the US and streamline the delivery of its fashion products to their new US distribution centre from the UK.  Our TariffTel system supported them in their new approach to customs classification, prioritising customs compliance and accuracy. The results speak for themselves.

Customs challenges when expanding into new markets

In 2022, boohoo Group’s orders to the US faced a lengthy delivery time of 8 to 10 days and the team used a legacy system to assign tariff codes which relied on traditional, paper-based processes and decentralised data systems.​

Their goal was to ensure the smooth and quick entry of millions of units into the US. Their first challenge was to quickly and accurately classify thousands of SKU’s, a complicated task given they stored only partial product master data. Further difficulty lay with the complexities of the US customs controls which vary significantly to the UK. ​

Boohoo group set out to transform their approach to customs classification with TariffTel.

Why TariffTel?

Boohoo group chose TariffTel as the system provided a centralised approach to assigning US tariff codes, capturing and storing essential product data which is crucial for accurate classification.

The TariffTel team had less than four months to classify thousands of SKU’s from various suppliers.​ TariffTel engaged suppliers for specific information, including size, weight, fabric composition, product images, and supporting documentation.

TariffTel was able to facilitate a level of digital transformation that allowed boohoo group to achieve a more efficient and compliant process in classification.​ The system enabled boohoo group to accurately classify and ship all necessary SKUs to the US from the UK in the four month timeframe. ​

The team achieved a 100% compliance record on 20,000 SKUs, transforming the way US operations and classifications were conducted. The initiative reduced transit times, enabling boohoo group to fulfil demand more precisely in the growing US market.

As a result of the new approach, boohoo group can now trust the 100% accuracy of its product master data, thanks to quality assurance checks and supplier integration. ​This digital transformation now serves as a benchmark for expansion into other overseas markets.​

David James, Group Supply Chain Director at boohoo Group PLC, says of the work, “This solution was transformative for boohoo group, we capture all the data required from suppliers for classification that produces the full 10 digit US HTS code. This innovation has ensured the smooth flow of goods through US Customs and since the distribution centre opened we have had zero shipment delays on products entering the US.”

Find out why compliance matters to boohoo group and other businesses in our blog on on the consequences of misclassification.

TariffTel’s combination of customs data and our unrivalled team expertise create a precision solution for every business prioritising trade efficiency and growth.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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Our Head of Infrastructure and Technology, Tim Ingram-Smith, will be lifting the hood on the range of integrations that exist today across the end to end purchase-to-pay lifecycle. He’ll explore the main mechanisms in use and development areas where organisations are investing for better compliance and more efficient processes. Tim’s session will take place on 7th March at 10.10am. If you’re attending, please come and say hello to our team, and if you’re interested in signing up, the details are here. 

Why is integration crucial for customs teams?

As the world becomes increasingly connected, integration is critical for modern businesses. In customs ,having the right data available at the right time is crucial to avoid classification delays and ultimately fines. The range of integrations available today is mind blowing, meaning that businesses of all shapes and sizes can take full advantage of being integrated, leveraging their data and reducing user replication across systems.

Technology is the enabler for greater accountability, efficiency and ultimately, cost savings. Expert-led classification solutions such as TariffTel that uphold the highest standards in classification, can play a vital role in enabling customs teams to more quickly and confidently assign the correct tariff code to all goods shipping internationally. Teams should not underestimate the necessary skill and resource that is required to get tariff codes right. The accuracy of these codes directly affects the amount businesses have to pay for importing or exporting goods. Incorrectly assigned codes can result in businesses paying more than necessary, affecting their competitiveness and profit margins.

Why is it important that every tariff code is correct?

Accurate HS codes facilitate the smooth and swift movement of goods across borders. Correct classification enables customs authorities to quickly assess and process shipments. On the other hand, incorrect codes may result in shipment delays, leading to dissatisfied customers, increased operational costs, and lost business opportunities.

Assigning tariff codes can be complex. Customs regulations and procedures vary from country to country and customs teams need to familiar with the different requirements. By correctly identifying and applying HS codes, businesses can ensure compliance with specific requirements and avoid potential delays and penalties due to customs complications.

Find out more about the consequences of misclassification and why it pays to get it right.

Find us at the Customs Compliance Conference

Our team will be on hand throughout the two days getting involved in sessions, please come and say hello. We have a stand at the coffee break-out area where we will be showing demos and talking about the challenges and solutions with customs technologies.

By understanding the importance of accurate HS codes and implementing appropriate technology solutions to mitigate risks and assign the correct codes, businesses can ensure smooth cross-border trade and maintain their competitive edge in the global marketplace in 2024 and beyond.

Read more about supporting customs classification teams and mitigating risk and also the importance of compliance in trade.

Interested to hear more about how our easy to use TariffTel solution can support your trade operations. Get in touch.

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In reality, using incorrect codes can lead to customs delays, fines, or even legal action. Take the recent tribunal case between HMRC and Star Images Enterprises where Star Images Enterprises found itself facing two C18 Post Clearance Demand Notices from HMRC for the underpayment of Customs Duty and Import Tax. This is a stark reminder of the importance of human expertise and interpretation in classification.

It’s crucial for businesses to prioritise the correct classification of goods to avoid these types of potential complications and financial risk. That’s where our TariffTel platform comes in to support businesses in accurate and compliant classification for even the most complex of products, supported by the guidance of our customs experts.

Here we look at the unexpected consequences of misclassifying goods and the repercussions it can have across a business if you’re found to be non-compliant by the government.

Repaying underpayments of duty

Underpayments of duty can lead to businesses having to repay the shortfall that should have been initially paid to customs authorities. This is often a meticulous and complex procedure that includes a thorough review of the misclassified products and the subsequent calculation of the correct tariff codes and associated duties, taking up both time and resource from elsewhere in the business. The financial impact of repaying underpayments extends beyond the actual duty amount. There are additional costs associated with conducting internal audits, hiring customs experts or consultants to rectify the misclassification, and possibly engaging legal support to navigate the complex regulatory landscape.

Associated fines with noncompliance

Customs authorities take tariff code accuracy seriously, and any errors can result in penalties that can put strain on a company’s financial resources. These fines are not just nominal; they can escalate rapidly, especially if the misclassification is considered a deliberate attempt to evade duties.

Potential loss of Authorised Economic Operator (AEO) status

AEO status is a coveted designation that provides companies with various benefits, including simplified customs procedures and reduced scrutiny. Losing this status could result in increased administrative burdens, longer processing times, and additional costs associated with adhering to standard customs procedures.

Further audits to ensure future compliance

Following a misclassification of goods, businesses may find themselves subjected to further audits by government authorities to ensure future compliance with customs regulations. This means that customs authorities scrutinise a company’s import and export activities in-depth, aiming to identify any potential irregularities, errors, or intentional noncompliance. These audits typically involve a meticulous examination of the company’s documentation, including customs declarations, invoices, and other relevant records. The impact of these audits is significant. The company may incur additional costs associated with the preparation of documentation, engagement of specialised consultants, and potential legal expenses to navigate the audit process.

Damage to company reputation

Repeated instances of noncompliance may lead to a damaged reputation within the industry. Customers, partners, and stakeholders may view the company with increased scepticism, potentially affecting its competitiveness and market position. The repercussions extend beyond the immediate financial and operational challenges, and can impact the long-term viability and sustainability of a business.

TariffTel’s combination of advanced customs data and our unrivalled team expertise create a precision solution for every business prioritising trade efficiency and growth.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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In a recent tribunal between HMRC and Star Images Enterprises, a licensed dolls and figures importer, the complexity of tariff codes and the correct interpretation of explanatory notes came under the spotlight. The case involved iconic characters like ‘Chucky’ from Child’s Play, ‘The Hulk’ and ‘Captain America’ from The Walking Dead, and highlighted the need for precision in assigning tariff codes, as well as an informed interpretation of the HS book and explanatory notes by experts.

Star Images Enterprises found itself facing two C18 Post Clearance Demand Notices from HMRC for the underpayment of Customs Duty and Import Tax. The root cause? Importing 189 different figures under a zero-rated import code when HMRC say they should have been assigned a tariff code which attracted a 4.7% duty. In tariff classification, the combination of accurate data and expert knowledge is essential to assign the correct tariff code to your goods. Simply looking up a code in the tariff book or an online tool, without considering the section, chapter, and explanatory notes, often leads to a wrong classification and incorrect duty payment. And this is the case here. It’s important to understand the properties of a product when assigning HS codes in order to do it correctly, as explained here in this blog about what makes up a HS and HTS code.

So, why is it crucial for businesses to invest in the right classification platform to assign correct tariff codes?

Risk of errors and unplanned costs

The large number of classification codes available increases the potential for errors, leaving businesses vulnerable to unplanned fines, penalties  and shipment delays if they are caught by HMRC in getting things wrong. In the case of Star Images Enterprises, a seemingly straightforward zero-rated code turned out to be a costly mistake. HMRC argued that the toys and figures should have been classified under a code which attracted a 4.7% duty and this was discovered through a lengthy audit process. Income duties are levied based on commodity codes assigned to the item being imported. Typically, the onus is on an importer to declare which code applies to their items. These codes are diverse and specific and for a lay reader, might be considered similar in attributes, but in fact carry different duties.

Knowledge and expertise matter a great deal in classification

The tribunal between Star Images Enterprises and HMRC shed light on the variations in rule interpretation, emphasising the need for dialogue in the classification process to clarify uncertainties. This is where the expertise of our TariffTel team is invaluable for customers when they come across a particularly complex product as highlighted with M&S and classifying some of their more complex Summer products.

The tribunal unraveled a debate over the main factors which could determine the correct classification, including whether figures represented humans or non-humans, if they were dolls or statuettes, and whether figures with additional items constituted a play set or a figure with accessories. The questions led to broader discussions, such as whether superheroes are human, if character backstory matters, and whether the figure serves a play or display purpose.

To read more of the arguments which both sides used to justify their position for classifying, the full judgement can be found here.

Lessons learned from the Star Images Enterprises case

The case demonstrated that interpretation of classification rules can significantly vary, impacting importation costs and goods’ profitability. The final judgment assigned the 189 figures to five different classification codes, with different suggestions from the importer, HMRC, and the tribunal for the same items.

Having the right classification platform in place is not just a matter of compliance but a strategic move to safeguard your business from costly errors, uncertainties, and unforeseen penalties. The Star Images Enterprises case serves as a poignant reminder that interpretation and customs knowledge should be a vital part of every classification solution. The consequences of getting it wrong are too great.

TariffTel’s combination of advanced customs data and our unrivalled team expertise create a precision solution for every business prioritising trade efficiency and growth.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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