Preference is typically claimed with a preference certificate, or declaration of preferential origin on commercial documents from the supplier in the country of origin, or the manufacturer of the goods, if the supplier is not the manufacturer (can be long-term or consignment based).

Still, there is a curve ball called ‘Importers Knowledge’. This means that the importer can claim or instruct their forwarder to claim preference of origin under Importer’s Knowledge without any preference-related proof from the supplier/manufacturer.

Great! thought many people, and merrily declared Importers Knowledge of preferential origin as they dealt with ‘J. Fernandez Company’ in Spain. They knew the goods were of Spanish origin because the supplier had told them, so away they went and claimed preference under Importer’s Knowledge, but is this right?

According to HMRC, in order to claim Importers Knowledge, you should be able to meet the following criteria:

You will need to have supporting documents or records which should cover the following:

• The Commodity Code
• A brief description of the production process (including the origin of the goods used)
• If the origin criterion was ‘wholly obtained’, the applicable category (such as harvesting, mining, or fishing and the place of production)
• If the origin was based on ‘sufficiently worked or processed’, give one of the following:
• The value of the product, as well as the value of all the non-originating or, as appropriate to establish compliance with the value requirement, originating materials used in the production
• The weight of the product, as well as the weight of the relevant non-originating or, as appropriate to establish compliance with the weight requirement, originating materials used in the product
• A list of all the non-originating materials, including their Commodity Code (in 2, 4 or 6-digit format, depending on the origin criteria)
• If the goods have been altered or transformed
• Any additional information that will help verify the origin of the goods, should HMRC ask for it

So, unless you, the importer, can produce all of the above to an officer conducting an origin and preference audit, don’t claim Importer’s Knowledge, or you could find yourself in a situation where you are subject to fines and penalties if you don’t have the complete records to support the origin declaration.

One of the only ways Importer’s Knowledge can be successfully used is if the importer is also the manufacturer of the goods (i.e., could be part of the same company/group) and have access to all the manufacturing site records locally, e.g., a shared group-wide computer network.

While you are here you may be interested in some Strong & Herd LLP training courses & live clinics related to this topic:

Understanding Origin & Preference

Understanding Free Trade Agreements