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Claiming Preference & Preference Quotas

Understand How to Claim Preference and Use Preference Quotas to Reduce Import Duty

 

 

Customs Preference

Customs preference allows eligible goods to benefit from reduced or zero import duty when they meet the preferential rules of origin set out in a Free Trade Agreement (FTA). In the UK, goods imported from countries with a trade agreement, such as the European Union, may qualify for a reduced duty rate if they satisfy the agreement's origin requirements and the correct evidence of origin is available. 

 

 

How you can claim Preference

Claiming preferential tariff treatment under the UK–EU Trade and Cooperation Agreement isn't automatic. To benefit from reduced or zero customs duty, importers must have the appropriate evidence that the goods meet the relevant rules of origin.
The type of proof required depends on the circumstances.
 
Examples of proof include:
 
  • A Statement on Origin (sometimes referred to as an origin declaration)
  • Importer's Knowledge
  • A movement certificate (such as an EUR1), where permitted by the relevant agreement
  • Other origin evidence specified within the applicable trade agreement.
Preference (12)

There are three ways to claim preference for trade between Great Britain and the European Union:

Importer's Knowledge:

Importer's knowledge is most commonly used where the importer has direct visibility of how the goods are made and where the materials originate, often in related-party transactions. Customs authorities may scrutinise the customs value more closely, as undervaluation can affect both customs value and preferential treatment. As with any preference claim, the supporting evidence must exist when the claim is made and cannot be obtained retrospectively.

Statement on Origin:

A statement on origin is prescribed wording added by the exporter to an invoice or other commercial document, confirming the goods meet the relevant preferential origin rules. The exporter must ensure it is accurate, include a valid REX number for EU consignments over €6,000 where required, and hold evidence to support the claim.
Both the importer and exporter must retain the statement for 4 years, along with supporting documents, as HMRC may request them during a verification check.

Long-term Statement on Origin:

A long-term Statement on Origin allows an exporter to use a single declaration for multiple shipments of specific goods with identical origin, rather than issuing a new statement for each consignment. The statement must specify the period it covers, and if the originating status of the goods changes, a new statement must be issued.
Long-term statements should be provided on company-headed paper and, where possible, include an official stamp. An email can accompany the statement but should not be relied upon as evidence on its own.
Statement on Origin (1)
For long-term declarations, use company-headed paper and, where possible, include a stamp and signature. If the statement is provided on an invoice, ensure the importer has confirmed proof of origin.

Do my goods qualify?

Preferential origin covers goods that are either wholly obtained or sufficiently processed. The rules governing preference vary by trade deal, so it's important to check each one individually, as what qualifies under one agreement may not under another. This can be misapplied where goods are non-originating but shipped from within the trading area. For example, Korean cosmetics shipped from France to the UK wouldn’t qualify for EU preference, as the goods originate from Korea, not the EU. Where there's doubt over the validity of preference, it's recommended to pay duty at the time of import and reclaim later.

 

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Download our 'Claiming Preference' Guide Today!

Learn how to claim preferential duty correctly, understand the different methods of proof of origin, and avoid the common mistakes that could leave you paying unnecessary customs duty. Our guide explains who can claim preference, what evidence is required under different trade agreements, and the checks you should make before importing to help ensure your claims are both compliant and accurate.

Preference Quota

A preference quota allows a limited quantity of qualifying goods from countries covered by a trade agreement to be imported at a reduced or zero rate of customs duty, provided they meet the relevant preferential rules of origin.

The preference provides the reduced or zero duty rate, while the quota limits the quantity of goods that can benefit from that rate. Once the quota is exhausted, the preferential quota rate is no longer available, and the applicable duty rate will apply.

Importers should check the relevant trade agreement and UK Trade Tariff to confirm the rules of origin, quota availability and any specific conditions that must be met before making a claim.

 

Non-Preference Quota

A non-preference quota allows a specified quantity of eligible goods to be imported at a reduced customs duty rate without meeting preferential rules of origin under a Free Trade Agreement.
The reduced rate is available while the quota remains open and the relevant conditions are met. Once the quota is exhausted, the applicable standard rate of customs duty will apply.
 
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Frequently asked questions...

Q. What is preferential origin?

Preferential origin allows eligible goods to benefit from reduced or zero customs duty when imported from countries that have a Free Trade Agreement (FTA) with the UK. To qualify goods must meet specific origin rules agreed between the UK and the exporting country.

Q. How do I know if my goods qualify for preferential duty?

To determine whether your goods qualify, you need to check the rules of origin within the relevant Free Trade Agreement. These rules can vary depending on commodity code, the country of export and the type of goods being imported. You can also check the applicable origin requirements by checking the UK Trade Tariff, which provides details of the rules of origin that apply to different goods and trade agreements.

Goods may qualify if they are;

  • Wholly obtained in the exporting country (for example, agricultural products grown or harvested there)
  • Sufficiently processed or manufactured in that country according to the agreement’s product-specific rules.

The supplier should be able to confirm whether the goods meet the origin requirements and provide supporting information if needed.

Q. What is a statement on origin?

A statement on origin, also referred to as a preference statement or origin declaration, is a declaration made by an exporter confirming that goods meet the preferential rules of origin requirements under the relevant Free Trade Agreement.

The statement allows the importer to claim preferential duty rates when completing their customs declaration. The required wording, format, and whether an exporter authorisation number is needed depends on the Free Trade Agreement being used.

Q. What do I need to claim preference?

To claim a preferential rate of customs duty under a UK Free Trade Agreement or preference scheme, importers must be able to demonstrate that the goods meet the relevant rules of origin. The country of origin is not always the same as the country from which the goods are shipped, so these should not be confused.

The type of proof required depends on the trade agreement or preference scheme being used.

Common forms of proof include:

  • A Statement on Origin (sometimes referred to as an origin declaration)
  • Importer's Knowledge
  • A movement certificate (such as an EUR1), where permitted by the relevant agreement
  • Other origin evidence specified within the applicable trade agreement.

Importers should always check the specific rules of the relevant UK trade agreement, as the acceptable proof of origin, wording requirements and supporting evidence differ between agreements.

Q. Why am I still paying duty if there's a Free Trade Agreement?

A Free Trade Agreement doesn’t automatically mean all goods imported from that country will be duty-free

To benefit from preferential rates:

  • The goods must meet the agreement’s rules of origin
  • Valid proof of origin must be available
  • A valid preference claim must be made on the customs declaration

It's important to remember that the country the goods are shipped from does not necessarily determine whether they qualify for preferential origin. For example, fish products processed or packed in the EU may not qualify for EU preferential origin if the raw materials used do not meet the agreement's origin requirements.

If the goods do not qualify for preferential origin or the required evidence is unavailable, standard third-country duty may apply.

Q. Who is responsible if a preference claim is wrong?

The importer is responsible for ensuring that a preference claim made on their customs declaration is valid. This includes ensuring that the goods qualify for preferential origin and that the required supporting evidence is available.

If a preference claim is found to be incorrect, HMRC may seek to recover any unpaid duty and, depending on the circumstances, additional charges or penalties may apply.

Importers should therefore regularly review their customs declarations and preference claims to ensure they remain accurate. If an incorrect claim is identified, it's important to notify HMRC and correct the error by submitting a duty underpayment. Taking action voluntarily is preferable to HMRC identifying errors during an audit or compliance check.

Q. Can I claim preference if my goods are exported from a different country?

Yes you can, but you must abide by the direct transport rule.The direct transport rule requires goods claiming preferential origin under a trade agreement to be transported directly from the exporting country to the importing country. The purpose is to ensure the goods remain the same originating products throughout the journey.

Goods can usually pass through or be temporarily stored in a third country, provided they:

  • Remain under customs control.
  • Are not released into free circulation there.
  • Undergo no processing other than unloading, reloading, splitting consignments, or operations necessary to preserve their condition.

How it works in practise: Goods originating in Morocco are shipped to Great Britain via France. The goods can still qualify for Moroccan preference in GB if they remain under customs control in France and are not altered or processed there.

The exact requirements vary by trade agreement, but the principle is to prevent non-originating goods from being substituted or modified during transit.