EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations are made as a consequence of the withdrawal of the United Kingdom from the European Union. Regulation 3 sets out the conditions under which chargeable goods are to be regarded as originating from a country or territory under section 17, and for the purposes of Part 1, of the Taxation (Cross-border Trade) Act 2018 (c. 22) (“the Act”). This includes the condition that the goods are to be regarded as originating from a “beneficiary country” namely an eligible developing country to which one or more of the Generalised Scheme of Preferences (trade preference scheme) frameworks specified in Part 3 of the Trade Preference Scheme (EU Exit) Regulations 2020 (S.I. 2020/1438) apply.
Regulation 3 sets out the conditions that must be met for goods listed in Column 2 of the table in Part 2 of Schedule 1 to be regarded as originating from a beneficiary country. The conditions are that the goods are wholly obtained in that beneficiary country or, where the goods are obtained in two or more countries or territories, that is the last country or territory in which processing of the goods constitutes an important stage of manufacture (for which regulation 7 makes further provision); and that the requirements in regulations 4, 20(1) and, in the case of returned goods, 19 are met (see further below). Regulation 4 provides for the evidence required for goods to be regarded as originating from a beneficiary country. Regulation 5 provides for the notices which HMRC Commissioners may give relating to the provision and verification of evidence of the origin of goods and the arrangements and obligations applicable to an exporter.
Regulation 6 specifies cases in which goods are to be regarded as wholly obtained in a country or territory. Regulation 7 sets out the circumstances in which the processing of goods constitutes an important stage of manufacture by reference to the conditions that must be met as set out in Schedule 1, and the circumstances in which it does not. Regulation 8 provides for the method by which the average ex-works price charged for goods sold, and the average value of non-originating materials used, may be calculated where the conditions specified in the table in Part 2 of Schedule 1 refer to a maximum content of such materials. Regulation 9 provides for a derogation relating to the use of certain materials up to defined weight, price and percentage maxima, in determining under the table in Part 2 of Schedule 1 whether the processing constitutes an important stage of manufacture.
Regulation 10 provides for the circumstances in which identical goods in a consignment must be taken into account individually and packaging must be included in determining the origin of the goods. Regulation 11 provides for the circumstances in which accessories, spare parts and tools dispatched with the goods to which they relate are to be regarded as having the same origin as those goods. Regulation 12 provides for the circumstances in which goods in a set are to be regarded as originating from a beneficiary country. Regulation 13 sets out elements used to process, or in the processing of, goods which are to be disregarded in determining their origin. Regulation 14 provides for the grounds on which the Secretary of State may grant a temporary derogation to a country in respect of specified goods and makes further provision relating to the derogation.
Regulations 15 to 18 make provision relating to different types of cumulation which is the system whereby goods originating from a specified country, or from the British Islands, a British overseas territory (except Gibraltar and the Sovereign Base Areas of Akrotiri and Dhekelia), the European Union, Norway or Switzerland in the case of cumulation under regulation 15, are to be regarded as originating from a beneficiary country when incorporated into goods manufactured in that beneficiary country. Regulations 16 and 17 provide for the two types of cumulation, intra-regional and inter-regional, between beneficiary countries in, respectively, the same regional group and different regional groups. Schedule 3 sets out regional groups for this purpose.
Regulation 19 sets out further requirements relating to goods returned to the exporting country or territory and regulation 20 sets out non-manipulation requirements that must be met to satisfy the conditions under regulation 3 for chargeable goods to be regarded as originating from a beneficiary country. Regulation 21 makes provision for the authorisation of the management of exporters’ stocks of fungible materials (as defined in that regulation) using the accounting segregation method.
This instrument is one of a group of instruments covered by an overarching Tax Information and Impact Note. The TIIN primarily focusses on the Customs Tariff (Establishment) (EU Exit) Regulations 2020 and will be available in due course at: https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.
The Explanatory Memorandum is being published alongside that Tax Information and Impact Note on the same website. There is no significant impact on business, charities or voluntary bodies as this instrument broadly replicates existing European Union legislation.