Post-Brexit Pitfalls: HS Code Errors Are Costing UK Businesses

Tom Thornton, UK Duty Management specialist at Customs Support Group (CSG), sounds the alarm on the growing risks of HS code misclassification in a post-Brexit world, where one wrong code could mean fines, delays, or even criminal charges.

In the wake of Brexit, the UK introduced the UK Global Tariff (UKGT), a move intended to simplify and liberalise trade policy, and to distinguish the UK from the EU’s Common External Tariff (CET). On paper, it was a step toward independence. In practice, it created a new layer of complexity for businesses already navigating a fragile and fragmented global supply chain.

Some goods saw reduced duty rates. Others were liberalised, such as flour or meal of soya beans, which dropped from 4.5% under the CET to 0% under the UKGT. Some were simplified, like sugar beet seeds, which shifted from 8.3% to a flat 8%.

These changes were designed to stimulate the UK economy by easing the tax burden on importers. But they also introduced a major challenge: divergence. The same goods now carry different commodity codes and duty rates in the UK and EU. For companies operating in both regions, this means maintaining dual classification systems, managing regulatory risk on both sides of the Channel, and ensuring consistency across borders.

A Divided Approach: Inaction vs. Over-Engineering

In my work with major British businesses, I see a growing divide in how classification is handled. On one side are companies that avoid revisiting historic classifications, whether due to resource constraints, outdated systems, or a lack of awareness about the risks. On the other are those attempting to optimise every line of their tariff schedule, engaging in what’s known as tariff engineering.

Done correctly, tariff engineering can be a legitimate strategy. But without expert oversight, it can quickly cross into dangerous territory. Misclassification, whether accidental or deliberate, can result in delays, financial penalties, or even criminal charges.

AI Is a Tool, Not a Solution

The rise of AI has brought new tools to the table. Classification software can now scan product descriptions and suggest codes in seconds. But speed doesn’t equal accuracy.

The tariff is written in legal, often ambiguous language. AI can misinterpret what it’s being asked to find, especially when product descriptions are vague or inconsistent. Before AI, a Google search for “commodity code for teddy bear” might return options ranging from live animals to vehicle parts. Today’s tools are faster, but not necessarily smarter. Without human oversight, automation can amplify errors instead of eliminating them.

One Product, Many Interpretations

Even with the global Harmonised System (HS), classification is far from consistent. Different countries apply different rules, require different product details, and interpret the same code in different ways. Take a bicycle, globally classified under HS 871200. Sounds straightforward? Not quite:

• In the UK, there are six different tariff codes depending on the presence of ball bearings and the country of origin.
• In Russia, there are two.
• In China, there are eight, based on type (mountain, racing, etc.) and wheel size.
• In the USA, there are seven, factoring in tyre type, weight, and wheel diameter, even if the bike is shipped without wheels.

Now multiply that complexity across your entire product catalogue. And remember: different countries require different elements of the product description. If you trade globally, your systems must hold multiple layers of classification data—accurate, up-to-date, and defensible.

Even the Big Names Get It Wrong

Classification isn’t just a challenge for SMEs. Even global brands have stumbled. Marvel famously fought a legal battle in the U.S. over whether X-Men toys should be classified as “dolls representing human beings” (which carried a higher duty) or “toys representing non-human creatures” (which didn’t). Their argument? Mutants aren’t human. The U.S. agreed. The UK didn’t. No duty savings here.

Classification is no longer a back-office task. It’s a strategic function that touches compliance, finance, operations, and reputation. In a post-Brexit world, where divergence is the new normal, businesses must treat it with the seriousness it deserves.

Now is the time to act. Fix the cracks before they become breaches. Because in customs, ignorance isn’t just expensive, it’s dangerous.