Commodity codes, collectibles and VAT

There’s a famous story about modern art and commodity codes. In 1926, renowned modernist sculptor Constantin Brancusi shipped a consignment of his work to the United States. Upon inspecting the consignment, customs officials refused to accept that one of the items, ‘Bird in Space’, was a work of art. Instead, officials classified the elegant abstract bronze as a household item, with correspondingly higher customs duties.

Brancusi eventually went to court to contest the decision. Fortunately, we don’t have to concern ourselves with abstract philosophical questions about what defines a work of art. Instead, anyone importing artworks and collectibles needs to understand the role of commodity codes. These can determine how much import VAT you will be required to pay. 

Paying too much import VAT on collectibles

We recently considered the case of independent antique dealers who were unable to determine the correct commodity code for an antique lamp. That posed a difficulty, as an antique lamp would be eligible for a reduced rate of import VAT. By contrast, if they used the commodity code for a light fixture, the standard VAT rate would apply.

Guidance on UK imports

HMRC has just issued guidance on valuing goods for import into the UK, which includes a list of items eligible for a reduced evaluation. 

As we can see, the correct commodity code needs to be used to demonstrate not just that an item is a work of art, but what type of production process was involved.

For example, commodity code heading 9701 includes, among other things, painting and drawings composed by hand. Whereas commodity code heading 9702 covers engravings, prints and lithographs (limited editions of works of art produced by mechanical reproduction).

Antiques and collectibles

To qualify for reduced VAT, antiques (that are not works of art or collectors’ items) must be at least 100 years old. Items of historical significance, on the other hand, must be less than 100 years old.

Collectors’ items that fall under headings 9704 and 9705 are also eligible for a lower evaluation. Examples include postage stamps and first day covers (heading 9704) and botanical, mineralogical and historical items (heading 9705). 

Determining precisely which items are eligible for a lower evaluation, and which commodity codes apply, is often very complex.  Importers should seek expert advice if they need clarity or assistance securing preferential rates.

Full clarity and guidance on global trade

Global trade is complex whether you’re shipping agricultural products or machinery or a collection of rare coins. Optimising your import process is about more than simply avoiding penalties. It should be about taking advantage of all opportunities to save on customs duties, VAT and logistics costs. reTRADE, powered by VAT IT, is a complete trade solution that will ensure your goods get where they need to be, as efficiently and cost-effectively as possible.