In O’Neill Wetsuits Ltd v HMRC [2024] TC09362, the First Tier Tribunal (FTT) found that wetsuits should be classified as ‘vulcanised rubber’ which has a 4% customs duty rate rather than 'textile' which has a 8% customs duty rate.
UK tariff classifies wetsuits under two categories:
- Code 4015 9000 00: If the primary material is ‘neoprene’. The Customs duty rate is 4%.
- Code 6113 0010 00: If the primary material is ‘textile’. The customs duty rate is 8%.
O’Neill Wetsuits Ltd (ONWL) supplies imported wetsuits to UK customers. The wetsuits are manufactured from cellular neoprene material. They comprise of single and double-lined panels, which are mostly covered with a knitted textile.
- ONWL made an application for an Advance Tariff Ruling (ATaR) to determine the legal classification of their wetsuits as ‘neoprene’ with a duty rate of 4%.
- HMRC rejected ONWL’s application and issued an ATaR certificate which confirmed that wetsuits should be classified as 'textile' with a duty rate of 8%.
- ONWL appealed to the First Tier Tribunal (FTT), arguing that
- The textile layers had no use in terms of the primary function (keeping the wearer warm), the neoprene alone achieves this function.
- The outer surface textile is there to improve durability, whilst the textile lining (i.e., the inner layer) aids comfort.
The FTT found:
- The wetsuits should be classified according to the material which conveys their “essential character”.
- The rubber (neoprene) gives the wetsuits their essential character, which is to provide insulation.
- The textile fabrics that are built into either side of the neoprene are merely for reinforcement, which doesn't contribute to the essential character.
- Neoprene is a ‘vulcanised rubber’ and therefore wetsuits should be classified under ‘an article of apparel of vulcanised rubber', (heading 4015 of the UK tariff). The applicable commodity code is 4015 9000 00 with a duty rate of 4%.
The FFT allowed the appeal.
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