HMRC v O'Neill Wetsuits: Upper Tribunal classifies neoprene wetsuits as textile garments

The Upper Tribunal has allowed HMRC's appeal in The Commissioners for HMRC v O'Neill Wetsuits Limited, overturning a First-tier Tribunal decision that had classified the company's imported wetsuits as rubber apparel under commodity code 4015 9000 00 (Chapter 40). The UT re-made the decision, classifying the wetsuits under commodity code 6113 0010 00 (Chapter 61) as garments made from rubberised textile fabric within heading 5906.

The wetsuits at issue were constructed from neoprene panels. The majority were covered on both sides with a knitted textile (double-sided panels), with a smaller area to the front chest and lower back covered on the inside only (single-sided panels). HMRC had issued an Advanced Tariff Ruling in October 2022 placing the goods in Chapter 61; the FTT allowed O'Neill's appeal and substituted Chapter 40.

The FTT's errors

The UT identified three errors of law. The most significant concerned the FTT's treatment of the HSEN to heading 4008. That note provides that plates, sheets and strip of cellular rubber combined with textile fabric on both faces are excluded from heading 4008, regardless of the nature of the fabric. The effect is a deeming provision: where textile covers both faces, it is treated as serving a function beyond mere reinforcement, and the material falls within heading 5906. The FTT dismissed this HSEN as irrelevant because "the rubber has been further worked" — a conclusion the UT held was an error of law. The question posed by both headings 6113 and 4015 is what the wetsuit is made of, and the HSEN to 4008 directly informs that inquiry.

The FTT also erred in finding, as a matter of fact, that both textile layers were present merely for reinforcing purposes. The only evidence before the tribunal was an email from O'Neill's own representative stating that the inner textile layer "aids comfort." Before the UT, O'Neill's representative accepted that the inner layer served more than reinforcement. The UT found the FTT's contrary finding was not supported by any evidence and was plainly wrong.

The correct classification pathway

Working through the General Interpretative Rules, the UT concluded that both the double-sided and single-sided panels constitute "textile fabrics… covered or laminated with rubber" within Note 5 to Chapter 59. The double-sided panels are not excluded from heading 5906 by the reinforcement carve-out — by virtue of the deeming effect in the HSEN to 4008 — and therefore fall within heading 6113. The single-sided panels, where textile covers one face only and is deemed to serve merely for reinforcement, remain in Chapter 40 under heading 4015.

The UT rejected O'Neill's argument that the three categories in the HSEN to heading 4015 should be read independently. Items (2) and (3) of that HSEN are mutually exclusive: once goods fall within the opening words of Item (2), they cannot migrate to Item (3) to escape the exclusion. The phrase "essential character" in Item (3) does not, contrary to O'Neill's submissions, link that provision inextricably to Rule 3(b) of the GIRs.

Application of Rule 3(b)

With double-sided panels falling under heading 6113 and single-sided panels under heading 4015, Rule 3(b) applied as a tie-breaker. The UT rejected the FTT's approach of conducting an open-ended enquiry into whether the "essential character" of the finished wetsuit was rubber or textile. Rule 3(b) operates within the framework already established by the headings and the notes, not as a freestanding override. The correct question was which type of panel — not which raw material — gave the wetsuits their essential character. The double-sided panels form the overwhelming majority by quantity, weight and role. Rule 3(b) therefore pointed to heading 6113.

The UT noted, without placing determinative weight on it, that its reasoning was consistent with European Commission Regulation (EC) No 2345/2003, which had reached the same classification conclusion for similar wetsuits, albeit that Regulation is no longer of legal effect in the UK.

Copyright & permissions