Article:

Post-Brexit Customs Duties – HMRC clamps down on non-compliance and inaccuracies

25 October 2021

Since 1 January 2021, all goods imported into the UK from the EU require an accurate import declaration. As a transitional measure, HMRC allowed businesses to make deferred Customs declarations up to 175 days (nearly 6 months) after the date of import and pay any relevant duty at that stage. For example, for goods imported on 1 March, a deferred declaration and any duty payment must be made by 23 August. However, to qualify for these rules, either the business or their freight forwarder must be authorised by HMRC to use simplified customs declarations processes and have an account to defer duty payments – registering and setting this up can take up to four months.

While these transitional rules apply for good movements up to 31 December 2021, it is vital to remember that this is only a deferral option – Customs declarations (and any duty payments) must be made at some point. With the current lack of resource amongst freight forwarders and customs agents, we are starting to see increasing incidences of deferred and inaccurate declarations NOT being submitted to HMRC.

Who is responsible for declarations?

The responsibility for ensuring that accurate and timely customs declarations have been submitted always remains with the importer, even if the process itself is being carried out by a freight forwarder or customs agent. Therefore, if you have just allowed import arrangements to roll along this year as they have in the past you may be storing up substantial financial problems.

If you are moving goods across to NI from GB you will probably use HMRC’s Trader Support Service (TSS). As an importer, at the moment you cannot sub contract the second (supplementary) declaration process to your haulier and must complete this yourself. If you do not complete the TSS declaration process, HMRC may issue financial penalties, for non-compliance.

If you do not have robust controls and checks over your freight forwarder who is making Customs declarations, how do you know whether any have been made? Ultimately, if no declarations have been made, it is not your freight forwarder that is responsible in the eyes of HMRC, it is you as the importer.

Penalties

The data in customs declarations is still entered into the HMRC system, ‘CHIEF’ manually with the ever-present likelihood of human error. If there are errors in your customs declarations which are not picked up and rectified, HMRC could:

  • Initiate a customs audit at your premises
  • Demand payment from you of any under paid duty and import VAT going back three years
  • Issue financial penalties for non-compliance,(even where there is no customs duty due)
  • Lower your compliance rating more generally across all taxes.

While many duties on goods imported from the EU are now set at zero, even if no duty is payable, HMRC has stated that it will charge penalties for failure to make declarations. Penalties can range from £250 to £2,500 for each failure to make a declaration – some regular importers could be building up large bills if they have not taken Customs declarations seriously.

Customs declarations: a rise in complexity and penalties

How robust are your controls and oversight with freight forwarders and agents? 

When you import goods into the UK or export goods from the UK you, as the importer/ exporter, are legally required to submit a customs declaration to HMRC providing details of those goods and establishing how much duty and import VAT you owe. You may ask your freight forwarder to carry out this process in your name, but you remain legally liable for that declaration: so the key question is – Do you know what information has been submitted in your name?

What could happen if I have errors in my customs declarations?

The data in customs declarations is still entered into the HMRC system (‘CHIEF’) manually with the ever-present likelihood of human error. If there are errors in your customs declarations which are not picked up and rectified, HMRC could:

  • Initiate a customs audit at your premises
  • Demand payment from you of any underpaid duty and import VAT going back three years
  • Issue financial penalties for non-compliance, (even where there is no customs duty due)
  • Lower your compliance rating more generally across all taxes – making enquiries into your other taxes more likely.

Northern Irelands Issues

If you are moving goods across to NI from GB you will probably use HMRC’s Trader Support Service (TSS). As an importer, at the moment you  cannot sub-contract the second (supplementary) declaration process to your haulier and must complete this yourself. If you do not complete the TSS declaration process, HMRC may issue financial penalties, (for non-compliance).

How we can help

Our low-cost Customs Declaration Assessment Tool will analyse all your customs declarations and highlight those with a risk of errors, allowing you to make the necessary rectifications with HMRC - so you can avoid unexpected duty and import VAT demands, costly financial penalties and unwelcome audits/low compliance scorings.

For those that are subject to TSS, we can help you to review historical movement of goods and identify where supplementary declarations are required to be submitted and support you in the submission process. 

For help and advice on putting right your Customs Duty reporting please contact Hakan Henningsson or Juliet Wallwork.