Guidance

Customs debt liability

What happens if you underpay import or export duties and who is responsible for the debt.

What a customs debt includes

A ‘customs debt’ is the amount you owe for import or export duties. ‘Import duty’ is any customs duties payable on goods imported into the EU, such as:

  • anti-dumping duties (ADD)
  • Common Agricultural Policy (CAP) charges
  • Import VAT

Legislation

This information is based on the Union Customs Code (Council Regulation 952/2013), Commission Delegated Regulation 2015/2446 and Commission Implementing Regulation 2015/2447.

It replaces older guidance based on Council Regulation 2913/92 and Commission Regulation 2454/93.

Customs debt notification

If HM Revenue and Customs (HMRC) believes you’re liable for customs debt, they’ll send you a letter letting you know the decision they intend to make. You have 30 days from the date the letter was issued to reply with any information that might affect this decision - this is known as your ‘Right to be heard’ (RTBH).

If you don’t reply within 30 days, or the information you’ve given doesn’t change HMRC’s decision, you’ll receive a post clearance demand note (C18) to inform you that the customs debt is now due, along with instructions on how to pay.

If you still disagree with the decision you can submit an appeal.

Make a voluntary disclosure

If you realise you’ve underpaid your customs debt liability you should report it using form C2001. You’ll receive a payment slip to enable you to make payment. If HMRC calculate that a higher amount is due than what you’ve disclosed, you’ll receive a C18 for the additional debt.

Interest on customs debt

You’ll be charged interest on any debts paid more than 10 days after the issue of the C18. You’ll be notified of the interest charge separately, after payment of the debt. The minimum charge is £25.

Time limit for recovery action

HMRC have 3 years from the date the debt was incurred to notify you of the debt. This is normally the date of the customs entry. There’s no time limit applied to voluntary disclosures.

If the debt is the result of an act that could have resulted in criminal court proceedings at the time it was committed then notification and recovery can occur after the 3 year limit.

Who is liable

The person or organisation who made the customs declaration relating to the goods being imported is liable for the customs debt (the ‘debtor’).

If you’re the declarant but use an agent or representative to make a customs declaration on your behalf, they may be liable depending on the type of representation.

VAT Groups

The debtor will be the member company which makes the customs declaration and potentially an agent acting on their behalf, depending on the type of representation.

Representation and agent liability

A person or organisation (the ‘principal’) may appoint an agent to act on their behalf, provided the agent is established within the customs territory of the EU.

Types of representation

There are two types of representation. They are:

  • direct representation, where the representative acts in the principal’s name - using code 2 in box 14 of the customs declaration
  • indirect representation, where the representative acts in their own name but on behalf of the principal - using code 3 in box 14 of the customs declaration

If the representative doesn’t state the type of representation on the customs declaration, or is not empowered to act as a representative, they’ll be considered to be acting in their own name on their own behalf.

You should keep written confirmation of the type of representation agreed between the agent and the principal.

Direct representation and customs debt liability

If an agent acts as a direct representative of the principal, the principal is solely liable for the customs debt.

However, if the agent is the holder of the authorisation for a customs procedure (such as Inward Processing or a customs warehouse) that the goods have been placed under, they’ll be responsible for any debt arising as a result of:

  • that procedure not being discharged correctly
  • any action taken by them that caused goods to be unlawfully removed from customs control

If the agent wants to delegate tasks to a sub-agent, the agreement between the agent and the principal must make an allowance for this. If it doesn’t, the sub-agent won’t be empowered to directly represent the principal and will be considered to be acting on their own behalf, and fully liable for any customs debt that arises.

Indirect representation and customs debt liability

If an agent makes a customs declaration as an indirect representative of the principal, the agent and principal will be jointly liable for any customs debt. HMRC may seek payment from either the agent or the principal.

If an agent delegates the task of making a customs declaration to a sub-agent, then the sub-agent and principal will both be liable for any customs debt. If the sub-agent is an employee of the agent, the agent may also be liable.

Customs Freight Simplified Procedures (CFSP) and representation

If you’re an authorised CFSP operator making a declaration on behalf of a principal this must always be indirect representation. This is because the declarant must be the holder of the CFSP authorisation.

Published 28 April 2016