What happens if you underpay import or export duties and who is responsible for the debt.
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 UK or EU, such as:
- anti-dumping duties (ADD)
- Common Agricultural Policy (CAP) charges
- import VAT
Customs debt notification
If HMRC believes you’re liable for customs debt, they’ll send you a letter to let 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’.
If you do not reply within 30 days, or the information you’ve given does not 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.
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.
Make a voluntary disclosure
If you realise you’ve underpaid your customs debt liability you should report it.
If you made your declarations using CHIEF
You should report the underpayment using form C2001. You’ll receive a payment slip you can use to make the payment. If HMRC calculate that a higher figure is due than the amount you’ve disclosed, you’ll receive a C18 for the additional debt.
If you made your declarations using the Customs Declaration Service (CDS)
You should report the underpayment using form C2001CDS. You’ll receive a payment slip you can use to make the payment. If HMRC calculate that a higher figure is due than the amount 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.
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 are 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.
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.
Someone dealing with customs for you
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 UK or EU.
Types of representation
There are 2 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
The representative will be considered to be acting in their own name (and on their own behalf) if they either:
- do not state the type of representation on the customs declaration
- is not empowered to act as a representative
You should keep written confirmation of the type of representation agreed between the agent and the principal.
If an agent acts as a direct representative of the principal, the principal is solely liable for the customs debt.
But if the principal gives clear instructions and the agent makes a deliberate or unreasonable error, the agent may become jointly and severally liable.
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 does not, the sub-agent will not 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.
The agent cannot act directly for the principal if they’re submitting your declarations using:
simplified declaration procedure
entry in the declarant’s records
They can only do this if the principal has authorisation themselves.
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.
Using direct representation for simplified declarations from 1 January
If you’re established in the UK and import goods into Great Britain (England, Scotland and Wales) you can ask someone to act directly, even if they’re making a declaration using:
simplified declarations procedures
entry in the declarant’s records
You should agree with the person dealing with customs for you if you need to have a duty deferment account to make payments or if they’ll use their own.