Business tax – guidance

Customs seizures and penalties

Penalties and seizures for contravening customs laws and duties and actions HM Revenue and Customs (HMRC) can take.

Introduction

The penalties for import duty and excise duty operate under separate legal systems depending on whether a contravention is committed under laws relating to customs or the operation of excise.

This guide covers penalties and seizures relating to customs duties only.

Notice 209: civil penalties - fixed, geared and daily has guidance on excise penalties.

Customs penalties

HMRC can impose civil penalties if you contravene customs or import VAT rules and regulations. The type of penalty imposed will depend on the nature of the contravention.

There are 2 main customs penalties that operate under civil law:

  • Customs Civil Penalties (CCPs)
  • Customs Civil Evasion Penalties (CCEPs)

Importing restricted goods without the correct documentation, and the importation of prohibited or counterfeit goods will be dealt with as a criminal offence.

Customs Civil Penalties (CCPs)

Customs civil penalties (CCPs) may be imposed if you’ve not followed statutory requirements for various types of customs duty, import VAT, and export procedures.

Notice 301: civil penalties for contraventions of customs law explains how HMRC calculate and notify you about CCPs for contraventions of legal requirements.

If you discover and voluntarily disclose a contravention to HMRC you may not receive a penalty. You must tell HMRC in writing, and at a time when you had no reason to believe that HMRC were making enquiries about any Customs Duty issues.

CCP warning letters

If HMRC believes you’ve contravened regulations, they may send you a warning letter and in certain circumstances financial penalties can also be issued. Notice 301 explains the warning process for civil penalties for contraventions of customs law.

A warning letter will give details of the alleged contravention, along with advice that if there’s a further broadly similar contravention within a 2 year period a penalty demand may be issued.

CCP warning letters stay on record for 2 years. If there’s a further contravention after 2 years have passed, a new warning letter lasting another 2 years or a penalty demand may be issued.

Warning letters for deficiencies in systems or records tell you what you must do to comply. HMRC will give you a deadline to make any corrections by. If you fail to comply, you may be issued a penalty.

HMRC won’t send a warning letter first if the error is serious. Officers may issue a penalty demand for a first contravention in cases where the resulting customs debt is £10,000 or more, or if traders or agents have already been given written guidance or warnings by HMRC.

The civil penalty officer will make this decision after evaluating the circumstances.

Disagreeing with a customs warning letter

If you don’t agree with the CCP warning letter, you can request a departmental review by someone not involved in the decision or you can appeal to an independent tribunal.

Calculating a CCP

CCPs for regulatory breaches are gradual. The minimum penalty is £250 and the maximum penalty for further breaches is either £1,000 or £2,500 for more significant breaches.

If you’ve got a reasonable excuse for the contravention HMRC may decide that there’ll be no liability for a penalty. Every case is judged individually, and penalties can be reduced for certain mitigating circumstances. Notice 301 has more information.

Customs Civil Evasion Penalties (CCEPs)

HMRC will impose a CCEP on you when it’s satisfied that customs duties or import VAT has been evaded or sought to be evaded, and dishonest conduct can be established.

This could be through a false declaration or if you’ve claimed any repayment rebate, drawback, relief, exemption or allowance that you’re not entitled to.

Duties and relevant taxes covered by CCEPs include:

  • UK customs duty
  • EU customs duty
  • import VAT
  • customs duties in the agricultural sector

Notice 300: customs civil investigation of suspected evasion has more information about CCEP compliance checks.

The CCEP compliance check isn’t a criminal investigation, but if you give information that’s outside the subject of the check or information that’s untrue, whether verbal or in any document, it may lead to prosecution.

These procedures don’t affect HMRC’s ability to seize goods liable to customs duty. In normal circumstances you’ll be able to reclaim seized goods when you’ve paid the CCEP and the duty and import VAT that’s due.

CCEPs don’t apply to offences involving prohibited or restricted goods. In these instances, you may be prosecuted.

Calculating a CCEP

CCEPs are calculated as a percentage of the duty or import VAT that’s been evaded or sought to be evaded.

If you fully co-operate in the compliance check, the amount of penalty payable may be reduced. An early and truthful admission of the extent of the evasion will attract a considerable reduction.

Reductions for co-operation

Although you don’t have to co-operate with a HMRC compliance check, the penalty may be reduced further if you do.

If you choose to co-operate, you must:

  • attend interviews (where necessary)
  • provide information promptly
  • answer all questions truthfully
  • give the relevant information to establish the true liability
  • co-operate until the end of the compliance check

When HMRC are considering a reduction of any penalty they’ll decide how:

  • much information was given (including any unpaid duties)
  • soon it was given
  • it contributed towards settling the compliance check

Notice 300: customs civil investigation of suspected evasion explains more about reductions.

Penalties and interest

There are a number of different ways you can pay a HMRC penalty.

If customs duty debts are not paid by the due date, HMRC will charge interest. The rate of interest is set in accordance with Section 197 of the Finance Act 1996.

What to do if your business can’t pay what it owes HMRC.

Disagreeing with a penalty

If you disagree with a penalty decision made by HMRC or UK Border Force (BF) you can either:

  • request a review of your case by a different officer to the one who made the original decision
  • appeal against the decision to an independent tribunal

If you don’t agree with a decision, you have 30 days from the original decision to appeal to HMRC or BF.

Putting things right

If you’re unhappy with the service you’ve had from HMRC or BF, you should contact the person or office you’ve been dealing with and they’ll try to put things right. If you are still unhappy, they’ll tell you how to complain.

Customs seizures

HMRC may seize goods or vehicles in the UK. BF may do the same at the UK border.

They can detain or seize goods and the containers or vehicles carrying them when the correct duty and or import VAT has not been paid, or when they have been used to carry, or are packed with goods that are liable to forfeiture.

When HMRC or BF seize goods or vehicles, you can:

  • challenge the seizure if you disagree with it
  • ask for the seized things to be given back
  • complain about the way HMRC or BF officers treated you

If traders or individuals have things seized by HMRC or BF, they will receive either a:

  • Notice of Seizure through the post if no responsible person (such as the owner or their agent) were present when the things were seized
  • Seizure Information Notice (Form ENF156 for HMRC seizures and BOR156 for BF seizures) handed to a responsible person if one was present when the things were seized

If you, as the owner of seized goods believe they were correctly seized by HMRC or BF, the matter will be closed.

Read Notice 12A: what you can do if things are seized by HM Revenue and Customs if you believe that HMRC or BF seized the goods incorrectly, or if you want them back.

Seizure of vehicles

When HMRC or BF officers seize goods in transit, they can also seize the vehicle that’s carrying the goods.

Notice 12A: what you can do if things are seized by HMRC has more detailed information about seizures.

Challenging a seizure

You can, as a trader or individual, challenge the seizure of goods or a vehicle by sending a Notice of Claim to HMRC.

The notice must be received within one month of the seizure otherwise you’ll not be able to challenge it. There’s more information about challenging seizure in section 2 of Notice 12A.

Return of seized goods

You can, as a traders or individual, write to HMRC asking for the return of goods, even if you agree the goods have been legally seized. This process is called restoration.

You can both challenge a seizure and apply for restoration at the same time.

Even if the one month limit to challenge a seizure has passed, you can still can ask for restoration.

Making a complaint

Both HMRC and BF have a complaints procedure you can use if you’re unhappy about the way you were treated during a seizure.

You can’t use this process to complain about the actual seizure – for that you need to complain to the person or office you’ve been dealing with. Section 5 of Notice 12A details how to make a complaint.

If you’re still unhappy, you can apply to the Adjudicator.

Further information

Notice 34: intellectual property rights
Intellectual property rights are protected and customs officers can help you if you suspect your rights are being infringed.

Excise: enquiries
Contact HMRC with your questions about alcohol, tobacco, fuel and gambling duties, warehousing and moving excise goods.

Customs, Excise and VAT fraud reporting
Contact HMRC to report all types of smuggling, misuse of red diesel, customs, excise and VAT fraud.

Appeal and tribunal application information
You can appeal to the First-tier Tribunal (Tax) if you want to challenge some HMRC or BF decisions.