Security for debt and payment requirements
Information about security for debt and payment requirements.
A guarantee is not part of the conditions to grant the authorisation for Simplified Customs Declaration Process (SCDP) under UCC and UK Customs legislation (as was the case previously in the CCIP legislation).
However, where a customs debt is incurred, a guarantee is required, related to the simplifications. Where the payment of the amount of customs duty is deferred such guarantee must be in place before the use of the simplifications.
Where required a separate application for the guarantee or for deferred payment must be submitted and a separate authorisation must be granted.
Further details on the level of guarantee required can be found in the level of deferment guarantee required section of this handbook.
Application and Authorisation approval notification requires that the SCDP authorisation holder holds a duty deferment account (DDA) and is therefore approved to defer payment of a liability.
Where SCDP transactions are concerned, the initial declaration (Simplified Frontier Declaration (SFD) or entry in records) does not state the payment account details. Therefore, HMRC require security for payment via a deferment account. The deferment account may be backed by a guarantee or subject to a waiver. The debt is not fully secured until the SD quoting the DDA has been lodged.
For SCDP, all payments of revenue must be made through a DDA. Other methods of payment such as, Immediate payment or Flexible Accounting System (FAS) or Cash Account payments cannot be accepted.
To account for VAT, SCDP authorisation holders may choose to use the Postponed Vat Accounting system which allows businesses to pay and recover the import VAT on the same VAT Returns, as opposed to paying the import VAT in advance and then reclaiming it through a VAT Return. This avoids the negative cash flow impact of paying VAT at the time of the import.
Only an SCDP authorised DR or an SCDP authorised Indirect Representative (IR) can use a deferment other than their own deferment for payment. They must provide details of their clients and their DDAs with their SCDP application.
If an authorised Direct Representative (DR) or authorised IR wishes to use the deferment facilities of their clients, they may do so providing each client gives written authority for use of their facilities. If one of the clients refuses to give authority, or does not have a DDA, then the SCDP authorised IR or SCDP authorised DR would need to provide their own DDA to account for all revenue due on those transactions.
Holding a deferment account is a condition of SCDP authorisation and there are different requirements for Great Britain and Northern Ireland.
A Customs Comprehensive Guarantee (CCG) is required to operate a DDA in Northern Ireland. Where a guarantee is required, the level of the guarantee can vary, as it is possible to request a reduction in the amount a guarantor needs to provide to 50% or 30% of the debt covered by the CCG.
Read Check if you need a customs guarantee and the Guarantee handbook for guidance on CCGs.
Application to use Simplified Import VAT Accounting (SIVA) can reduce the amount of the guarantee required for a duty deferment account so it only covers duty, not VAT. Excise Payment Security System (EPSS) allows traders to defer or make payments of excise duty without having to provide a guarantee.
Read Excise Payment Security System (EPSS): authorisation criteria for guidance on EPSS.
You may be able to obtain a DDA with a full guarantee waiver. If you are not eligible for a waiver, then you must provide a financial guarantee to use a DDA in Great Britain.
Read Check if you can get a guarantee waiver for a duty deferment account in Great Britain for guidance on Guarantee waivers in Great Britain.
SCDP Authorised Indirect Representative
As an SCDP Authorised Indirect representative, the SCDP authorisation holder is jointly and severally liable with their client for all customs debts arising from the importation of goods through their SCDP authorisation. As the authorisation holder they must have a DDA. If not eligible for a guarantee waiver, they are required to provide a sufficient Customs Guarantee to cover the duty liability for all goods declared using their SCDP authorisation, which is not otherwise secured. DDAs must follow the requirements for Great Britain or Northern Ireland as above. When using their own DDA for payment, the SCDP Authorised Indirect Representative (IR) must ensure that their DDA limit is sufficient and that where required, the guarantee is provided to cover all of their own importations (if they have any) and those of their clients.
For Authorised IRs, the duty may be paid in one of two ways. The authorised trader may wish to use:
- their own duty deferment account
- their clients deferment accounts to cover their clients SCDP declarations
SCDP Authorised Direct Representative
As an SCDP Authorised Direct Representative (DR), the SCDP authorisation holder is not jointly and severally liable with their client for all customs debts arising from the importation of goods through their SCDP authorisation.
As the SCDP authorisation holder they must have a DDA. If not eligible for a guarantee waiver, they are required to provide a sufficient Customs Guarantee to cover the duty liability for all goods declared using their SCDP authorisation, which is not otherwise secured. DDAs must follow the requirements for Great Britan or Northern Ireland as above. When using their own DDA for payment, the SCDP Authorised DR must ensure that their DDA limit is sufficient and where required, the guarantee is provided to cover all of their own importations (if they have any) and those of their clients.
For Authorised DRs, the duty may be secured in one of two ways. The authorised trader may wish to use:
- their own duty deferment account
- their clients deferment accounts to cover their clients SCDP entries
Monitoring of deferment guarantee arrangements
It is the SCDP Authorisation Holder’s responsibility, as part of their SCDP authorisation, to ensure that their DDA limit and Customs Guarantee level (where one is required) is sufficient at all times to cover their SCDP transactions (and any standard import entry transaction they may also have).
In the case of SCDP authorised IRs and SCDP authorised DRs, the SCDP authorisation holder should be made aware that their supervising Office or Officer must be informed each time they begin SCDP operations on behalf of a new client. This increase in traffic should then be reflected by a corresponding increase in the level of deferment, where the SCDP authorised IRs or SCDP authorised DR’s DDA is being used.
Where a Guarantee waiver is held by a SCDP authorisation holder, the waiver will be reviewed as HMRC carry out annual checks to ensure that the holder of the waiver continues to meet waiver criteria.
Standing authority provision on CDS is also required.