Duty management and closing stock balance systems
How to use duty management and closing stock balance systems to support your commercial stock records.
A duty management system is a software package usually provided by software suppliers to warehousekeepers to support their commercial stock records. It will contain various modules to perform declaration procedures or stock accounting for customs warehouses and other special procedures. In most cases they will form part of the customs warehouse stock account as the data contained within them is critical to maintaining an audit trail and is usually the point of reference to the customs declaration of entry and discharge.
The responsibility and accuracy of the system lies with the warehousekeeper.
The standard requirement is that customs warehouse stock records must always show the current stock of goods under the procedure (real time).
Records must be kept for a minimum of 4 years after the goods have been discharged from the procedure.
The customs warehousekeeper must be able to facilitate the updating of stock records at the request of an officer from HMRC. This will enable the officer to accurately view the current stock of goods under customs warehouse procedure.
For further advice on whether duty management software system meets the requirements, contact the supervising office. Details of the supervising office can be found in the customs warehousing authorisation letter.
To be authorised to use a duty management system, the following conditions must be met:
- allow for a full audit of the warehousing arrangements including physical examinations when required and any documentation for goods released to free circulation can be checked
- together with commercial stock records, it should contain all the relevant information necessary for the operation, validation and integrity of the warehousing arrangements
- identify goods with a tariff preference or quota or licensing restriction and make sure the appropriate certificate or licence is available prior to removal of the goods to free circulation
- stock records must be updated as soon as information becomes available but no later than before midnight of the following warehouse operation day, when a duty management system used in support of a commercial system
Software that has not been approved by HMRC cannot be used.
The duty management system can be updated:
- on a transaction-by-transaction basis
- by adjustment using the closing balance system (after receipts have been added and deliveries subtracted from the previous day’s balance)
- by applying separate files (suggested order of application — receipts, removals, adjustments)
When this update is completed, HMRC can confirm whether the removal is from duty suspended stock or duty paid stock.
The closing stock balance system is a type of duty management system that can be provided by software suppliers to administer control of the customs warehouse stock and to enable Simplified Customs Declarations Process (SCDP) declarations to be made. It is usually interfaced with commercial records.
When the closing stock balance is being used the details of consignments, quantities and dates of removal are entered into the commercial records before removal, with the duty management system being updated later.
A duty management system that cannot meet the above requirements will not be approved for customs warehousing purposes.
It is not allowed to attempt to co-ordinate updates to coincide with Simplified Customs Declaration Process (SCDP) notifications, as this is not adequate for customs warehouse purposes.
The commercial records and duty management system are to be regarded as one system and therefore constitute the customs warehouse stock account for the purposes of:
- the SCDP Entry in Declarant’s Records (EIDR) authorisation
- the stock records
Closing stock balance systems will be authorised provided the following conditions are met:
- the duty management system is fully updated as soon as information becomes available but no later than before midnight of the following warehouse operation day
- the commercial system and the duty management system can be regarded as one system for the purposes of:
- Entry in Declarant’s Records (EIDR) authorisation
- stock records
- the trader has arrangements in place to make sure that duty suspended stock has the appropriate documentation available (such as licences or proof of origin) before it is accessed for pick or removal to free circulation
- there is an audit trail from the commercial system to the update of the duty management system
- it is possible to carry out physical examinations (if required) and any documentation for release to free circulation can be related to the goods
- if common storage has been approved, the system can identify equivalent products for example, by product code and apply the rules correctly (for example the goods have the same 8-digit commodity code, commercial quality and technical characteristics)
- if Agricultural Policy or Common Agricultural Policy (CAP) for Northern Ireland goods are included the requirements are fully met
Before any closing stock balance system is authorised, it will need to be tested to make sure that it can handle the proposed volume of goods to be entered and removed. The warehousekeeper should provide evidence that this testing has taken place.
The interfaces and reconciliations between inventory system and the Simplified Customs Declaration Process (SCDP) messaging system will be tested by HMRC as part of the assurance activity. If any new contracts for the storage of different goods to those covered by the authorisation are taken on, they will need to be covered by the authorised inventory system. If a closing stock balance system has been authorised and is found to no longer meet the criteria detailed in approving closing stock balance systems in the duty management and closing stock balance systems section of this handbook, contact the authorising office immediately for advice.
Duty management systems may be operated by the warehousekeeper or a third party. When maintained by a third party, the warehousekeeper must always have access to the duty management system records, preferably view only access or by daily reporting of data relating to receipts, deliveries, adjustments and balances.