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HMRC internal manual

ATA/CPD Carnets Manual

Compensatory interest: calculating the charging period

The period for which compensatory interest is charged starts from the first day of the month following the month in which the goods were entered under the carnet into the EU. The period runs to the last day of the month in which the customs debt is incurred.

The date of the customs debt is the date that the act of release to free circulation takes place. It is not the:

  • date on which the carnet holder notifies the diversion to customs
  • date the diversion entry is presented
  • date on which the debt is identified.

The minimum period for which interest is charged is one month. If the charging period is calculated as being less than one month, no interest is due.

Example of a calculation

Goods enter the EU on 08/04/08

Goods diverted to free circulation on 19/12/08

Customs notified of diversion on 01/01/09

Duty on goods £510

Compensatory Interest rate in February 2008 - 6.36% pa

Chargeable period starts 01/05/2008 - First day of the month following the month goods enter EU)

Chargeable period ends 31/12/08 - Last day of the month the goods were diverted.

Period for compensatory interest is 8 months

Calculation is £510 x 6.36% = 32.43

32.43 x 8/12 = £21.62

Note: as this is above the €20 de minimis limit the compensatory interest is payable (ATACPD10200).

Goods entered under a carnet released to another procedure with a view to export but subsequently released to free circulation

Any time spent by goods previously entered under a carnet in inward processing, customs warehousing before release to free circulation or inward processing (drawback procedure) is included in the period for charging.

The interest period runs from the first day of the month following the month in which the goods were entered under the carnet to the last day of the month in which the customs debt arises.