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HMRC internal manual

Customs Authorisation and Approval

Guarantee Requirements for Customs Authorisations and Approvals: Guarantee limits for potential debts

The guarantee limits (reference amount) for potential debts will be calculated using the following methodology:

·        Maximum value of goods to be held under each procedure at any point in time (Column B). 

This does not necessarily need to be established by proven invoice values, it can be arrived at by the average throughput value of goods in a given period, value of goods covered for the premises by an insurance policy, company accounts.  Consideration should be given to any method which the economic operator and customs authorities agree gives a realistic value for the goods on which to base duty calculations.

·        The highest duty rate applicable to the goods (this does not take account of any quotas, preference and should include any potential ADD – Column C).

The guarantee limit (reference amount) and guarantee requirements will be calculated by inserting these figures (for each regime or procedure to be covered by the guarantee) into the Potential Debt Calculation Schedule below: 

Potential Debt Calculation Schedule          
A B C D E official use only F official use only
Customs procedure Maximum value of goods within procedure at any time Highest Duty rate applicable to the goods Estimate of Charges    

= B X C%

Maximum liabilities allowed in the procedure at any time (revenue suspended) Guarantee level authorised
  Amount of guarantee required
= D X E%            
  Inward processing £10,000 5 500 30% £150
  Warehousing £20,000 5 1,000 30% £300
  Totals - potential debts £30,000 NA 1,500 NA £450


This gives the economic operator’s Potential Debt calculations as follows:

·        Potential Debt reference amount (guarantee limit) = £1,500 (column D total)

·        Potential Debt guarantee requirement: £450 (column F total)

Care needs to be taken when making these calculations that as goods move from one procedure to another that they do not get ‘double’ counted, for example, goods move from temporary storage to processing.   A suggested method for identifying the reference amount for potential liabilities in this scenario is to take the average value of goods within each procedure over a 1 month period.



Economic operators should list each procedure operated and the average value of goods held concurrently in each at any given time.  This amount may then be multiplied or divided according to the average length of time goods remain within the procedure.

It must be ensured that the overall reference amount calculated for potential debts is sufficient to fully cover all goods held in duty suspense at any point in time.  The guarantee must remain in place for the entire time the authorisation is held and goods remain under the procedure.

Any calculation provided by applicants must be verified to ensure this need is met.  Where there is doubt that the applied for ‘Reference Amount’ will be sufficient, the authorising officer should agree with the applicant a satisfactory reference amount.