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HMRC internal manual

Customs Freight Simplified Procedures

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HM Revenue & Customs
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Processing the application: Customs Comprehensive Guarantees (CCGs), Deferment accounts and payment

The trader will have indicated in Section 2 of the C&E48 the CCG and deferment arrangements that they have in place.

The provision of adequate security is a fundamental aspect of CFSP. It is therefore essential that authorising officers ensure that:

  • the CCG/deferment provided is of a sufficient monetary level
  • it adequately safeguards the revenue
  • Customs have the appropriate authority to ‘collect’ against the Guarantee/deferment and
  • the authorised trader has authority to use the form of guarantee/deferment/payment provided.

DMB Banking Southend undertakes in-depth assurance checks on the deferment account before a trader is authorised. These should highlight any past instances of accounting non-compliance and therefore identify any potential risks to the collection to the revenue, eg banks have refused to pay direct debits, the trader’s deferment account level is frequently exceeded, there are inhibits placed upon the Deferment Account Number (DAN), etc.

The authorising officer must complete Form CDO1 (see CFSP14750) with the trader’s details and email it to DMB Banking Southend as soon as possible after receipt of the C&E48. Officers should only complete the trader details at the bottom of the CDO1. DMB will complete the top section. One form is required by DMB Banking Southend per deferment account, not per trader/EORI.

Officers must not issue the authorisation until they have received the completed CDO1 back from DMB. Any risks identified by this check must be addressed by the authorising officer before proceeding any further with the trader’s application. For example if the deferment level is frequently exceeded then the trader must increase its level to a satisfactory amount. If direct debits are frequently rejected the officer should ensure that the deferment amount is increased accordingly. See CFSP12000 for further information regarding CFSP security and payment requirements.

In addition, post 1st May 2016, a CCG must be in place to cover either potential debts or a combination of actual and potential debts. This will apply to new CFSP authorisations or existing CFSP authorisations reassessed to UCC standards due to amendments to the existing authorisation.

Security requirements for Indirect Representatives
Conditions of approval to use client’s DANs for security
Application procedures to use a client’s DAN for security
Authorisation action to use a client’s DAN for security
Aggregation across the tax point
Single rate of exchange

Security requirements for Indirect Representatives

Indirect Representatives (IRs) are required to provide adequate guarantees to cover all goods declared using their CFSP authorisation (ie sufficient to cover all of their own and their clients importations). Please refer to CFSP12200 for further details regarding the guarantee requirements of IRs.

IRs using their clients deferment account number (DAN) or CCG for security will need to adhere to the following conditions and hold the required approval (as explained below).

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Conditions of approval to use client’s DANs for security

In order to use a client’s deferment guarantee (DAN) as security, the trader must:

  • be authorised for CFSP as an IR
  • obtain written approval from each of their clients prior to using their DAN as security
  • obtain written approval from Customs prior to using these procedures
  • regularly monitor that the client’s security is adequate and take immediate steps to inform the client that they must amend/ increase the DAN/authority where it is found to be insufficient
  • have a system in place to:

 

  •  
    • monitor the authorisations total CFSP liability
    • monitor the throughput of each security’s transactions (ie a DAN by DAN reconciliation of the amount of revenue entered in the month against the amount of security provided), and
    • provide adequate security themselves as an IR and monitor that it remains at a sufficient level at all times to cover any amounts not secured by their clients.

Failure to adhere to these conditions will result in the level of security provided by the CFSP authorised trader being increased to a sufficient level to cover the full customs debt.

Note: Both the authorised CFSP trader and their client must be made aware that they are jointly and severally liable for the debt and that Customs may claim against either of these parties to collect any outstanding revenue.

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Application procedures to use a client’s DAN for security

If an applicant is new to CFSP they must indicate in Section 1 of the application form that they wish to be authorised as an IR and complete Section 2 of the form, indicating whose deferment accounts they will use for payment and security purposes. Prior to authorisation, the applicant must provide the following to the authorising officer:

  • a list of the client’s DANs that the IR wishes to be used as security
  • written authority from each client (on their company headed note-paper) approving the use of their DAN as security. The format this authority must take is specified in CFSP18000
  • a worksheet showing the total (average) monthly revenue throughput of the CFSP authorisation
  • a worksheet showing the amount of security to be provided by each clients DAN
  • details of how the balance of the security (ie total throughput minus client’s provisions) will be secured by the CFSP trader (eg their own DAN).

The written authority to be provided by each client must specify the following information:

  • the financial amount of security they will provide
  • assurance that their DAN will be maintained at a sufficient level to cover this security in addition to any other deferment transactions (eg security provided = £20,000, other DAN transactions = £150,000, DAN must be maintained at £170,000 or above)
  • an acknowledgement of their awareness that they are held jointly and severally liable for the customs debt as a result of their use of an IR.

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Authorisation action to use a client’s DAN for security

The CFSP authorising officer will then need to:

  1. perform a satisfactory CDO1 check on the DAN(s) to be used
  2. be assured that the IR has a satisfactory system in place that will monitor the monthly throughput against each DAN to ensure its continued adequacy. In the event that the security limit is reached the authorised trader must immediately increase the security level accordingly.

Once the officer is satisfied that:

  • the DANs are sufficient
  • both the authorised trader and their clients have a good compliance record with DMB Banking Southend and
  • that the revenue is satisfactorily safeguarded

the CFSP authorisation may be progressed.

If the trader is already an authorised IR for CFSP they must obtain written authority from a client to use a new deferment account. See ‘Facility to use customers’ duty deferment guarantee as your CFSP security’ at CFSP18150. The authority must be sent to the authorising officer prior to using the new DAN. The procedures that the authorising officer is to follow are as above. If approved, the C&E 58 authorisation letter must be amended to reflect the new information. Alternatively, the new authority may be annexed to the C&E58 and retained in the trader’s folder.

If at any time there are found to be problems with the security provided or it’s monitoring by the IR, this facility will be withdrawn and the IR will be required to provide the full security.

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N.B. further information as to how to apply to use a client’s CCG will be available as soon as it is available.

Aggregation across the tax point

Any traders wishing to operate aggregation across the tax point will need to apply for formal approval by writing to their authorising office. More details on this procedure can be found at CFSP06300. The completion rules for aggregated declarations are at CFSP06450.

Authorisation is not required to aggregate data on a daily basis.

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