This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Import and National Clearance Hub Procedures

Special directions: post clearance recovery of arrears of duty and VAT: part 1 policy guidelines

The Union Customs Code

The UCC provides for the post clearance recovery of import duties when the amount of Customs duties and duties on agricultural products paid at the time of entry was less than legally due.

The team responsible for Customs Debt is the Duty Liability Team, 10th Floor West, Alexander House, Southend.

Own Resources

Customs duties on agricultural products are not UK revenue. They are Own Resources (OR) of the European Union (EU). The system of Own Resources is defined in Council Decision 2000/597 of 29 September 2000. The Decision is implemented by Council Regulation 1150/2000, dated 22 May 2000 that covers the circumstances in which post clearance recovery of these duties should be made.

These regulations are applied to VAT and Excise although these revenues are not customs duty. However, arrears of both VAT (see VAT Act 1994 Section 16(1)) and Excise duty on imported goods are to be recovered on similar lines as those laid down for customs duty.

Own Resources are paid to the EU on a monthly basis. Each Member State retains 25% to cover the cost of collection. The Code and its implementing regulation 2454/93 cover the circumstances in which post clearance recoveries of these duties should be made.


VAT on importation is charges and payable as if it were a duty of Customs (VAT Act 1994 Part 1 Section 1(4), so the code applies. The Code does not cover the post clearance recovery of Excise duty.

Duty declared

The amount ‘legally due’ is the amount of import duty that should have been collected by the Department at the time entry was accepted and passed (Establishment of a debt Regulation 1552/89).

Binding Tariff Information (BTI) and Binding Origin Information (BOI)

Post clearance action may not be appropriate where the amount of duty declared at entry was based on:

  • BTI issued by Excise, Customs Stamps and Money (ECSM) Classification Advisory Service
  • BOI issued by ECSM
  • BTI or BOI issued by the competent authority in another Member State.

Officers should, of course, ensure that the goods in question are properly covered by the terms of the BTI / BOI and address any concerns regarding validity to the issuing officer.

Other binding information

Where a trader claims that the amount of duty declared incorrectly at entry was based on other information issued by Customs, officers should satisfy themselves that the information was properly issued and can in fact be relied on as binding:

  • This may require reference to the originating office.
  • Advice on tariff classification issued on form C22 is not binding and cannot in itself be used to validate future incorrect tariff classification.
  • Advice allegedly issued verbally by the Classification Advisory Service should be referred for confirmation - records of such advice are retained.

As a general rule, binding information (other than BTI and BOI) can normally be regarded as information:

  • given in writing in response to a specific written request
  • based on complete and correct facts, and
  • which has not been overtaken by subsequent legal provisions or policies.

Errors by Customs

Post clearance recovery action may not be taken where the amount of duty declared was based on an error by Customs. However the definition of Customs error is a complex legal issue. Where Customs error is alleged, advice should be sought from Duty Liability Team.

In general, except for BTI, BOI and specific written information mentioned above, there are few instances where the Department would consider itself ‘bound’ on the basis of information provided. It would not be bound for example where:

  • goods have previously been under-entered and have been cleared by Customs without examination
  • goods have been previously under-entered and have been cleared after examination only for admissibility purposes (eg anti-smuggling checks, plant health etc)
  • clearance of under-entered goods has been obtained on the basis of incorrect information provided by the trader (in which case it may fail to be considered for offence action under Procedure 21 or 22).

Instances and information that might bind the Department

The Department might be bound where:

  • previous under-entered goods have been cleared as entered after detailed fiscal examination
  • where previous under-entered goods have been cleared as entered on a regular basis, over a long period, where documentary checks have been carried out that should have identified obvious inconsistencies or errors in the declaration.

Write-offs of Customs debts

Where post clearance recovery action cannot be taken, other than those in which BTI, BOI (or other binding information) has been accepted, the debt is written off.

Time limit

Recovery action for arrears of duty (except excise only) must be taken within three years of the date when the debt was incurred, usually the acceptance of the entry. However, in cases where the arrears result from an act that has, or could have, given rise to criminal proceedings, and for all underpayments of excise duty, the three year limit does not apply.


The post clearance recovery of a debt is established by the raising of a Post Clearance Demand Note (Form C18). See INCHP06450.

Recovery action in particular is to be taken when:

  • a consignment was entered to the wrong commodity code heading which led to an underpayment of duty or the wrong rate of duty being used for calculations
  • a consignment was incorrectly entered to a quota
  • a consignment was incorrectly granted preference and full Customs duties / VAT were not called for at the time of entry, and
  • there was an error in calculations which led to an underpayment of duty and / or VAT.

Non-entry in the accounts

Customs debt does not need to be entered in the accounts when it:

  • has been invalidated by a court decision
  • was the result of a Customs error that was not reasonably detectable by the debtor.

Customs error includes failure:

  • of Customs to object to an error after large numbers of declarations were accepted after a long period of time
  • to detect errors when checking documents, after a physical examination of the goods, making post clearance checks or audit of the company concerned very difficult.

Customs error also refers to mistake by third country authorities in issuing preference certificates.

If you consider the trade has a case under the second bullet point, report the facts, supported by the relevant documents, to Duty Liability Team, 10th Floor West, Southend.

Minimum amount recoverable

No post clearance recovery action is to be taken where the amount of import duty involved for any recovery action on an individual importation is less that €10 rounded up to the nearest €. Where a single declaration is involved the limit is applied to each item on that declaration. Where a number of declarations are involved, the €10 (rounded up) limit is to be applied to each item of each individual declaration.

The appropriate exchange rate to reach the current amount in sterling is found on the CHIEF Notice board or Customs web page under Import & Export > Rates, Codes & Tools.

The limit does not apply to import VAT which has a deminimis value limit for consignments under €22.

The non-VAT DMU in Liverpool initiates enforcement action for outstanding post clearance demands.

Customs Directorate involvement

A Customs debt may arise from use of an incorrect valuation method or under valuation. Guidance on the Audit of Customs Values (GACV) provides guidance on the audit of customs values, Notice 252 deals with the valuation of imported goods for customs purposes, VAT and trade statistics. The advice of Duty Liability may be sought in cases of doubt or difficulty.

When taking post clearance recovery action officers are to bear in mind that customs and agricultural duties form part of the Own Resources of the Union. As such the Union is entitled to receive them in full and expects any shortfall to be made good from national resources. In the following types of cases of difficulty involving post clearance arrears advice maybe sought from Customs Directorate:

  • the arrears are deemed to be irrecoverable in circumstances other than those set out in above, or
  • the trader has requested time to pay or has asked for payment to be made by instalments, or
  • the debt is outstanding and subject to enforcement action by the non-VAT DMU.

In regulation to (b), interest must be charged on arrears of Customs duties and CAP charges notified after 1.7.90. This is a mandatory requirement on Member States under Regulation (EEC) 1854/89 Article 19.

Time to pay (TTP)

Time to pay request are normally dealt with by the non-VAT DMU, Liverpool.

TTP agreements involving Customs debt (C18s or Union Transit movements - but not import VAT or Excise duties) are generally subject to interest charges.

Any TTP agreements must be notified to the C18 originating office. The DMU is responsible for notifying both the originating office and the NCH 18 Team, 1st Floor West, Ralli Quays, Salford, M60 9LA, of all receipts under TTP agreements so that VAT certificates can be issued and to ensure that the Own Resources returns forwarded to Finance are both accurate and complete.

Any delay in bringing receipts to account in contrary to EU Own Resources regulations and could result in interest being charged by the EU. Consequently, each instalment must be brought to account immediately against the relevant CECAS account code. Instalments must never be placed on Miscellaneous Cash Deposits (MCD) pending receipt of the total debt. Where the instalment agreement covers more than one C18 the earliest debt is to be credited first.


A number of circumstances exist where no action for recovery is to be taken by the Department. These cases are referred to as ‘non-recovery’. In cases of non-recovery, no OR debt has been established and therefore the UK is not required to pay to the EU the amount of OR involved.

Cases concerned with Article 220.2(b) are covered by INCHP06050.

Details of other cases of non-recovery should be reported to Customs Directorate. They will make a decision on the question of non-recovery and forward the cases to the Customs debt team who will report them to the EU on a six-monthly basis.


Guidance on write-off can be found in the Tax Accounting Policy Framework.

It is important to note that, even though a debt is written-off, the UK might still have to make funds available to the EU depending on the circumstances involved. When a write-off is prepared / authorised, it is essential that full consideration is given to the possibility of official error and a decision made as to whether the write off should be funded or not.

Non funded write-offs exceeding €10,000 (£7,000) are included in the annual report to the Commission under Article 17.3 of Regulation 1150/2000 and the Commission has six months to decide if own resources should be made available. Consequently, all Own Resource implications must be considered in full prior to any authority for write-off.

Charges for post clearance recovery

Although importers and / or agents may be directly responsible for the need to take post clearance recovery action no administrative charges are to be made for any of the additional costs involved. This work is part of the general duty to collect and manage the revenues of Revenue and Customs.