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HMRC internal manual

Oils Technical Manual

Central accounting points: System overview:

Duty deferment approval

The Deferment Approval Number, oftened shortened to DAN, when prefixed by a number 7, allows an oil company to defer any excise duty liable on product removed from duty suspension, during an accounting period (15th of one month to the 14th of the next) until the last business day of the latter month. It should normally be prefixed by a 7 if it is for oils rather than alcohol or tobacco duty deferment, ex-UK warehouse.

The deferment facility is of great financial advantage to an oil company as it means they are not required to pay the duty on product they remove from duty suspension for up to six weeks.

Financial security

Security for deferment of duty must be provided in the form of a guarantee underwritten by an approved guarantee society. Most banks and insurance companies have this approval. (This is overseen by Central Deferment Office (CDO), which is part of DMB, Southend-on-Sea. Guidance A1-2 also refers).

Companies who are not on the approved list but wish to stand as surety for deferment guarantees may apply to CDO to be accepted.

The guarantor agrees to cover every sum deferred up to the overall maximum in any accounting period. This is the deferment holder’s limit and must be sufficient to cover all deferrable excise liabilities. The guarantors can be liable for up to twice the monthly amount shown on the guarantee. This is because traders may defer up to their guarantee limit in one accounting period and then again in the next period before making any payment.

Those traders whose average liability exceeds £5 million for an accounting period may apply for partial security (see Notice 179). Partial security traders can be identified by a deferment approval number in the series commencing “7605”.

A maximum guarantee limit of £9.5m applies.

Allocation of deferment guarantee

Note: This applies only to traders with uncapped guarantees, i.e. those with guarantees of less than £9.5 Million.

A deferment holder’s liability may be spread over a number of approved premises from which oil is to be delivered, but the total amount deferred will be calculated at the CAP. The CAP must specify which warehouses are to be used for removing product to home use under the duty deferment arrangements before using this guarantee.

Agent’s authority to use deferment

In respect of product stored in independent warehouses the deferment holder may authorise the warehouse-keeper(s) concerned to complete the deferment documentation and charge duty on their behalf.

Authority is to be given on appropriate C1207 form and sent to the warehouse-keeper(s) involved, for retention and production to us on request.

Monitoring guarantees

At the CAP approved traders must monitor deliveries from all delivery warehouses, net of any allowable credits, plus or minus any adjustments advised by the approved person and the overall guarantee limit throughout each deferment period, in accordance with Notice 179.

Individual warehouse-keepers must also monitor the guarantee allocation(s) in respect of their warehouse and report to the relevant CAP when it is anticipated that the operating guarantee level will require adjustment.

Guidance for approved traders who anticipate exceeding guarantee levels should refer to Notice 179 paragraph 10.10.