HCOTEG131750 - Central accounting points: System overview
Duty deferment approval
The Deferment Approval Number (DAN) allows an oil company to defer any excise duty liable on product removed from duty suspension, during an accounting period (from midday on the 15th of one month to midnight on the 14th of the next) until the last business day of the latter month.
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 immediately and may defer payment for up to six weeks.
Financial security
Security for deferment of duty may be required in the form of a guarantee underwritten by an approved bank, insurance company or other approved financial institution. Most banks and insurance companies have this approval.
Deferment administration is undertaken by HMRC operational teams responsible for duty deferment accounts. Current organisational responsibilities should be checked before use.
Companies who are not on the approved list but wish to stand as surety for deferment guarantees may apply to the relevant HMRC team 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.
Allocation of deferment guarantee
Note: This applies only to traders with uncapped guarantees.
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 Central Accounting Period (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 in writing and sent to the warehouse-keeper(s) involved, for retention and production to HMRC 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.