HMRC taking tough stance on mistakes made on import and export duties

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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Small and medium sized businesses are being unfairly penalised when importing and exporting goods to/from the UK. Complex documentation that is all but impossible to access and mistakes made by customs agents are leaving businesses open to penalties and legal sanctions through no fault of their own.

Accountants and business advisers Hillier Hopkins is bringing two Tribunal cases against HMRC to challenge and change the new rules that apply to the documentation of trade when moving goods in and out of the UK.  This will become more significant when the UK exits the current transition period on 1 January 2021 and movements of goods between the UK and EU will be subject to additional documentation. In addition, small and medium enterprise businesses conduct the majority of movements of goods between the UK and the Republic of Ireland (in terms of numbers of businesses). Director of Indirect Tax Ruth Corking explains why. 

Business that trade with the EU and, in particular, the Republic of Ireland, will have to comply with new rules to document the flow of goods and services across the border. The regulations require businesses to complete customs declaration forms that evidence the export and import of goods to allow HMRC to collect VAT and any duties and tariffs. For VAT purposes, the evidence of export in particular cases real issues for businesses now, with agents routinely being allowed to destroy documents before the normal time limits for retention. Insufficient description of the goods on the official documentation has also led to assessments for VAT due on goods that have been exported because it is not possible to track the goods through the “paper” trail.

For Customs duty purposes, insufficient descriptions of the good have led to large sums of underpaid duty, additional VAT, potential penalties and interest.

Each declaration is accompanied by a £55 cost for small businesses, and a £25 cost for large businesses, with an additional £8-11 for each VAT declaration in some cases to obtain the copy documentation.

The system relies on small and medium-sized businesses using customs agents and freight forwarders to complete the declarations, as those submitting declarations need specialist software to access HMRC’s CHIEF and CDS systems.

Whilst this software is technically available to all businesses, it is very difficult to find and requires businesses to obtain accreditation, known as a ‘badge’, from HMRC, which cost upwards of £1,400 per port or airport.

Businesses can also apply for what is called ‘Simplified Freight Simplified Procedures’, but the application process is far from simple taking upwards of 12 months to complete.  Most small businesses simply give up, leaving them with little choice but to rely on customs agents and freight forwarders.

And this is where businesses hit further problems.

Customs agents and freight forwarders are in huge demand and there are simply not enough of them to meet the volume of trade today, let alone when the UK leaves the transition arrangements with the EU at the end of 2020.

Mistakes are being made and customs agents and freight forwarders are, leaving businesses facing sizeable demands from HMRC. Customs agents and freight forwarders cannot be held responsible for those mistakes, and it can be very difficult for businesses to prove that the mistakes where not their own as customs agents and freight forwarders do not need to hold copies of any documentation for longer than three months.

HMRC is now pursuing businesses for the unpaid tax on import and export declarations, with Hillier Hopkins representing businesses being chased for more than £1,500,000 VAT and duty.

Hillier Hopkins is, on behalf of two businesses, bringing legal challenges against HMRC through the Tribunals. One relates to export documentation and the volume of evidence that HMRC is requesting. A second relates to the rate of duty charged on imports of goods. The assessment raised has been reduced piecemeal due to reliance by HMRC on incorrect descriptions entered onto import declarations.

Ruth is also asking the Minister responsible for HMRC to look at the current arrangements as a matter of urgency before, and certainly before, the UK leaves the transitional arrangements. It is hoped that discussions will result in easier, fairer and cheaper access to the HMRC systems for small and medium businesses.

If you are affected by the above or would like some guidance, get in contact with Ruth Corkin on or 01908 713860 OR Farzana Khan on or 01923 634452.

Do you need extra information?

Ruth Corkin - Prinicipal - VAT and Indirect Tax Advisory at Hillier Hopkins

Ruth has been involved with VAT for over 30 years. She started her VAT career as a Customs and Excise Officer in Essex and then moved into consultancy with a variety of well-known accountancy firms. She is well known in the VAT world and is the proud author of many articles and technical works.

Contact Ruth at or on +44 (0)1908 713860

Based at the following office - Milton Keynes, Watford and London