Customs Talks: Inward Processing – It’s all about accurate data!

The UK tribunal decision, TC08653, issued on the 30^th November 2022 highlighted the inherent risks associated with administering the Inward Processing Special Procedure. 

When operating a full Inward Processing (IP) authorisation, a business must adhere to specific requirements set out within its authorisation letter.  One of these relates to the submission of a Bill of Discharge (BoD), which is required to confirm the goods imported under IP and how they were disposed of (discharged).

In the decision, the Tribunal confirmed that HMRC was correct to raise a customs debt for all imports on a Bill of Discharge (BoD) were inaccuracies were identified.

What happened?

HMRC raised an assessment for £2,409,009.91 customs duty and £6,480,265.52 VAT due to a breach of the obligations under providing accurate Bill of Discharges between March and December 2014.  Errors identified by HMRC related to the following:

• Commodity code was incorrectly declared on the import entry, but the commodity code on the BoD is correct.  Breach due to no Post Clearance Action (PCA) completed.
• Difference between the weight or customs values recorded on MSS and the weight shown on the BoD.
• Import entry on MSS was cancelled and a PCA made but the cancellation was not made clear on the BoD.
• Errors relating to incorrect import stock recorded, resulting in incorrect export quantities declared on BoD.
• Failure to report the disposal of a quantity of import goods.

The critical element of this case related to the fact that HMRC determined that any error found on a BoD causes a breach of Article 521(2) of Commission Regulation (EEC) No 2454/93, resulting in a customs debt being liable under Article 204 of Council Regulation (EEC) No 2913/92 for the customs duties on all imports stated on the BoD.

During the Tribunal, the CJEU decision Döhler Neuenkirchen GmbH v. Hauptzollamt Oldenburg (Case C-262/10) was referenced by both sides as this related to whether a single error within a BoD invalidates the entire BoD.  The appellant queried HMRC’s opinion that all imports were subject to a customs debt, as it considered that the BoD was an aggregated form and not a single submission.  This opinion was rejected by the Tribunal as “the non-fulfilment of an obligation gives rise, in respect of the entire quantity of the goods covered by the bill of discharge, to a customs debt”.

The appellant was unable to persuade the Tribunal that the errors identified by HMRC were insufficient to warrant a customs debt and was therefore required to pay the £9m customs debt.

What does this mean for your business?

Any business operating Inward Processing must be vigilant and ensure that its processes are such that any information submitted on a Bill of Discharge is relevant and 100% accurate.

Consideration must be given to Article 175 of Commission Delegated Regulation (EU) No 2015/2446 and its Annex 71-6 as this relates to the submission of data on a Bill of Discharge.

If your company operates Inward processing, we would be pleased to discuss how to ensure it has the necessary controls in place to minimize the risk of incurring a customs debt.

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Please contact us if you are considering applying for IPR approval, or would like to know more about the potential benefits of IPR after Brexit.