Customs Complexity

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Regulations around the exportation and importation of goods are complex, presenting challenges for companies and His Majesty’s Revenue & Customs (HMRC) officers alike. The latter hold extensive powers over goods of various customs origins entering and leaving the UK. They include the right to expect and inspect correctness in the customs declarations required to be made in the course of such cross-border goods movements, to ensure, among other things, that the right duty and VAT amounts are paid to the UK’s Exchequer, and the correct trade measures are applied.

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Where your international trade activities attract particular HMRC attention, possibly giving rise to HMRC compliance concerns and decisions, import duty(s)/tax(s) assessments, penalties and/or similar, which adversely impact your business, HMRC’s letter will explain the reason for their action and whether there is a right of review / appeal, and if so how to proceed and in what time-frame. You can normally expect to have rights to be heard, of review, and of appeal.

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You should always consider exercising these rights where the impact of any given HMRC notice / decision on your business is considered to be significant, and you feel and/or are advised that you have a good case in the context of the applicable regulations. ‍

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Your Right To Be Heard

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The ‘right to be heard’ is a fundamental principle of natural justice in UK public law requiring that those with the authority to make decisions affecting the rights, interests or legitimate expectations of a party, provide that party with a fair opportunity to present their case before any such decision is made. This procedural safeguard is aimed at ensuring that decision-makers consider relevant representations and that affected parties know the case against them and can respond accordingly. The right forms part of the duty to act fairly imposed on public bodies exercising statutory or other public functions.

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Therefore, if HMRC notifies you of an intended customs decision likely to give rise to a customs debt, it usually provides you with a period of 30 calendar days from the date recorded on the notice, during which you may challenge their intended decision before it is made final, by the provision of any additional information or argument you think might change HMRC’s view of the matter. If you do not exercise your right to be heard, or HMRC is unmoved by your representations, you will receive a final HMRC decision letter to act upon.

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Other Ways To Contest HMRC  Notices / Decisions

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HMRC makes provision for companies which disagree with its notifications / decisions, enabling: representation to be made and additional information to be provided, or a request for a review, and/or an appeal to an independent tribunal.

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So beyond exercising your right to be heard, you generally have two main avenues by which to contest the position HMRC has taken on a particular matter: a Statutory Review and/or an Appeal (see below). You may select between them, or proceed sequentially with both, but you cannot pursue these avenues simultaneously. ‍

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1. A Statutory Review

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This is an internal HMRC procedure which you may request within 30 days of the date of any written notice / decision (a ‘reasonable excuse’ extension can be requested). Your request should be in writing and include:

• A clear statement of which decision is being challenged and why you believe it to be incorrect.

• What you believe the position should be and your reasoning.

• Relevant supporting evidence, (copy documentation, reference to any authorities etc.).

• Your Economic Operator Registration and Identification (EORI) reference and the relevant customs entry number(s).

Your case should be reviewed by a HMRC officer not previously involved with it. If you disagree with the outcome of the review, you can still appeal to the tribunal.

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HMRC is normally required to complete a statutory review within 45 days of receiving and accepting a request. The original provisional decision can be expected to be either upheld, varied  or rescinded. If no response is received within 45 days, the original provisional decision can be presumed to have been upheld. At which point the case can be escalated to the First-Tier Tribunal (Tax Chamber) if you consider it worthwhile. ‍

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2. Appeal To An Independent Tribunal

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You can elect to appeal to His Majesty’s Courts and Tribunal Service, First-tier Tribunal (Tax Chamber) straightaway, within 30 days of the date of the HMRC notice / decision received, or as the next step following an adverse HMRC Statutory Review decision which you still believe to be wrong. In the latter case, you must submit your appeal to the tribunal within 30 days of the date of the communicated HMRC's statutory review decision, and include a copy of the relevant HMRC correspondence.

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The Tribunal is a formal independent judicial body that hears appeals against HMRC decisions, including customs matters. The proceedings are more formal and therefore legal representation, though not required, is advisable in cases which are not straightforward. The decisions of the Tribunal, which are binding, are publicly available for scrutiny and you can use any relevant precedent to support your own case.

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If the Tribunal decision goes against you, there remains a further appeal option, to the Upper Tier Tribunal, but only when permitted, and only usually on points of law.

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Is A Challenge Worth It?

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In most cases, you have the right to challenge notices and decisions issued by HMRC in one way or another. Customs related challenges tend to revolve around commodity code classification, the value for customs purposes and customs origin / preference.

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Tips for making a challenge include:

• Respect HMRC deadlines – submit your challenge in good time.

• Request payment deferment / postponement – for any disputed amount, pending the outcome of the any review / appeal.

• Pay attention to detail – in the making of your case, in respect of relevant documentation (retain copies of anything submitted), and in adherence to procedural requirements.

• Seek professional guidance and support.

Whether a particular challenge is worth it is an evaluation to be made on the facts and what is at stake, on a case by case basis. If the impact on your business is significant enough it usually worth querying HMRC, given that a statutory review is free, or at least  in straightforward matters need only cost you your time and effort. A successful review may also conceivably provide the basis for a customs duty reclaim.

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Tribunal appeals are of course more costly to prepare and to pursue, but can easily be justified depending on the magnitude of what is at stake and the nature of the evidence available. In general terms, the success of any challenge hinges upon the quality of your argument and supporting evidence, and of any adviser you work with, which is where BKR comes in.

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How BKR Can Support

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At BKR we have a wealth of experience and expertise with which we can help you to review and analyse any notices and/or decisions you may occasionally receive from HMRC, and to assist you in the preparation of your response or request for a statutory review.

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We can also help you to review, and where necessary improve, the quality of your customs administration in the light of any HMRC compliance concerns communicated.

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In addition we can assist you by:  

• Using our special software ‘tool’ to audit and analyse your customs declaration data to enable any errors to be spotted and remedial action to be taken. Such as the amendment of incorrect declarations, or the making of voluntary disclosures. We help you to spot discrepancies before HMRC does.

• Supporting you in any customs duty reclaim you may be entitled to apply for.

• Reviewing the customs commodity codes you are using, the customs valuation calculations you are making, and applicable customs origin requirements, to provide you with an objective assessment as to their correctness.

• Working with you to review, and where necessary improve, your customs processes, procedures, and documentation to enable you to optimise your customs and trade operation in line with the latest best practice.

• Providing tailored technical customs administration training for your business.