Customs and the UK tariff
Territorial extent and application
33 This Bill extends, and applies in relation to, England, Wales, Scotland and Northern Ireland.
34 The Bill does not contain any provision which gives rise to the need for a legislative consent motion in the Scottish Parliament, the National Assembly for Wales or the Northern Ireland
35 See the table in Annex A for a summary of the position regarding territorial extent and application in the United Kingdom. The table also summarises the position regarding
legislative consent motions and matters relevant to Standing Orders Nos. 83J to 83X of the Standing Orders of the House of Commons relating to Public Business.
These Explanatory Notes relate to the Taxation (Cross-border Trade) Bill as introduced in the House of Commonson 20 November 2017 (Bill 128)
Part 1: Import duty
Chapter 1: The charge to tax
Clause 1: Charge to import duty
36 Clause 1 provides for duty to be charged on chargeable goods by reference to their importation into the UK. This duty is to be known as import duty.
Clause 2: Chargeable goods
37 Clause 2 provides that goods are chargeable (and therefore subject to import duty as set out above) unless they are domestic goods as defined in clause 33.
Chapter 2: Incurring of liability to import duty
Clause 3: Obligation to declare goods for a Customs procedure on import
38 Clause 3 requires chargeable goods presented to Customs to be declared for a Customs procedure by the making of a Customs declaration. Under paragraph 1 of Schedule 1, which clause 3 introduces, goods must be presented to Customs on import. If chargeable goods are not presented, then they are liable to forfeiture, as set out at clause 5; the definition of presenting goods to Customs for these purposes is set out at Clause 34.
39 Customs declarations are currently only required for goods imported into the UK from outside the EU, but with the UK’s departure from the EU Customs Union this requirement may also
extend to goods originating from within the EU.
40 Imported goods can be declared for either the free-circulation procedure or one of a number of special procedures. Schedule 1 contains further rules about making a declaration, which apply
in both cases. It is the procedure for which the goods are declared which determines when a liability to import duty is incurred.
41 Where chargeable goods are declared for the free-circulation procedure, and the procedure has been discharged, they become ‘domestic goods’ as defined at clause 33.
42 The special procedures, which are referred to in this clause, are processes whereby a liability to import duty which would otherwise arise is not imposed (or is imposed at a lower rate),
provided that certain conditions are complied with.
43 A summary of the different special procedures is given in Box 1. These concepts already exist in the UCC, but in the future their operation will be determined by the provisions of this Bill,
and not EU law.
Box 1: Special procedures
A storage procedure allows imported goods to be held in storage which can be either a premises approved by HMRC (such as a Customs Warehouse), or a free zone. This will allow any liability to import duty to be suspended until they are removed from storage.
For example, a retailer or wholesaler can import goods and store them in approved premises without incurring duty at that point. When they subsequently wish to sell them, they can remove the goods from storage, and declare those goods for free circulation, incurring any duty liability then. Deferring the payment of duty in this way could be valuable in helping a business manage its cash flow. Alternatively, they can export goods back to their place of origin or to an external market within another Customs territory without incurring duty or other trade remedies, or they may in certain situations declare the goods to another special procedure.
A transit procedure allows goods to move between two places without incurring a charge to UK import duty. For example, goods from another country can pass through the UK en route to another destination, or goods which had previously been declared for another special procedure can move within the UK, without needing to be declared for free circulation. Inward processing procedures
An inward processing procedure allows goods to be imported in order to be processed in the UK without incurring a charge to import duty, provided that certain requirements are met. Once the procedure has been completed the goods may be exported, or the processed products may be declared to free-circulation. Such processes include the repair of goods or the assembly of components into a finished product – such as a laptop computer – where that is the purpose of bringing the goods into the UK.
Authorised use procedures
An authorised use procedure is designed to assist certain industries. It allows a lower rate (including a zero rate) of import duty or a relief to apply to specified goods which are put to a specific authorised use. An example would be where certain hydrocarbon oils are brought from overseas to undergo a specific distillation process in the UK. If those goods were imported for another, non-specified process, such as for resale, they would need to be declared for free-circulation and the full rate of duty would apply.
Temporary admission procedures
A temporary admission procedure allows goods to enter the UK Customs territory for a temporary period during which a full or partial relief will apply. Temporary admission can, for example, allow artworks situated overseas to be loaned to a UK gallery for a public exhibition without import duty being payable. The temporary admission procedure can also apply where goods are brought to the UK for auction and subsequently taken overseas.
44 Schedule 2 contains further rules about special procedures.
Clause 4: When liability to import duty incurred
45 Clause 4 sets out when the liability to import duty is incurred.
46 For goods declared for the free-circulation procedure, liability is incurred when HMRC accepts the declaration.
47 For goods declared to the temporary admission or authorised use procedures, liability is also incurred when HMRC accepts the declaration. However, this will be at a reduced (potentially
zero) rate provided that the declarant is entitled to make such a declaration. There are further rules that set out the appropriate rate of import duty due when the liability is incurred, and
that additional liabilities can also be incurred if the terms of the procedure are breached.
48 The general rule for goods declared to a storage procedure, a transit procedure, or an inward processing procedure is that liability is not incurred when the goods are imported, or when the
declaration for these procedures is accepted by HMRC. 49 Liability may arise at a later date, for example if a good previously declared to a storage procedure is subsequently declared for free-circulation. In that case, the liability would be incurred when HMRC accepted the declaration for free-circulation.
50 Where the declarant was never entitled to declare the goods for the storage procedure, transit procedure or an inward processing procedure, liability is incurred at the time the declaration
51 Where there is a breach of any requirement relating to the storage procedure, transit procedure or an inward processing procedure, liability is incurred at the time of the breach. Clause 5: Goods not presented to Customs or Customs declaration not made
52 Clause 5 provides that where chargeable goods are not presented to Customs when they are imported into the UK they are liable to forfeiture.
53 It also states that a liability to import duty is incurred at the time goods become liable to forfeiture. This is the case whether they have become liable to forfeiture because they have not
been presented to Customs or because they have been presented to Customs but not declared, as set out in paragraphs 1(5) or 3(4) of Schedule 1.Chapter 3: Person liable to import duty
Clause 6: Person liable to import duty
54 Clause 6 determines who will be liable to pay any import duty on goods imported into the UK. The general rule is that the person in whose name a Customs declaration is made is liable to
pay the import duty for the goods in respect of which the declaration is made for.
55 There are however exceptions to this general rule. Where liability to import duty arises as a result of goods not being presented to Customs or on goods where Customs declarations have
not been made (as set out in the preceding clause) liability for import duty falls onto any person who is in possession or control of the goods.
56 In addition, certain other persons will also be liable to import duty. These include a person on whose behalf a Customs declaration is made, a person that is liable as a result of the provisions
surrounding liability for Customs agents as set out in clause 21, a person that is liable as a result of provision surrounding breaches of special Customs procedures and any other person
that is involved in the breach of a Customs obligation.
57 Subsection (7) makes clear that where there is more than one person liable for import duty the liability is joint and several in nature.
Chapter 4: Amount of import duty: the Customs tariff, preferences,safeguarding etc
Clause 7: Amount of duty: introduction
58 Clause 7 introduces the provisions that deal with determining the amount of import duty applicable to goods.
59 This clause establishes that the clauses specified in subsection (1) will make provision for the applicable rate of import duty and for the amendment or adjustment of this. Subsection (2)
introduces clauses 16 to 19 which relate to the determination of the value of goods, their origin, and any relief, which will be relevant to the determination of the applicable rate of import
Clause 8: The Customs tariff
60 Clause 8 places a requirement on the Treasury to make regulations establishing and maintaining a “Customs tariff”.
61 The Customs tariff established under clause 8 will set out the rate of import duty to be applied to an imported commodity. This is referred to throughout the Bill as the Customs tariff in its
standard form. Where there is a liability to pay import duty, the rates set out in the Customs tariff in its standard form will apply, unless those rates are amended or adjusted by another
provision of the Bill.
62 The Customs tariff will enable an importer to ascertain the applicable rate of import duty for particular goods by setting out the rules for determining the correct classification of goods and
the duty associated with those goods based on their nature, origin and any other factor relevant to their treatment for Customs purposes. The system used for classifying goods will, as is currently the case, be based upon that of the World Customs Organization’s Harmonised System, which is recognised by 180 countries around the world.
63 The amount of import duty applicable to goods may be determined in a number of ways.
a. Subsection (3)(a) describes an ad valorem tariff. An ad valorem tariff is based on the value of the goods, and is calculated as a percentage thereof (e.g. 10%).
b. Subsection (3)(b) describes a specific tariff. A specific tariff is based on the quantity of goods, and is a fixed fee (e.g. £100/kg).
c. A compound tariff combines the features of an ad valorem tariff and a specific tariff, where both (3)(a) and (3)(b) apply, (e.g. £100/kg plus 10% of the value).
64 The rate of import duty may be specified in the Customs tariff by reference to formulae or otherwise. The ability to do this is particularly important for variable duty regimes. In these
circumstances, the formula will be specified in the Customs tariff but the rate of import duty that the formula produces may increase or decrease automatically without the need for further
legislation. For example, a duty may be set with reference to a global price benchmark for a commodity.
Clause 9: Preferential rates: arrangements with countries or territories outside UK
65 Clause 9 allows provision to be made for a lower rate of duty (a ‘preferential rate’) to be applied to goods originating from specific territories in order to give effect to arrangements
between the UK and the governments of those territories. This clause broadly covers any arrangements, international agreements or memoranda of understanding. For example, such
an arrangement could include giving effect to an FTA between the UK on the one part and another State, territory or regional economic integration organisation (such as the EU) on the
other; or to an arrangement the UK may have with a British Overseas Territory.
66 The ability to use a preferential rate under an arrangement may be subject to any conditions specified in the arrangement, including, for example, quotas, rules of origin or safeguard
Clause 10: Preferential rates given unilaterally
67 Clause 10 allows the Secretary of State to make regulations to create a trade preference scheme for developing countries. It specifies that the import duty applied to goods from countries
included in the preference scheme shall be lower than the standard import duty specified in the Customs tariff. The preferential rate could range from a reduced tariff (compared to the standard Customs tariff) up to the full removal of the tariff. This provision will allow the Secretary of State to decide the most appropriate preferential rate to encourage trade between the UK and eligible developing countries.
68 The power in subsection (1) will allow the Government to create and administer the trade preference scheme. Different tiers of preferences can be applied to different groups of countries. When the UK first leaves the EU, it is intended that the products and preferential tariffs applied in each tier would reflect the current EU scheme to ensure that market access for all beneficiary countries is maintained.
69 Subsection (2) sets out the parameters for the scheme.
Paragraph (a) says that the trade preference scheme may apply to one or more eligible developing countries. The immediate intention is to continue to offer preferences to all countries receiving preferences under the UK’s existing arrangements. The developing countries which may be included in a trade preference scheme are limited to those listed in Schedule 3.
Paragraph (b) says that a trade preference scheme may contain conditions for the application of tariff reductions. For example, eligibility for different levels of tariffs could be conditional on economic circumstances or could require a country to satisfy certain requirements, such as ratifying certain international agreements (as the UK currently does under the GSP+ arrangement). It is the government’s intention that eligible developing countries which currently receive the same or better market access under another arrangement (for example, a FTA or Economic Partnership Agreement) would not also receive unilateral trade preferences.
Paragraph (c) says that the trade preference scheme may provide for circumstances in which the application of the lower import duties may be varied, suspended, or withdrawn. For example, the tariff reduction on a particular good could be temporarily removed in the event that a large surge of imports of that good was causing harm to domestic industry. Preferences could also be varied or withdrawn from a country in response to serious and systematic human rights violations. Tariff reductions on a particular product from a beneficiary country are also expected to be withdrawn according to predetermined rules when imports of that product reach certain levels – this is known as “product graduation”.
70 Regulations will provide more details on the circumstances and process for the variation, suspension, or withdrawal of preferences. Where a decision involves an element of discretion,
(as opposed to simply applying predetermined rules relating to product graduation, for instance), the process could, for example, allow the affected countries to present evidence and
make representations about their situation before changes to their preferences take effect. The process could also allow functions (for instance investigation functions) relating to the process
for surges in imports to be delegated to the Trade Remedies Authority. Such delegation is enabled by subsection (7) (a) of clause 32.
71 Subsections (3) and (4) set out the specific parameters for least developed countries.
72 Paragraph (a) of subsection (3) requires that if a trade preference scheme is created under subsection (1), regulations must provide for a nil rate of import duties on products imported
from least developed countries except for arms and ammunition. This is an international commitment in the UN Sustainable Development Goals which the UK supports.
73 Paragraph (a) of subsection (4) explains that arms and ammunitions shall be defined in regulations. The intention is that, for the purposes of this clause, “arms and ammunitions”
shall follow and cross refer to the classification to be specified under clause 8, when the UK Customs Code is established. We expect the UK Customs Code to adopt the classification in
chapter 93 of the Harmonised System, the internationally recognized coding system established by the World Customs Organization.
74 Paragraph (b) of subsection (3) says that regulations may provide for circumstances in which the nil rate of tariffs on import duties may be suspended or withdrawn from a least developed
country, for example in response to serious and systematic human rights violations. The intention is that this provision shall only be used in exceptional circumstances. The action
taken may include the application of a different preferential tariff rate or reversion to the Most Favoured Nation rate, as stated in subsection 4(b).
75 Subsection (5) clarifies that reference to the Customs tariff in its standard form does not include adjustments to the tariffs made by clauses 9, or 11-15 of this Bill. These include the preferential rates under international arrangements (clause 9) and the tariffs applied in cases of safeguarding (clause 14).
Clause 11: Quotas
76 Clause 11 allows provision to be made in respect of goods where the applicable duty rate is dependent on a quota, commonly known as a tariff rate quota.
77 A tariff rate quota is a set quantity of specific goods that can be imported at a lower rate of import duty than that which is specified in the Customs tariff in its standard form. Any further
imports in excess of the quota will be charged at the standard rate.
78 There are different types of quota. They can arise from an arrangement with another territory (such as a FTA) or the UK’s schedule of concessions at the WTO. Such arrangements may
establish tariff rate quotas for certain products and may specify details such as which products are covered and the in-quota duty. Others are known as autonomous quotas, which may be
proposed by the Government in secondary legislation. An autonomous quota may also be created when requested by other countries.
79 The administration of a tariff rate quota can be determined by a variety of factors, laid down in regulations.
80 Importers may need to seek a licence or allocation of the quota in order to benefit from the lower rate of import duty and a fee could be payable. Other quotas operate on a first-comefirst-served basis. Where a claim on such a quota is refused, or cannot be made because the quota limit has been reached, the goods would be charged at the standard rate of duty
appropriate to those goods (by reference to the Customs tariff in its standard form).
Clause 12: Tariff suspension
81 A tariff suspension allows for the waiver of some or all of the amount of import duty for specified goods for a set period, in order to encourage trade and support domestic production
by ensuring that UK businesses have access to the supplies they need.
82 Clause 12 sets out the means by which the Treasury may make provision to lower the rate of import duty for goods that are to be subject to a tariff suspension. Generally, these are
commodities that are not yet manufactured or worked into finished goods. The conditions determining whether a commodity may be eligible for a suspension will be set by regulation.
These lower rates of import duty are intended to apply temporarily, and could apply only for a limited amount of a commodity.
83 The clause also establishes the right of businesses to request a suspension, which must be considered by the Secretary of State. The requirements for an application will be set by
Clause 13: Dumping of goods, foreign subsidies and increases in imports
84 If trade remedies duties are imposed following a dumping or subsidy investigation, the measures imposed will function as an additional amount of import duty, and will be
chargeable on goods which are specified in a public notice from the Secretary of State, in accordance with the details set out in the Secretary of State’s notice. Schedule 4 sets out further
details of dumping and subsidy investigations.
85 Safeguarding remedies will function as an additional amount of import duty or a tariff related quota, and will be chargeable on goods which are specified in a public notice from the
Secretary of State. The duty or tariff related quota must be in accordance with a relevant recommendation made by the Trade Remedies Authority, and the details set out the Secretary
of State’s notice. Schedule 5 sets out further detail of safeguard investigations.
Clause 14: Increase in imports or changes in price of agricultural goods
86 Clause 14 allows for Special Agricultural Safeguards, which are permitted under Article 5 of the WTO Agreement on Agriculture12. This provision allows members of the WTO to set
additional import duty on certain agricultural goods designated on their schedule of commitments.
87 These additional duties are applicable if the relevant imported goods either: exceed a set volume of imports in a given time period; or when individual shipments of those products fall
below a set price. These are known as trigger points.
88 Regulations under this clause must define the designated products in scope and set the trigger points for price and volume for those products. The regulations can also define when representative prices are used to check the import prices of individual consignments.
89 Special Agricultural Safeguards cannot be applied to a good which either already has a global safeguard measure applied to it or is currently within its import quota.
Clause 15: International disputes etc.
90 Clause 15 enables the Secretary of State to vary the rate of import duty when a dispute or other issue has arisen between the UK government and the government of another country and the
UK is authorised to do so under international law. The clause replaces equivalent existing powers available to the European Commission.
91 One of the circumstances in which this power may be exercised is in the context of international trade disputes, where the UK may be authorised to impose retaliatory trade
measures, including higher import duty against the imports of goods of a respondent territory which fails to comply with a dispute ruling within the required period of time. Another of the
circumstances in which this power may be exercised is where the UK may be required to offer compensation to complainants (including in the form of lower import duty) when it has lost a
dispute and has not brought itself into compliance within the required period of time.
92 Authorisation to vary the rate of import duty may also arise in other specific situations, including in the context of rebalancing trade concessions when another Member of the WTO or
a party to a trade agreement has taken action which undermines trade concessions to which it has previously committed.
93 Clause 15(2) addresses the interaction of retaliatory duties under this clause and duties under clause 13 in relation to the same subsidised imports.
Chapter 5: Amount of import duty: supplementary
Clause 16: Value of chargeable goods
94 Clause 16 sets out the principles governing the valuation of goods.
95 The general rule is that the value of the goods is their transaction value (the amount payable for the goods at the time of export to the UK), which includes consideration for the goods and
certain specified costs associated with the importation (e.g. some transport and insurance costs).
96 The clause also allows the Treasury to make regulations that permit or require something other than the transaction value to be used – for instance where transaction values cannot (or cannot readily) be determined. The regulations may also specifically exclude or include certain costs from the transaction value.
Clause 17: Place of origin of chargeable goods
97 Clause 17 sets out rules for determining the place of origin of goods.
98 It is necessary to determine the place of origin of imported goods for the purposes of international trade. For example, rules of origin ensure that preferential rates (as provided for
in clauses 9 and 10) can only be applied to the goods that are intended to benefit from the lower rate of duty. When goods are imported under a preferential regime, they are deemed
eligible for this regime only if they originate from a particular country or territory with which the preference arrangement exists.
99 It is also necessary to determine the place of origin of goods where they are subject to other trade measures, trade remedies (as provided for in clauses such as 13, 14 and 15) or quotas
(provided for in clause 11).
100 In certain circumstances, different rules of origin may apply to the same commodity. For example, a specified amount of a commodity may be imported at preferential duty rates under
a more flexible rule of origin. This would allow a greater proportion of the commodity in question to consist of material originating from a state with which the UK does not have a
preference. Imports beyond the specified amount can only be imported under a tariff preference if they meet stricter rules of origin. Such provisions can be found in a small number
of FTAs, such as between the EU and Canada.
Box 2: Rules of origin
Where goods originate is determined using ‘rules of origin’. Simply because goods are considered to be originating by one territory does not mean that another territory will consider them also to have originated there, as the rules can be very different from Customs territory to Customs territory.
Rules of origin are applied to check that goods meet the criteria established in a preferential arrangement (for example, a FTA) or unilateral preference. They protect the Exchequer by preventing goods, which originate from territories with which the UK has no preferential arrangement, from wrongfully benefiting from any preferential arrangements that the UK has with other territories. For example, goods imported to the UK via a territory that has a preferential arrangement with the UK. The rules of origin in an arrangement lay out the minimum requirements for a product to be considered “originating” in parties to the FTA, in order for it to benefit from preferential import duties under that arrangement. Such requirements typically limit the use of third-country material to be used in the production of a product or require a minimal level of economic activity to transform the goods.
Clause 18: Currency
101 Clause 18 makes provision for the currency of values for Part 1 of the Bill, requiring the value of all chargeable goods be expressed in sterling.
102 All amounts that are used to calculate the final value of chargeable goods (such as values that are obtained from invoices) must first be converted into sterling before calculations are made.
103 Any such conversion must be made in accordance with what HMRC has provided for by way of public notice. This clause also expands on what HMRC may include in such public notice.
Chapter 6: Reliefs
Clause 19: Reliefs
104 In certain circumstances relating to the particular nature or use of the goods or the type of importer, levying duty is not considered appropriate. In such circumstances, arrangements
may be made, both internationally and in the UK, to relieve the importation from some or all of the import duty which would otherwise be due. These reliefs are comparable to those currently
covered by EU legislation and can be conditional on prior approval, the completion of certain procedures or evidence of eligibility.
105 Examples of the type of uses under which such goods are eligible for reliefs are: where the goods are only imported for a limited period prior to re-export; previously exported domestic
goods are being returned without alteration; goods being imported for specific end uses, as designated by the tariff; items imported for educational, scientific or cultural purposes or
research; goods imported to encourage future trade, such as samples or items for testing; donated items, private gifts and inherited items.
106 Certain reliefs can also be specific to the importer and are therefore used by organisations such
as charities, museums and galleries; or eligible individuals.
Chapter 7: Administration etc.
Clause 20: Notification and payment of import duty, etc.
107 Clause 20 introduces Schedule 6 of the Bill. Schedule 6 sets out the relevant rules for, amongst other things, how a liability to pay import duty is to be notified, how import duty is to be paid,
when guarantees may be required, and how import duty is to be repaid.
Clause 21: Customs agents
108 Clause 21 provides that any person, referred to as the “principal” in the legislation, may appoint and use a Customs agent to act on their behalf. It distinguishes between two types of
agents: direct agents that act in the name of the importer, and indirect agents that act in the agent’s own name. The appointment of an agent, or the withdrawal of that appointment, must
be notified to HMRC in accordance with regulations made by HMRC.
109 The general rule is that unless otherwise specified the actions of an agent are to be regarded as done by the principal and the principal is liable for the actions of a direct agent. An indirect
agent however is jointly liable with the principal for any import duty.
110 There are additional instances where a Customs agent may also be liable for Customs duty, as set out in subsection (6). This may be where a Customs agent acts when their appointment has
not been disclosed to HMRC as required, because the agent’s appointment has been withdrawn, because they do not have authority to act as an agent, and also where declarations
made under paragraph 9 of Schedule 1 (simplified Customs declarations) are not made in accordance with the provisions of that provision.
111 Subsection (7) allows HMRC to make further provisions about Customs agents in regulations, and subsection (8) provides examples of the types of regulations that HMRC may create under
this clause. This includes requiring Customs agents to be approved by HMRC and specifying the criteria for approval.
Clause 22: Authorised economic operators
112 Clause 22 allows the setting up of an Authorised Economic Operator (AEO) scheme. AEO status is an internationally recognised quality mark indicating that an operator has met
recognized standards of compliance.
113 AEO status is not mandatory, but Operators with AEO status may gain quicker access to some of the simplified Customs procedures set out in Part I. It can also give the right, in some cases,
to ‘fast-track’ shipments through some Customs procedures.
114 This clause allows HMRC to make regulations setting out that certain requirements in Part 1 of the Bill can be simplified or not applied with regards to AEOs, or to make regulations
specifying that the status of AEOs must be taken into account in the exercise of a power or function under this part. This includes the criteria that can be applied in determining whether
or not AEO status should be granted and making the granting of AEO status conditional on compliance with conditions specified. AEO status may have more than one class. Different
classes and the benefits a particular class confers can also be set out in regulations.
Clause 23: Approvals and authorisations granted under regulations
115 In establishing the processes and requirements of the UK’s Customs system, various clauses in Part 1 also set out where regulations can make provision requiring HMRC’s approval to do
certain things. For example, provision made by regulations may require a person and/or their premises to be approved before they can operate a Customs warehouse. Approval is needed so
that HMRC can be assured that individuals or businesses meet a prescribed standard. Clause 23 and the regulations made under it set out the rules that apply in relation to any approvals or
authorisations granted as a result of regulations made under Part 1 of the Bill, unless the regulations make alternative provision.
116 The regulations may include provision to, for example, set out how applications for theapproval should be made to HMRC and set out what information will be required. The
regulations may also make provision setting out where HMRC may amend, suspend or revoke an approval.
117 Where an application for approval was deficient, the business or individual making the application knew this, HMRC would not have granted the approval if the deficiency had been
known, and the applicant has been given appropriate notice, then the approval is treated as though it had never been granted. However, clause 23(6) allows HMRC to make regulations
specifying circumstances in which such an approval is nevertheless to be treated as still being in force. This would, for example allow HMRC to make provision remedying any adverse
effects upon innocent third parties where an approval or authorisation is revoked.
Clause 24: Rulings as to application of Customs tariff or place of origin
118 Clause 24 requires HMRC to establish a system, by way of public notice, to give rulings for determining the correct tariff code and origin of the goods. Under the current Customs system
such decisions are known as Binding Tariff Information and Binding Origin Information decisions.
119 Subsection (2) clarifies that the public notice can among other things, specify the form in which an application and determination must be made and the period after which a person would
expect to have received a determination. This notice may also include the period for which a notice would have effect (subject to the circumstances of the determination continuing to be
met), and when a determination would be withdrawn. The notice may also set out cases in which rulings will not be given.
120 Subsection (3) requires that an application for a ruling may be made even if an HMRC officer considers the ruling may not be required to resolve a doubt or issue being determined.
121 These rulings allow businesses certainty when calculating their liability to import duty, by ensuring that the tariff code (clause 8 (1)(a) and (b), and elsewhere) and origin information
(clause 17 and elsewhere) are determined correctly.
Clause 25: Disclosure of information
122 Clause 25 allows HMRC to disclose information relating to import duty for Customs duty purposes. For example, HMRC currently exchanges information with other law enforcement
partners so that it can more effectively target criminals or deliberate wrongdoers who are looking to evade import duty.
123 The clause sets out the type of information that can be disclosed, the purpose for which it may be disclosed, and what can be done with the information once it has been disclosed. For
example, any person who receives information under this section cannot forward it on (or otherwise further disseminate it) without HMRC’s consent. Any such wrongful disclosure
would be a criminal offence under existing rules set out in section 19 of the Commissioners for Revenue and Customs Act 2005 (CRCA 2005).
124 HMRC is also subject to other laws that regulate the disclosure of information. This clause does not affect the circumstances in which information may be disclosed under section 18(2) of the CRCA 2005, or any other law. In addition, this clause does not permit a disclosure which is in breach of the Data Protection Act or that is prohibited by relevant provisions of the
Investigatory Powers Act 2016.
Clause 26: Co-operation with other Customs services
125 Clause 26 allows HMRC to cooperate with other Customs services on matters of mutual concern.
126 The restrictions that apply in relation to the disclosure of information in clause 25 also apply in relation to information that is disclosed under this section.
Clause 27: Fees for exercise of functions in connection with import duty
127 Clause 27 allows the Treasury to make regulations that will allow for fees to be charged for the exercise of functions in connection with import duty.
128 The power to make regulations charging fees may only be exercised if to do so is consistent with international agreements and if it is fair and reasonable for the charge to be made. An
example of where fees may be charged is where out of hours support is needed at the request of the importer (or another party connected to the importation).
Clause 28: Requirement to have regard to international obligations
129 Clause 28 places a requirement upon specified persons, departments, and bodies exercising functions specified in Part 1 of this Bill to have regard to international arrangements that the
UK is a party to and that are relevant to the exercise of that function. This would, for example, include agreements with the WTO.
130 This clause does not seek to impact upon the question of whether or not there would otherwise be an obligation to have regard to such agreements.
Schedule 1: Customs Declarations
Presentation of goods to Customs and period for making a Customs declaration etc.
237 Paragraph 1 requires goods to be presented to Customs on import and a Customs declaration to be made within 90 days of presentation. Clause 34 defines when goods are presented to
Customs and the procedures that must be followed. However, there is no need to make a declaration if the goods are exported from the UK within those 90 days in accordance with the
applicable export provisions. Paragraph 1 also provides that HMRC may make regulations about presentation, including specifying the circumstances in which presentation is not
238 Goods are under the control of a Customs officer from the time of importation and paragraph 1 provides the power for HMRC to make regulations imposing restrictions and conditions on the goods during that 90-day period.
239 If a declaration is not made within the 90 day period and the goods have not been exported the goods are liable to forfeiture under sub-paragraph (5) and a liability to import duty arises in
accordance with clause 5.
Eligibility of persons to make Customs declarations
240 Paragraph 2 establishes that a Customs declaration may be made by the person who is able to present, or secure presentation of, the goods to Customs on import into the United Kingdom.
241 HMRC may make regulations placing specific conditions on the person making a declaration. These may include a requirement to be established in a specified place.
Time at which Customs declarations required or authorised to be made
242 Paragraph 3 establishes the timing of the Customs declaration. It allows HMRC to make regulations requiring the Customs declaration to be made before the goods are imported in
specified cases. Failure to make a declaration in such cases would result in the goods being liable to forfeiture under sub-paragraph (4) and a liability to import duty arising in accordance
with clause 5.
243 In cases where a declaration in advance of import is not mandatory, paragraph 3 permits a person to declare goods prior to importation. The goods must then be presented to Customs
within a permitted period (specified as 30 days from the time at which the declaration is made, unless a different period has been set in a public notice); if the goods are not presented within
that period then the declaration is treated as having been withdrawn.
Form of Customs declarations and how they are made
244 Paragraph 4 establishes the general rules for the form of declarations. The general rule is that declarations should be made in an electronic form prescribed by HMRC.
245 Paragraphs 5 and 6 establish alternative methods for making declarations that may be used in specified cases. Under paragraph 5 declarations may be made in writing rather than
electronically and under paragraph 6 declarations may be made orally or by conduct. These alternative methods will be used in circumstances where it is impractical to make declarations
electronically. This will allow, for example, a traveler with personal luggage satisfying certain conditions to make a declaration by walking through the green channel.
246 HMRC can make regulations in order to give effect to these alternative means of making declarations. This includes disapplying provisions in Part 1 or other Customs enactment and
treating anything done, or omitted to be done, as meeting a condition imposed under this Part or other Customs enactment.
Contents of Customs declarations
247 Paragraph 7 provides that HMRC may further specify, by public notice, the information that must be included in Customs declarations and the documents which must accompany it.
248 The public notice may specify the circumstances under which the requirement to produce such documents may be met by the person making the declaration or another person making other
information or documents available to HMRC. This allows, for example, a person to satisfy the requirements by making documents available through an electronic platform.
249 Paragraph 8 allows HMRC to make provision in a public notice that a single declaration may cover a number of goods or that separate declarations must be made in respect of goods of the
Simplified Customs declarations etc
250 Paragraph 9 allows for HMRC to make regulations to disapply or simplify the requirements in Part 1 of the Act to allow for simplified Customs declarations.
251 These provisions may, for example, allow the declarant to declare the goods by means of entry into their own approved record system and software linked to HMRC’s systems.
Acceptance of Customs declarations
252 Paragraphs 10, 11, and 12, set out the responsibilities of officers of HMRC when receiving and accepting Customs declarations.
253 As soon as practicable after receipt, HMRC is required to determine whether or not a declaration has been properly made (i.e. in accordance with the requirements provided in
Schedule 1) and contains all the required information and is accompanied by all the required documents.
254 If the Customs officer is satisfied that the Customs declaration has been made in accordance with the requirements and the goods have been presented to Customs on import, they must
notify the declarant. This notification constitutes acceptance, but does not prevent an officer from subsequently verifying the declaration in line with paragraphs 13 and 14 of the Schedule.
Verification of Customs declarations
255 Paragraphs 13 and 14 set out the process by which an officer of HMRC may verify a Customs declaration. A Customs officer may take any steps to establish whether the conditions for the
making of a Customs declaration have been met, the person making the declaration was entitled to make the declaration, and the accuracy of the declaration and supporting
documents. These steps include any documentary and physical inspection of goods under
Parts 7 and 12 of CEMA 1979 and may take place before or after the declaration is accepted by HMRC.
256 If a Customs officer considers that there is an inaccuracy in the declaration (whether the declaration itself, or any document in support of the declaration), the officer must notify the
declarant, correct the declaration or direct the person making the declaration or another appropriate person to make the necessary correction. However, HMRC is not required to
notify the inaccuracy if doing so would prejudice an investigation. The liability to import duty is determined on the basis of the corrected declaration.
Amendment or withdrawal of Customs declarations
257 Paragraphs 15 and 16 provide that a person who has made a Customs declaration may amend or withdraw it before HMRC accepts, takes steps to verify, or indicates that they intend to
verify, the declaration. After one of these events has occurred the declaration can be amended or withdrawn only after notification within a period set out in a public notice and with the
consent of an HMRC officer.
Releasing and discharging goods to and from Customs procedures
258 Paragraph 17 provides that goods declared to the free-circulation procedure cease to be under the control of an HMRC officer when they are discharged from that procedure.
259 Goods declared for free-circulation are released to that procedure when the correct import duty is paid to HMRC, or if there are alternative arrangements, such as guarantees, in place,
when the declaration is accepted by HMRC and are discharged from the procedure when HMRC notifies the person making the declaration that the goods are discharged.
260 Goods declared for a special Customs procedure are released to that procedure when HMRC accepts the declaration; or, in cases where an authorisation is required for a special Customs
procedure, the goods are released at a specified time from which the procedure may be used for those goods if this is later than the acceptance of the declaration by HMRC. The goods are
then subject to the provisions made under Schedule 2 for the relevant procedure and these continue to have effect until the goods are discharged from that procedure.
Declarations for different Customs procedures
261 Paragraph 18(1) provides that a declaration can be made in relation to goods for another Customs procedure notwithstanding the fact that the goods are already subject to a different
Customs procedure. Accordingly, if goods are declared for the temporary admission procedure and the importer then wishes to sell the goods in the UK the trader can
subsequently declare those goods for free-circulation.
262 Paragraph 18(2) provides that goods may not be subject to two Customs procedures simultaneously; the first Customs procedure must be discharged before the goods can enter the
second procedure. Schedule 2 provides for the circumstances when goods are discharged from a special Customs procedure and these include where goods are declared for another Customs
procedure and that declaration is accepted by HMRC.Notifications given by HMRC or HMRC officers
263 Paragraph 19 provides that notifications given by HMRC under this Schedule may be given inany way that the person giving it considers appropriate. It also provides that HMRC may
make regulations specifying cases where it is presumed that a person has been notified under Schedule 1, including circumstances where that presumption may not be rebutted.
Schedule 6: Import duty: notification of liability, payment
387 Schedule 6 sets out detailed rules for notifying a person that they are liable to pay import duty and the process for discharging it. It also deals with cases in which HMRC will repay or remit
amounts of import duty.
Notification of liability to pay import duty
388 Paragraph 1 provides that a person cannot be required to pay import duty before they have been notified of their liability to do so in line with the rules set out in the Schedule. Paragraph 2
specifies what must be included in a notification and sets out that a notification of liability may be given in such form and manner as HMRC consider appropriate.
389 Paragraph 3 allows HMRC to make regulations that set out exceptions to the above rule. This might be, for example, where a person is authorised to use facilitations whereby they are
responsible for notifying the nature and extent of their liability to HMRC, or where the debt has already been paid.
390 Paragraph 3(2) provides that any regulations specifying cases where the duty to notify does not apply must set out that there must be some other acknowledgement of the liability to pay
391 Paragraph 4(1) sets out the general rule that HMRC must notify a person of their liability topay duty within 3 years from the day it arose. Paragraph 4(2) sets out an exception to this rule
that applies where HMRC consider that a criminal offence has been committed. In such cases, the period in which HMRC must notify a person of a liability is extended to 20 years.
Payment of import duty
392 Paragraph 5 requires HMRC s to make regulations about the payment of import duty. For example; time limits within which import duty must be paid, the method for paying it and the
circumstances in which interest will be charged and how it will be calculated.
393 Paragraph 6 requires HMRC to make regulations about giving guarantees for any liability or potential liability to pay import duty. These may include matters such as the form a guarantee
must take and the process for discharging it.
394 Where a guarantee is given in relation to goods declared for free-circulation the regulations made under paragraph 6 (regulations regarding guarantees) must set out that the liability to
pay import duty is deferred for a specified time.
Repayment of import duty
395 Paragraph 10 requires HMRC to make regulations about the repayment of import duty and the repayment of any interest paid in respect of import duty. Paragraph 10(2) sets out a list of what may be included in such regulations, for example, the form, manner and timing of a claim, and the person entitled to submit a claim.
Remission of import duty
396 Paragraph 11 provides that HMRC may also make regulations about the remission of import duty (the cancellation, in appropriate circumstances, of a debt which has arisen but not yet
been paid, for example, where goods are exported because they are defective).
Recovery of import duty
397 Paragraph 12 provides that any amount due to be paid as import duty is recoverable as a debt to the Crown.
398 This does not apply, however, where the goods which give rise to the liability are condemned as forfeited and neither restored nor sold by HMRC. In such cases the amount of import duty
is not recoverable as a debt. There is an exception to that rule where the goods are sold by HMRC: in such cases, the debt is not extinguished and the purchaser is liable to pay the debt to