Policy paper

Using the duty offset mechanism

Updated 14 April 2023

This guidance focuses on the duty offset mechanism for UK excise duty paid goods moving from Great Britain (England, Scotland and Wales) or the Isle of Man to Northern Ireland.

Different rules and processes apply to goods moving in excise duty suspension from Great Britain to Northern Ireland and goods moving from Northern Ireland to Great Britain.

The excise duty offset mechanism

The alignment to EU excise rules in Northern Ireland means an excise duty charge arises when excise goods enter Northern Ireland from Great Britain or the Isle of Man. This charge arises even where duty has already been paid on the goods when they were released for consumption in the UK.

To avoid paying duty twice and the administrative burden of reimbursement claims, the duty offset mechanism means that (although a charge arises as the goods enter Northern Ireland) there will usually be no need to pay additional duty at this point, even if the goods are not in duty suspension.

If you make a mistake using the duty offset mechanism and pay more excise duty than is needed, you may be able to apply for a repayment. If you make a mistake using the duty offset mechanism and pay less excise duty than is needed, you should apply for a voluntary clearance amendment (underpayment).

Using the excise duty offset mechanism for freight movements

The duty offset mechanism credits the amount of UK or Isle of Man excise duty that has already been paid on the goods against the liability to pay the charge to excise duty that arises on entry to Northern Ireland.

When you move goods from Great Britain or the Isle of Man to Northern Ireland you will need to make an import declaration using the Customs Declaration Service and use the import Additional Information (AI) code:

• ‘NIDOM’ for an arrival from Great Britain
• ‘NIIMP’ for an arrival from the Isle of Man

To apply the duty offset mechanism, you’ll need to work out the amount of excise duty that is payable on entry to Northern Ireland, then take this figure and subtract the UK or Isle of Man excise duty already paid from it. This is known as the standard method of offset calculation.

If you are unable to us the standard method of offset calculation, you may use a simplified method of offset calculation only where HMRC can be satisfied that both:

• excise duty has already been paid on goods removed to Northern Ireland prior to departure from Great Britain or the Isle of Man
• no one liable for duty on entry to Northern Ireland is, or could reasonably be expected to be, aware of the rate at which duty has already been paid or able to get such information

For more information on making offset calculations, including the simplified method, read Excise Notice 197 for more information.

You must maintain records that allow you to evidence all of your duty offset calculations in your revenue trader records irrespective of which calculation method you use. Find more information about the requirements for revenue traders to maintain records.

In most cases where you make a duty offset calculation the two amounts will be the same and no additional excise duty will be payable. In this case, you do not need to use any excise override codes when making your declaration.

There may be some limited circumstances where the UK excise duty already paid on the goods is less than the amount chargeable on entry to Northern Ireland. This might, for example, be because of a routine duty rate change between the time the UK excise duty was paid in Great Britain and the time the goods arrive in Northern Ireland.

In these cases, you’ll need to pay the difference in duty as part of the declaration process. There are 2 ways to account for additional excise duty:

• periodically — using periodic reporting
• immediately — using import declarations

Periodic reporting of additional excise duty

From 1 April 2022 you can choose to account for any pay additional excise duty using periodic reporting, which removes the need to make individual payments of additional excise duty each time you move goods to Northern Ireland.

If you choose to use periodic reporting to account for additional excise duty, you’ll still need to make a declaration using the Customs Declaration Service. and maintain evidence supporting the calculation in your revenue trader records, but you’ll not need to use any excise override code.

Find out more information about how to use Periodic accounting in Excise Notice 197.

Immediate payment of additional excise duty

To account for the additional duty, you must use the manual override Additional Information (AI) codes ‘OVR01’ and ‘OVR06’ in box DE2/2. You must enter the amount of excise duty you’ve worked out that you need to pay in the DE 4/6 ‘payable amount’ box in the Customs Declaration Service. You’ll also need to make sure your revenue trader records contain information to allow you evidence your calculation.

Find out more information about National Codes and Customs Declaration completion requirements.

If the duty already paid is more than that to be charged on entry to Northern Ireland the difference is not reclaimable. This is a revenue protection measure. In this case, you’ll still need to make a declaration using the Customs Declaration Service. and maintain evidence supporting the calculation in your revenue trader records, but you’ll not need to use any excise override code.

Using the duty offset mechanism for post and parcels

There are different rules and processes required for moving excise goods from Great Britain to Northern Ireland by parcel.