Policy paper

Customs – reviews and appeals against discretionary guarantees

Published 15 March 2023

Who is likely to be affected

Any importers who are required by HMRC to give an approved guarantee for the payment of import duty before imported goods can be released into the UK market.

General description of the measure

The measure enables a trader to request a review of, or appeal against, a decision by HMRC to require a financial guarantee as a condition of releasing imported goods from customs control. This is in circumstances where the amount of duty due is not clear at the point when a customs declaration is accepted by HMRC. The measure also brings the legislation relating to these guarantees within the framework of legislation covering other forms of customs guarantee.

Policy objective

The measure will ensure the appropriate rights of review and appeal are available to traders and will apply a consistent set of general rules for all types of import duty guarantee.

Background to the measure

Customs legislation enables HMRC to make the release of imported goods conditional upon the provision of a guarantee to cover duty that might be due. While the UK was in the European Union (EU), and during the transition period following its exit (‘the EU transition period’), the relevant rules were set out in EU legislation. This was supported by domestic legislation concerning the right of a trader to request a review or appeal to an independent tribunal.

Since the end of the EU transition period, domestic customs enforcement legislation has allowed HMRC to continue to require guarantee from importers in the aforementioned circumstances, but such a requirement is not currently linked to statutory rights to request a review, or to appeal to an independent tribunal. The measure will update the relevant customs enforcement legislation to bring all legislation relating to customs guarantees under one Act which will reinstate these rights. It will also provide consistency to the rules for these guarantees with the rules for all import duty guarantees.

Detailed proposal

Operative date

The measure will have effect on and after the date of Royal Assent of Spring Finance Bill 2023.

Current law

Legislation on the giving of a guarantee as a condition of releasing imported goods from the control of an HMRC officer where the amount of customs duty due is unclear is in Section 119 of the Customs and Excise Management Act 1979 (CEMA). Legislation on release of imported goods from control of an HMRC officer, and the approval of guarantees for payment of duty is in paragraph 17 of Schedule 1 of the Taxation (Cross-Border Trade) Act 2018 (TCTA).

Schedule 5 to the Finance Act 1994 sets out which HMRC decisions in relation to customs matters are subject to review and appeal under arrangements set out at Chapter II of Part 1 to that Act.

Proposed revisions

The measure will replace section 119 of CEMA with a new more up-to-date provision in Taxation (Cross-Border Trade) Act 2018 (TCTA).

This will bring all legislation relating to customs guarantees and the release of goods from the control of an HMRC officer within the framework of TCTA legislation and will allow general rules and processes relating to customs guarantees to be applied consistently.

The effect will be that the guarantees covered by this measure will be subject to:

• general rules for guarantees set out in the Customs (Import Duty) (EU Exit) Regulations (SI 2018/1248)
• a right under Finance Act 1994 for an importer to request a review of an HMRC decision in relation to the guarantee or to appeal to an independent tribunal against such a decision

However, this measure will not change the rules concerning how and when a guarantee may be required by HMRC.

Summary of impacts

Exchequer impact (£m)

2022 to 2023	2022 to 2023	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact.

Economic impact

This measure is not expected to have any significant macroeconomic impacts

Impact on individuals, households and families

There is expected to be no impact on individuals as this measure is only expected to affect businesses and traders.

The measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

It is not expected that there will be adverse effects on any group sharing protected characteristics.

Impact on business including civil society organisations

This measure will have a negligible impact on a very small number of businesses where HMRC need to verify the information on the customs declaration (including the amount of import duty due).

The measure ensures the right of appeal to a tax tribunal against the requirement to provide a guarantee.

The measure is not expected to affect the number of traders who are subject to a guarantee requirement. The only impact will be in relation to the new review and appeal rights, and only where a trader chooses to make use of them. One-off negligible costs would include familiarisation with the process of requesting a review of a HMRC decision and/or appealing to a tax tribunal.

There are not expected to be any further one off or continuing costs.

This measure is expected overall to improve business’ experience of dealing with HMRC as, without it, the only route available to them to challenge a HMRC decision to provide a financial guarantee to HMRC would be to apply for a Judicial Review.

This measure is not expected to impact civil society organisations.

Operational impact (£m) (HMRC or other)

HMRC will incur no financial costs to implement this measure.

Other impacts

Other impacts have been considered and none have been identified

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change, please contact Saddique Saleem by email: saddique.saleem@hmrc.gov.uk.