3. Guarantees (Transit Manual Part III refers)
Processes regarding guarantees including types, how reference amounts are calculated and when guarantees are released.
Customs duties and other charges applicable to goods are temporarily suspended when goods enter into a Transit movement. In order to ensure the payment of duties and other charges when a (customs) debt is incurred in the course of a Transit operation, the holder of the procedure must provide or acquire a guarantee. This section explains amongst other things:
- types of guarantee that can be used
- how the reference amount should be calculated
- when the guarantee is released
The relevant Force of Law comes from these Statutory Instruments.
For this purpose, the following types and forms of guarantee will be acceptable:
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a) individual guarantees in the form set out at Annex C3 to Appendix III of the Convention, pursuant to an undertaking provided using the form set out at Annex C2 to that Appendix
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b) individual guarantees in the form set out at Annex C1 to Appendix III of the Convention
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c) undertakings for a comprehensive guarantee given by a guarantor using the form set out at Annex C4 to Appendix III of the Convention
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d) cash deposits in pounds sterling, or other means of payment that HMRC regards as equivalent taking the form of:
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i. corporate credit cards
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ii. commercial debit cards
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iii. bank transfers (the systems known as “BACS” AND “CHAPS”)
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iv. online and telephone banking facilities (the system known as “Faster Payments”)
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v. cheques
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In all of the above cases:
Unless otherwise specified, the guarantee must be valid for enforcement in each common Transit state involved in the common Transit procedure.
In cases covered by (a), (b) and (c) above the guarantor shall:
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indicate in their undertaking an address for service or appoint an agent in each common Transit state involved in the common Transit procedure
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undertake in writing to pay the secured amount of customs debt. The undertaking shall also cover, within the limits of the secured amount, amounts of debt payable following posteriori checks
Full details of guarantees are contained on the GOV.UK website. Information on comprehensive guarantees can be found on the Import and Export: Customs Comprehensive Guarantees (CCGs).
If the trader is ‘unknown’ to HMRC (not currently recognised as trading in the UK), the recording of guarantees on the GMS will take approximately 4 working days (to allow for the capture and download of trader details).
The Guarantee Office will record the guarantee details on the GMS and, once recorded, send an email to the trader with the Guarantee Reference Numbers which, together with the access codes, will be input to the electronic declaration.
Holders of the procedure intending to use guarantee types 1 (Comprehensive) or 2 (Individual guarantee) can find a list of approved guarantors/financial institutions on the Bank of England website or for Northern Ireland on the European Banking Authority website.
Guarantee Declaration made via free gov.uk web portal
Where the actual guarantee securing the movement is a Type 0 (Guarantee Waiver) or a Type 1 (Comprehensive Guarantee), a guarantee value is required.
Guarantee Declaration made via XML channel
Calculations of the guarantee reference amount are required in relation to all guarantee types.
Calculation of the guarantee amount (total guarantee available)
The amount of guarantee must be calculated in such a way that it covers the full amount of the (customs) debt liable to be incurred (CTC Appendix I Article 18 and UCC Article 89 (2) and Article 90 refer).
The method of determining the amount of the guarantee is set out in section 3.5 below.
It must cover the full amount of the (customs) debt liable to be incurred. The calculation is to be made on the basis of the import duties that would be applicable to goods of the same kind in the country of departure in case of release of the goods for free circulation.
The goods concerned are to be classified on the basis of the customs tariff, but if the classification is not possible or appropriate, the amount of guarantee may be assessed.
In exceptional cases where such an assessment is also not possible, the amount of guarantee may be presumed to be 10,000 EUR. This basic idea applies to both a comprehensive and an individual guarantee.
Where the actual guarantee securing the movement is a Type 2 (Individual Guarantee), Type 3 (Individual Guarantee in cash) and Type 4 (Guarantee Vouchers (€10,000 each)), a true calculation of the reference amount must be included in the declaration.
For Guarantee Type 2, Type 3, Type 4 and Type 5 (Guarantee Waiver, secured amount does not exceed € 500), the Office of Departure will overwrite the field if not correct.
For Guarantee Types 7 (Guarantee not required between the Office of Departure and the Office of Transit), 8 (Guarantee not required for certain public bodies) and A (Guarantee waiver by agreement), an amount will be entered by the Office of Departure.
For NI to EU Movements only: Guarantee Type 8 will be available.
Type 8 (Guarantee not required for certain public bodies) and A (Guarantee waiver by agreement), an amount will be entered by the Office of Departure.
Introduction
The amount of a guarantee must be calculated in such a way that it covers the full amount of the (customs) debt liable to be incurred.
Further information is provided in the Transit Manual, Part III, section 2.2.
Calculation
In general, the calculation is to be made based on the highest rates applicable to such goods in the country of departure. The calculation is to include all the customs duties and other charges including excise duties and value added tax that are applicable to those goods at import. The highest rates concerning customs duties result from the conventional rates. Reductions in the duty rate that are, for instance, subject to supplying proof at the time of release for free circulation - for example, a preferential rate or a quota - are not to be considered.
The calculation is to be made on the basis of the import duties that would be applicable to goods of the same kind in the country of departure in case of release of the goods for free circulation. Goods that are in free circulation in the UK are to be treated as goods being imported from a third country.
This applies also when GB Domestic goods are placed under the Common Transit procedure. These goods are presumed to be non-UK goods for the purpose of the calculation of the amount of the guarantee to ensure the possible payment of a (customs) debt in a CTC Contracting Country other than the UK.
The goods concerned are to be classified on the basis of the customs tariff, but if the classification is not possible or appropriate, the amount of guarantee may be assessed. The assessment must ensure that the guarantee will cover the full amount of the (customs) debt liable to be incurred. In exceptional cases where such an assessment is also not possible, the amount of guarantee may be presumed to be 10,000 EUR. This basic idea applies to both a comprehensive and an individual guarantee.
If the guarantee fails GMS checks, a ‘Guarantee not valid’ message (IE055) will be issued. Upon receipt of this message, the declarant must request cancellation and submit a new declaration with a new LRN. Prior to submitting the new declaration, it is essential that the error (as recorded on the IE055 message) is resolved to avoid the same problem recurring.
The guarantee will fail a GMS check if the value of the guarantee on the Transit declaration is greater than the remaining capacity the holder of the procedure has available on a Type 1 or Type 0 comprehensive guarantee. If the holder of the procedure attempts to submit a Transit declaration with a guarantee value greater than the remaining balance available on their comprehensive guarantee, this will result in an error message “insufficient available balance”.
GMS requires all Type 1 and Type 0 guarantees to retain a balance of at least 1 penny at all times, where the guarantee is in GBP. This means that if the holder of the procedure attempts to use the full balance down to the last penny, this will result in the error message “insufficient available balance”. To avoid this the holder of the procedure should ensure that there is always at least one penny of spare capacity remaining on their comprehensive guarantee which is not allocated against movements. This issue does not affect guarantees in EUR currency where the full balance can be used.
If the Office of Departure ‘rejects’ the guarantee (for example, the guarantee type is not appropriate for the goods) then this is input to the system and the declarant will be advised by phone or email as appropriate. Upon receipt of off-line advice, the declarant must submit a new declaration with a new LRN. The Office of Departure will perform the cancellation. Prior to submitting the new declaration, it is essential that the advice from the Office of Departure is acted upon. Failure to do so may result in the same problem recurring. The cancellation request must make reference to the new LRN or, if the new declaration has already been submitted and accepted by the NCTS, the new MRN.
If registering of the guarantee is successful, the Transit movement will be released and the declarant will receive the ‘Release for Transit’ message, IE029. However, release by the NCTS will be dependent on completion of the Inland Transport Mode (19 04 000 000) / Identity of means of transport at departure (19 05 000 000). Failure to enter the means of transport will occur in either of these ways:
- if both D.E. 19 05 000 000 and 19 04 000 000 are left blank (completion of D.E. 19 05 000 000 alone is sufficient to enable release by Customs) Customs will request the necessary information before the movement can be released
- other than for modes 5 and 7 (which do not require an identity to be entered), if the mode is entered but the identity is left blank the declaration will be rejected and will need to be resubmitted
This will result in either the Office of Departure seeking details to enable release or the declaration being rejected.
Holders of the procedure should complete form CCG1 and send it to the Customs Comprehensive Guarantee Team at the address given on the form. For further details to check if you need a CCG see Apply for a customs comprehensive guarantee to cover customs debts.
See further information on getting a customs guarantee.
The Common Transit Team will issue the applicant with an authorisation and guarantee certificates or guarantee waiver certificates (required for the business continuity procedure). The Common Transit Team will also enter the details of the guarantee or guarantee waiver including the reference amount onto the NCTS Guarantee Management System (GMS) and issue the applicant (holder of the procedure) with a Guarantee Reference Number (GRN) and access code. The holder of the procedure must use both the GRN and the access code on the NCTS declaration.
Type 1 and 0 Guarantees can cover multiple movements up to the amount of the reference amount which is calculated based on the potential debt over a given period of the applicant’s Transit activity.
Holders of the procedure wishing to use an individual guarantee by a guarantor must contact the intended Office of Departure well in advance of the start of the Transit procedure. This will provide Customs with the opportunity to approve the holder of the procedure’s chosen guarantor and to ensure that the guarantee amount is adequate prior to commencement of the operation.
The holder of the procedure must provide the guarantor with full details of the type and quantity of the goods to be moved and the offices of departure and destination to be used. The guarantor will then complete a guarantee undertaking and return it to the holder of the procedure.
The guarantee must not be dated more than 28 days earlier than the date of authentication of the Transit declaration.
The holder of the procedure must present the guarantee undertaking to the Office of Departure. Customs will complete Part II and return it to the holder of the procedure. For NCTS purposes, the holders of the procedure must email (with scanned guarantee attachment) the authenticated individual guarantee to the Guarantee Office 3 working days before the electronic declaration is submitted. At the same time the holder of the procedure must email the access code to the CCTO so that the details of the guarantee can be entered on the Guarantee Management System (GMS). Once this information is entered, the Guarantee Office will send a Guarantee Reference Number (GRN) to the holder of the procedure by email. The holder of the procedure must enter both the GRN and the access code on the electronic declaration. The holder of the procedure must also lodge the guarantee with the Office of Departure before submitting the Common Transit declaration.
If the holder of the procedure holds a foreign guarantee, or is not recognised as a UK trader, the holder of the procedure must email (with a scanned guarantee attachment) to the Guarantee and Simplifications Team 4 working days before the declaration is submitted. This will allow time for the holder of the procedure’s details to be captured and downloaded onto the UK NCTS system.
Under business continuity the holder of the procedure must present the guarantee with the goods and a copy of the manual procedure or offline TAD at the Office of Departure. Customs will check that the guarantee is valid and sufficient to cover the duties and other charges on the goods. Customs will complete Part II of the undertaking and send it with a copy of the authenticated declaration to the Guarantee and Simplifications Team.
The Simplifications Team will retain the undertaking until the movement is discharged. It will then be returned to the guarantor.
The Simplifications Team can be contacted by:
- email at nationalsimplifications.ccto@hmrc.gov.uk
- phone on 0300 322 7905 (choose option 2)
- post at:
HM Revenue & Customs
National Simplifications Team
BT-CCTO
HM Revenue and Customs
BX9 1EH
Introduction
Offices of departure in the UK may have differing arrangements for accepting cash deposits. Some offices may not have the facilities to accept all of the options described here. Holders of the procedure are therefore advised to contact the Office of Departure in advance to confirm the arrangements.
Where the Office of Departure accepts a cash deposit it will check that the amount is adequate to cover the potential duties and other charges liable on the goods being moved. The Office of Departure will make appropriate arrangements with the NCH (National Clearance Hub) Accounting Team. When the movement is ended, the cash deposit will be returned to the holder of the procedure.
In the UK, the currency to be deposited must be in pound sterling (£).
Refund Procedure
CCTO must monitor the progress of the movement to “written off” stage. Once satisfied, CCTO will confirm repayment details (address, account code and sort number) with the Trader and send a Refund of CT Cash Deposit letter to the Trader. A copy of this letter must be emailed to NCH Accounting Team with an Authority to Refund email to customsaccountingrepayments@hmrc.gov.uk.
CCTO will retain copies of all correspondence for Audit trail purposes.
If a holder of the procedure requires an individual guarantee in the form of vouchers, they may apply to any of the authorised guarantors operating in an EU or CTC country listed in the Transit Manual Part III, Annex 7.1. Note, however, that this list is subject to change and, at the time of publication of this guidance, there are currently no authorised guarantors in the UK for this type of guarantee.
For NI to EU movements only not moving through GB
The Transit Manual states that a Type 8 guarantee waiver is granted to public authorities without any authorisation, on condition that the authorities have been set up on the territory of the EU. The same applies to international organisations that have been formed between states or governments of which at least one is a member state.
The waiver cannot be used by an organisation that is based solely in GB to send goods across the EU. UK regulations allow public authorities to use a similar waiver when sending goods across the UK, including NI.
The process of releasing a holder of the procedure’s guarantee liability amount cannot start until the goods have been arrived at destination. The goods and the electronic MRN or paper TAD must be presented to end the movement on the NCTS. If the holder of the procedure holds a comprehensive guarantee the GMS will re-credit the guarantee with the liability amount.