Recently Integration Point held a webcast on the European Union’s (EU) Union Customs Code (UCC) and what organizations need to know now that we are almost one year away from implementation.  The presenters were from the United Kingdom’s HM Revenue & Customs (HMRC) team that has been working on the UCC. During the webcast there were several questions that we were not able to answer due to time. The panel agreed to provide answers to those questions to be posted here.  Today’s post deals with Guarantees and Special Procedures.

Previous Q&A posts dealt with the following topics and links are provided to those posts as well.

If you missed the webcast, you can view it on-demand here.

Will guarantees be required against import VAT? Also - calculation of guarantee - will this be an average figure of potential & actual debts over a year or how will this be calculated­?

a) Guarantees are required against import VAT where SIVA is used.  Import VAT is not within the scope of the UCC

b) Calculation of a guarantee;  This will not be an average figure of potential and actual because both are calculated differently, however they will be added together as one comprehensive guarantee will cover both actual and potential debts. For this reason I have set out a detailed explanation of how each will be calculated.

- Actual debts - An Actual debt is something that is due and payable e.g  anything released to free circulation with a positive rate of duty is an actual debt.  If the duty is paid, then there will be no requirement to provide a guarantee,  however, if the amount is deferred, Article 90 (1) sub Para 2 of the UCC, requires the guarantee limit (reference amount) to be set at a level equal to the precise amount of the customs duties (and other charges) incurred for the actual debt.  This means that where an individual guarantee is provided, this will be the specific amount as calculated for that individual transaction or customs declaration.

  •  Where it is not possible for this amount to be fixed in advance (for example deferred charges over a given period), the guarantee limit for actual debts will be calculated using the deferment account guarantee limit for customs duties where these are already held.
  • For established businesses who do not currently operate deferment, we are looking to use evidence of the customs duties paid over the previous 12 month period to establish the reference amount.
  •  For newly established businesses, projected forecasts for the value of goods to be imported and the highest rate of duty applicable to those goods or known purchase orders and invoice values of the goods and the actual duty rate applicable to these goods will most likely be used to calculate the reference amount.

- Guarantees for potential debts - These are calculated using the highest rate of duty that may be applied to the goods.  The Guarantee calculation does not take account of any preference or tariff quota rates that are available.  This is because, whilst they remain 'potential debts' no eligibility for the reduced rates have been confirmed.

- For the purposes of a Guarantee under a Customs authorisation, we are looking to calculate the Reference amount for potential debts using the following;

i) Average value of the goods held under the procedure at any point in time (established using proven invoice values, average throughput value of goods in a given period, value of the goods covered by an insurance policy for the premises or company accounts).

ii) The average length of time the goods are held in the procedure;

iii) The highest duty rate applicable to the goods (this does not take account of any quotas, preference etc. - any potential Anti-Dumping Duty (ADD) should be included)

This calculation sets the limit for the maximum amount of potential duty within the procedure at a point in time and will need to be repeated for each regime or procedure that an economic operator uses, in order to arrive at an overall liability for the economic operator's potential debts.


Potential debt - can a deferment provide the guarantee?

Yes - however, commercial costs may be higher, compared to getting a comprehensive or single guarantee


If you have AEOC, is the maximum waiver against a guarantee going to be 30%?­

There are differing levels of reduction and waiver dependent on the type of debt:

  • Actual debt (e.g. duty deferment) – you must hold an AEOC to benefit from the reduction to 30% guarantee requirement.
  • Potential debt (e.g. special procedures such as Customs Warehouse) – an AEOC will obtain a full waiver of the guarantee requirement.


In regards to special procedures, what is retrospection used for?­

A retrospective (or retroactive) authorisation can be requested in various circumstances. The most common are when the authorisation holder has forgotten to renew at the end of the period of validity or where goods originally imported to free circulation are now the subject of an export order and the importer wishes to obtain relief for import duties previously paid.


For retail sales - if you sell directly from the warehouse does this have an impact on the duties paid? What are the most compelling reasons to follow that program?­

Duty will be calculated on the basis of the value of the goods being removed under Article 85 UCC.


Should we presume that the mandatory guarantee is waived / reduced if AEO (C) held?­

If you hold an AEOC then you will be entitled to benefit from a waiver of the guarantee requirements covering potential debts (see Q3 as part of the first post on AEO)


The final post in this series will contain general questions on the UCC.