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HMRC Repayment, Refund and Remission of Import Duty and VAT

Since BREXIT EU exports to the UK are subject to normal customs procedures. Applications for remission and repayment of import duties are now a common occurrence, in particular, for those traders who engage in ecommerce to end customers, that is, business to consumer sales. Returns by customers in the ecommerce setting are frequent. Processing such returns, in particular for sellers based outside the UK, comes with an administrative overhead which requires dealing with large swathes of data within strict deadlines.

A trader may claim for repayment if they have overpaid import duty and VAT. An importer, a representative of the importer, an agent, a freight forwarder or a private individual may make a claim. Depending on the situation, the relevant forms are the C&E1179 and the C285.

Rejected Goods

A trader may make an application for repayment (refund of any duties overpaid) or remission (waiver of any duties that have not yet been paid) on goods imported from outside the UK when:

The goods have been rejected because at the time of declaring them to a customs procedure they were:

- Defective;

- damaged before being cleared by customs;

- not compliant with the terms of the contract you imported them under;

- they’re the same goods from the original customs declaration;

- goods have not been used, other than the minimum necessary to establish they were defective or did not comply with the contract;

- goods have not been sold after finding them to be defective, damaged or not compliant with the contract; and

- goods will be re-exported or destroyed.

Time Limits

The time limit for submitting a claim for repayment of overpaid duty and VAT is:

- 3 years for overpayments

- 1 year for rejected imports

- 3 months for invalidation of a customs entry

Taxation (Cross-border Trade) Act 2018 (“TCTA”)

Schedule 6, paragraph 10 of TCTA lays down administrative provisions in relation to repayment or import duties and interest. Schedule 1, paragraph 16 deals with an amendment or withdrawal of customs declarations. Schedule 1, paragraph 16(b) provides a discretion to HMRC.

Customs and Excise Management Act 1979 (“CEMA”)

Section 123 of CEMA, as amended by the TCTA, refers to the repayment of duty where goods are returned or destroyed by an importer.

Customs (Import Duty) (EU Exit) Regulations 2018 ("CIDEER")

Section 123 of CEMA is further expanded in Part 7, Chapter 2 of CIDEER titled ‘reduced duty case’. This part addresses various scenarios in respect of which a remission or repayment may be made further to an application made under Chapter 3.

In summary, Reg 47 of CIDEER defines a reduced duty case; Reg 49(2) should be read when Reg 50 cases are being considered; Reg 50 deals with any overpayment made in error; Reg 51 deals with defective and goods that do not comply with terms of the sales agreement; Reg 52 deals with exceptional circumstances (referred to as special circumstances pre Brexit) where it would be just and equitable to offer a refund or remission; Reg 53 deals with the withdrawal of a customs declaration; Reg 55 is the provision under which the application for repayment is made; Reg 58 stipulates the contents of the said application and states that one ought to refer to HMRC public notice on the subject; Reg 67 deals with the required conditions for defective and noncompliant goods; and Reg 70 deals with HMRC’s power to grant a repayment even when an application is not made.

Consumer Protection Laws

When considering the terms of the sales agreement in relation to defective and non-compliant goods, traders must consider the protective provisions of the statutes that relate to consumer rights.

International Conventions and Treaties

In addition to the above UK is bound by international conventions and treaties. Many of these govern the procedures that we must have in place in relation to customs and trade. UK legislation cannot contradict international conventions and treatise.

UK Trade and Cooperation Agreement

Article CUSTMS.3 of the Trade And Cooperation Agreement Between The European Union And The European Atomic Energy Community, f The One Part, And The United Kingdom Of Great Britain And Northern Ireland, Of The Other Part places a duty on the UK that its customs provisions and procedures are consistent with international instruments and standards applicable in the area of customs and trade, including the WTO Trade Facilitation Agreement, the substantive elements of the Revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures, the International Convention on the Harmonised Commodity Description and Coding System, as well as the SAFE Framework and the Customs Data Model of the WCO.

The Article goes on to state that all customs provisions and procedures are based on legislation that is proportionate and non-discriminatory, avoids unnecessary burdens on economic operators, provides for further facilitation for operators with high levels of compliance.

World Customs Organisation’s Revised Kyoto Convention

The UK is a signatory to the International Convention of the Simplification and Harmonisation of Customs Procedures and th

e Revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures (“Revised Kyoto Convention”).

Paragraph 4.12 of General Annex/Chapter 4 of the Revised Kyoto Convention deals with the repayment of duties and taxes. Paragraph 4.19 sets the standard in this regard stating that a repayment shall be granted in respect of imported or exported goods which are found to have been defective or otherwise not in accordance with the agreed specifications at the time of importation or exportation and are returned.

Refusal to Grant an Application for Repayment or Remission

Failure to complete the application correctly may result in the rejection of the claim. This may well mean that a trader is then out of time to resubmit the claim, where such an option exists.

Hammad Baig has experience in advising large ecommerce platforms in relation to repayment and remission applications. You may contact Hammad's

should you wish to discuss customs related matter with him.


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