All Businessesand Agents Who Are Involved in International Trade

Customs Information Paper51(2015)

New Customs Comprehensive Guarantees (CCG) introduced under the Union Customs Code (UCC)

All businessesand agents who are involved in international trade.

1. Introduction

This Customs Information Paper (CIP)is to advise interested parties of the new customs comprehensive guarantee requirements due to the introduction of the Union Customs Code (UCC).

2. Background

The requirementfor a CCG will take effect from 1May 2016, as a consequence of the UCC.

The legislation will allow,where appropriate, for businesses to continue with any current arrangements. However, all UCC guarantee requirements will need to be implemented by 1 May 2019 at the latest.

Any re-assessment of an existing approval after 1 May 2016 will mean that guarantee arrangements will need to be put in place to ensure compliance with UCC.

There will be changes that affect businesses importing, storing and/or processing goods and their agents, as the goods will not be released until the duty has been paid or secured by a guarantee.

3. What is a Customs Comprehensive Guarantee?

The CCGis a customs decision under the UCC.

It will cover both potential and actual debts.

New guidance and processes including application forms, are in development and will be available by end of March2016.

4. Types of Customs debt

An actual debt is one which becomes due immediately on import. For example, goods being released to free circulation which are secured by use of a duty deferment account.

A potential debt is one which is due or may become due at a later date. For example goods declared to Inward Processing. Whilst the goods are being processed, and prior to being put to an eligible method of disposal, the debt is a potential debt and must be secured.

5. Criteria to be met in respect of CCGs and security.

You will need to apply for an authorisation to hold a CCG (application forms will be available) and HMRC will carry out the necessary assurance checks before issuing an authorisation. The authorisation will inform the business the level of CCG that will need to be obtained from your guarantor(s) or whether you are entitled to reductions or waivers. The business will then need to provide the securities to HMRC.

You will need to comply with the new UCC criteria in order to be authorisedto obtain aCCG from 1 May 2016.

The criteria are:

be established in the European Union (EU)

no serious or repeated infringements of customs or tax rules

no record of serious criminal offences related to your business activities

are competent in relation to your business activities.

You will be assessed against the criteria, covering the past 3 years,for a CCG.

6. What if I don’t have 3 years of history?

If you have not been established for 3 years then you will be assessed against the criteria on what information and records are available.

7. What happens if I do not meet the authorisation criteria?

You will not be able to access the CCG if you do not meet the authorisation criteria.

There are other alternative ways to secure or pay for the customs debt, either by an individual guarantee or other methods of payment such as cash or credit cards.

8.What customs debts and liabilities will the CCG include?

The applicant must produce calculations to support the reference amount. These will need to be apportioned between all your actual and potential debts, and it will be agreed by HMRC.

This will include a total reference amount to account for:

Duty Deferment account

Simplified Import VAT Accounting (SIVA)

Excise-only if part of International Trade activities

Potential debts applied to any special procedures;

currently called Customs Procedures with Economic Impact (CPEI)

Temporary Storage facilities.

Goods declared using a Customs Freight Simplified Procedures (CFSP) declaration (covering the period between the initial declaration and the supplementary declaration)

9. UCC changes for SIVA

SIVA authorisations may continue under transition arrangements until 1 May 2019, unless any amendments are required which will require reassessment to UCC standards.

Further information can be found in the SIVA CIP 46 (2015).

10. Businesses that are not involved in International Trade

If you only operate an Excise Payment Security System (EPSS) account and have no customs activities then the CCG requirements are not applicable.

11. When will the changes take effect?

Where you already hold a guarantee or deferment account, reassessment for the new eligibility requirements will be made if you request any substantive changes to your current guarantee or deferment account from 1 May 2016 (for example, Annex A lists the type of change of guarantor, increase in guarantee level)that will prompt the need to apply for a new authorisation.

If you hold an authorisation/approval which is reassessed after 1 May 2016 by HMRC then guarantee arrangements will need to be put in place to ensure it is compliant with the UCC.

The UCC requires all reassessments to the new criteria,for impacted businesses,to take place by 1 May 2019. HMRC will contact you to request any further information at the appropriate time.

12. Who can act as a guarantor for a financial guarantee?

A financial guarantee must be obtained from one of the approved financial institutions. A list can be found here for BBA and FCA.

13. From 1 May 2016 provision of a CCG is mandatory in the circumstances listed below:

Any new authorisations and approvals for customs special procedures granted on or after 1 May 2016 will be required to provide a guarantee immediately for example:

Inward Processing (IP)

Outward Processing (OP) with prior importation

Temporary Admissions where the UCC does not provide for an outright guarantee on admission

End Use

Temporary Storage

Customs Warehousing.

Comprehensive transit guarantees issued on or before 30 April 2016 may continue to be used as security against transit movements which commenced on or after 1 May 2016 until reassessment by customs of the

guarantee, or

authorisation for a reduction or waiver.

14. UCC changes for deferment accounts and when they take effect

Your deferment account can continuewithout any change unless the deferment guarantee is amended or replaced. Annex A lists what would be seen as a requirement for a reassessment.

If you request one of the amendments in Annex A to another Customs authorisation which you already hold, the new guarantee arrangements will become applicable to the goods covered by that authorisation.

Any change made on or after 1 May 2016 to a deferment guarantee will require reassessment to UCC standards. The new CCG criteria will need to be met in order to retain the deferment facility.

15. Deferment Accounts used for charges other than Customs.

If your deferment account only covers excise and related charges (no customs duty) then there will be no impact on your account under the UCC changes.

16. Guarantee reductions and waivers

There may be certain occasions where a CCG may be reduced or waived.

These are dependent on either meeting Authorised Economic Operator for customs simplifications (AEOC)criteria or holding/obtaining an AEOC status.

Potential debts (for example, security for goods declared to a procedure where duty is suspended) :the proportion of potential debt may be authorised for a reduction of 50%, 30% or waiver depending on whether certain criteria can be met.

Actual debts (for example, deferment accounts): this will be reduced, on request, by 70% and isdependent on the businessholding/obtaining AEOC status.

From 1 May 2016 only businesses that hold AEOC authorisation will be eligible for the reduction on their deferment guarantee;see CIP 42 (2015)

17. Impacts of suspension, revocation and withdrawal actions

If you fail at any time to meet the criteria associated with the guarantee waivers or reductions you will no longer be entitled to receive these benefits and will need to amend your CCG amount.

If at any time an AEOC authorisation is suspended or revoked by HMRC or withdrawn by the business the full guarantee requirements will need to be met as you will no longer be entitled to these benefits. It is important that an AEOC retains up to date information in their records in respect of reference amounts.

18. Joint Contractual Liabilities (JCLs)

The UK are currently considering the new legislation and creating a process to deliver this new facility. Below is our interpretation of the detail provided so far, however, this may be subject to change. Once extra detail has been provided and clarity attained, HMRC, will provide further advice.

For potential debts only,you may wish to considera JCL. This is an alternative to a guarantee secured by a financial institutionand must be provided by a legal entity established in the EU.

A JCL can only cover potential debts. You may have:

one JCL to cover all potential debts or

multiple JCLs covering different customs activities.

The third party legal entity acting as the guarantor for the JCL will need to meet the criteria covered in section 5 and provide financial accounts covering the last 3 years for scrutiny by HMRC.

A JCL cannot be used to cover the actual debt; this still needs to be covered under the CCG- and can only cover UK debts. They are not available for cross Member States approvals.

19. Monitoring

It is the responsibility of the business to:

calculate the reference amount

monitor the reference amounts against customs activities

ensure sufficient coverage by the appropriate guarantee method

consider alternative options of methods of payment, for example individual guarantee for one large transaction to avoid exceeding the CCG.

HMRC will also monitor the use of the guarantees in place on a regular basis and contact the business in cases where guarantee levels have been found to be inappropriate.

20. Further Information

As this is new legislation and we are still in the process of developing documents and processes.

We will be sending further information out as soon as it is available.

Guarantees Policy

Issued on 2 December 2015by Customs Directorate, HMRC.

For general HMRC queries speak to the VAT, Excise & Customs Helpline on telephone: 0300 200 3700.

Your Charter explains what you can expect from us and what we expect from you.

For more information go to: Your Charter

ANNEX A