News / UK HMRC struggles to process 11-month backlog of delayed declarations

HMRC is “finally cracking down” on “widespread abuse” of its delayed declaration scheme, amid mounting concern that the treasury could lose hundreds of millions of pounds.

A customs expert said that prior to the UK tax authority’s decision to chase those failing to bring “delayed declarations to account”, only a “few household names” had abided by the six-month (175-day) concession for imports from the EU between 1 January and 1 July.

“Finally, we are seeing HMRC going after importers that have not made their delayed declarations,” the customs expert told The Loadstar.

“As to what is outstanding, I don’t know, but what is clear is that lots of non-UK companies in particular have not been submitting anything. The treasury has promised HMRC additional funding to chase non-compliant organisations.”

HMRC warnings that full customs controls goes live from 1 January urges importers that have yet to file delayed declarations to do so immediately. But a five-month backlog sees some questioning whether the UK has the resources to process the delayed declarations while simultaneously processing new ones arriving daily.

“The actual processing of supplementary declarations by HMRC would not be an issue, CHIEF [software] will just do it,” said the customs expert. “It is being able to make the declarations that is the bigger deal.

“Step two of the planner HMRC published confirms that there are two options – either become authorised, which would be a real pain, or use an agent that is approved.

“However, there are relatively few authorised agents, and those are still not receiving enquiries, suggesting that no one is acting on HMRC’s advice.”

Part of the issue is that delayed declarations are accounted for as supplementary, and can only be made by a UK company approved to use a simplified import procedure, known as a Customs Freight Simplified Procedure (CFSP).

The number of those certified remains relatively low, in part due to approval processing times, ranging from four to five months, “even with a perfect application”.

The bigger problem may be persuading brokers to become certified, as brokers processing EU imports as indirect clients are also left liable for any tax due, which the custom expert said would mean “few” would be willing to handle the backlog.

“If we process a declaration, we earn £35, ($47), but it also makes us jointly liable for the tax due,” he explained. “To give an idea of what we’re talking about, we processed a declaration that had some £2,300 in duty owed. If Customs comes and audits us, asks us to prove origin and we cannot, HMRC will ask us to fund the duty, or go to the importer.

“But, the importer in the EU could just say ‘come and get us’ and HMRC won’t. And doesn’t have to, because we are in the UK, equally liable and much easier to get hold of.”

The source noted that further evidence of the shortfall in viable brokers was the absence of any sustained “pick-up” in the number seeking CFSP approval as the first due date, 25 June, neared – and that interest has remained low. HMRC itself reports just 34 companies – one fewer than the 35 The Loadstar counted in September – that can serve as indirect representatives.

The customs expert said there was now concern that, in an effort to address the backlog, HMRC was “watering down” approval requirements, citing dealings with an authorised importer that “never should have been authorised”.

He added: “It was apparent they had absolutely no idea what CFSP was – so much for it being the ‘gold standard’ vehicle for customs declarations, offered only to ‘trusted’ importers.”