A Spotlight on: HMRC V Thyssenkrupp Materials (UK) Limited
Strong & Herd LLP
Supporting international business! We provide practical training in the areas of export, import and customs procedures.
A recent court case involving the appellant, Thyssenkrupp Materials (UK) Limited (TK), demonstrated that HMRC may always be powerful but not necessarily always right!
In light of the recent court case involving Thyssenkrupp Materials (UK) Limited (TK) and HMRC, businesses facing potential discrepancies or disputes with HMRC during audits can benefit from the expertise of Strong and Herd Consultancy.
The case highlighted that while HMRC holds significant power, they are not infallible, and errors can occur in their assessments.?
Strong and Herd’s Audit HealthCheck offers specialised services, tailored to assist companies in navigating complex Customs procedures, ensuring compliance, and enabling you to be fully prepared. By utilising our expertise, companies can proactively address concerns before audits or seek support during audits, to rectify genuine mistakes and mitigate potential financial implications.
The Thyssenkrupp case revolved around the correct use of inward processing relief (IP) and whether a single error on the Bill of Discharge (BoD) or data mismatch between BoD and HMRC’s Management Support System gives rise to a Customs debt under Article 204 Community Customs Code in relation to all products on the BoD. The basis of the demand was that HMRC considered that TK’s quarterly BoDs contained errors which breached the relevant IP requirements, such that TK was not entitled to the IP claimed for that period.?
The financial implications for TK were staggering. In 2017, HMRC issued a C18 Post Clearance Demand Note, demanding TK to pay a vast ￡8,889,275.43. This amount was a combination of ￡2,409,009.91 for Customs duty and ￡6,480,265.52 for import VAT, all for the period from March 2014 to December 2014.
Essentially, TK’s case was that it agreed that its BoDs contained some errors and some data that was inconsistent with information in HMRC’s Management Support System (MSS) database but maintained that the overwhelming majority of entries were accurate and that the identified errors were immaterial or de minimis in that the BoDs contained a small number of errors (such as typographical errors) across a total of over a hundred thousand data points. HMRC did not concur, maintaining its position that a single defect on a BoD means that Customs duty and import VAT liabilities arise regarding all the imports covered by the quarterly BoD in question.
On 28th March 2024, a higher court delivered a significant ruling favouring TK. The court allowed TK’s appeal, primarily because the errors had 'no significant effect on the correct operation of the Customs procedure in question.’ The court also dismissed the notion that 'a single error in a single cell within a BoD will lead to a Customs debt being incurred in relation to all goods covered by that BoD', deeming it 'entirely absurd. ’From a financial perspective, this was a significant win for TK, and potentially opened the door for other businesses finding themselves in a similar position.
Despite TK’s favourable outcome, the case served as a stark reminder of the importance of strict adherence to the correct processes and procedures associated with IP. It particularly underscored the need for accuracy in the information provided on the BoD.?
With guidance from our advisors, businesses can enhance their understanding of Customs procedures, maintain accuracy in documentation and, ultimately, safeguard against erroneous demands, as exemplified by the favourable outcome achieved by TK.?
Feel free to reach out today to initiate a discussion regarding your compliance requirements. [email protected]
Alternatively, attend our specialised audit course. HMRC is conducting audits on businesses to ensure they understand and comply with customs regulations. This course is designed to help traders prepare for customs audits. It covers standard procedural requirements and provides detailed information on key areas such as valuation, preference, VAT evidence of export, and the use of special procedures.
Preparing for a Customs Audit
Tuesday 7 May, 2024
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The virtual training sessions were fully interactive and relevant to our business, ensuring we were well-prepared for the audit ?which resulted in the authorisation being granted by HMRC without difficulties, and we couldn’t have done it without Strong and Herd’s support."- Abakhan Fabrics ?
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With thanks to Liam Noonan for this month's Spotlight On.