My business can’t pay Customs & Excise fees – what now?

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Updated: 17th October 2021

What to do when you cannot pay Customs and Excise fees

When you import goods from a non-EU country, your business must pay customs duty before the items will be allowed in. Excise duty is an ‘inland tax’ that’s also charged on certain imported goods, including alcohol, tobacco, and fuel, in addition to customs duty.

Clearing your goods through UK customs is crucial if you’re to trade effectively as any delays can seriously affect your cash flow and profit as a business. So before we look at what happens when you can’t pay your customs and excise fees, let’s see what constitutes these charges.

How are customs fees calculated?

Customs fees consist of three different elements:

  • UK Duty: charged as a percentage based on the type of goods imported, their value, and where they originated
  • VAT: currently 20% of all charges
  • Miscellaneous costs: including storage, and testing of goods by UK Customs

Whether you normally pay customs and excise fees immediately when the goods are imported, or you’re allowed by HMRC to defer payment, failing to meet your customs and excise obligations can be disastrous for your business.

What happens when my business can’t pay the required customs and excise duty?

If customs and excise fees aren’t paid, your goods will be held in a storage warehouse pending payment, so you’ll also need to cover these extra costs. If the goods aren’t able to enter the UK, ultimately you’ll have the extra cost of shipping them back to their country of origin in the hope that your supplier will refund you, or even of having the items officially destroyed.

So what can you do to prevent a catastrophe at customs, and ensure you’re able to distribute your imported goods in the UK as planned?

Control cash flow

Effectively managing your cash flow helps you to pay all your bills on time, and prevents problems with suppliers and HMRC. Cash flow forecasts that predict your cash needs in detail over a period of time also enable you to deal with any shortfalls that emerge.

Seek professional help

Obtaining help from licensed insolvency practitioners (IPs) allows you to ‘health check’ the business as a whole, and make sure you’re not heading towards insolvency. IPs can identify your best options, which might include applying for HMRC’s Duty Deferment Scheme, for example, which can delay payment for up to 30 days.

Additional finance

You may be able to pay your customs and excise fees by obtaining additional business funding. A number of finance options are now available to businesses that offer an alternative to the high street bank, and some can be secured relatively quickly. These include finance products based on the value of your hard assets and also your sales ledger, but the most appropriate depends on your type of business.

Formal insolvency

If your business is officially insolvent and you have a number of debts, you may be able to enter a procedure that protects the business from closure. Company administration is just one process that might help – it offers a moratorium period during which your best options can be established without fear of legal action.

If you would like more assistance when you can’t pay your customs and excise fees, please contact one of our licensed insolvency practitioners at Real Business Rescue. We are a major part of Begbies Traynor Group – the UK’s largest professional services consultancy – and focus on business rescue and recovery. Working from an extensive network of offices throughout the UK, we’re able to offer free same-day consultations.

Keith Tully

Partner

0800 644 6080
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