The success of German steel producer Thyssenkrupp in the recent tribunal which overturned a landmark £9m customs duty and import VAT assessment has been big news in the world of international trade.

Unsurprisingly, it has been followed by a gentle sigh of relief for many of the major UK importers which, like Thyssenkrupp, are currently using Inward Processing (IP) as a tool for cost effective trade on goods imported for processing and subsequently exported.

The initial judgement made against Thyssenkrupp left many importers with a very uncomfortable sense of vulnerability, with questions over the processes they have (or don’t have) in place to ensure the accuracy of customs declarations and how they might fare if they were to find themselves in ThyssenKrupp’s shoes. But does this victory mean that importers can sleep easy again at night, knowing that good sense has prevailed and what was widely considered to be a disproportionate penalty for arguably minor errors has been rectified?

Steel Production

An image of a steel production with a male supervisor
Monica Ryder, Head of Customs at Barbourne Brook breaks down what this means for businesses going forward:

“There’s no doubt that this feels like a sensible and fair judgement but looking at the bigger picture, it’s vital that accuracy and attention to detail remain paramount in minimising risk, ensuring stability and working to a robust financial strategy.  While ThyssenKrupp were successful in court, the disruption to their business has been immense, as they were required to pay the entire £9m and battle for seven years for full restoration.  The cost of the legal battle and the senior exec hours required to instruct solicitors and prepare for hearings should not be overlooked.  It still remains unclear whether HMRC will appeal further.”

Businesses looking to take advantage of Inward Processing (IP), should be mindful of the following risks and responsibilities highlighted by the case:

  1. Bills of Discharge (BoDs) must be submitted on time and be error-free. Any errors can be costly to correct.
  2. The BoDs must reflect reality and a full and detailed audit trial is key.
  3. HMRC may audit and assess the duty contained in a BoD for up to three years from the date of submission of the BoD.
  4. The Upper Tribunal concluded that only significant errors can lead to assessments and only against the affected lines. However, debating with HMRC whether an error is significant or not can be costly.
  5. The same principles apply to Authorised Use (previously known as End-Use Relief), which also requires submission of regular and accurate Bills of Discharge.
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The outcome of the tribunal provides clarity for import businesses on the complex nature of compliance when working with Bills of Discharge:

  1. There is no requirement that the BoD has to be reconciled to the MSS. If stock records and documents could be used to reconcile the two, then there is no material error. HMRC through its authorisation did not make such a reconciliation mandatory.
  2. FTT/HMRC were wrong to say that the ECJ case of Dohler was a precedent for stating that errors on a BoD had the same effect as not submitting the BoD at all, and therefore a material error giving rise to a duty demand.  Given the number of data points this would be absurd and disproportionate.
  3. Only material errors give rise to a duty demand and only in reference to the lines affected by the error. The tribunal first looked at some general principles and then at the specific groups of errors. Ten out of twelve errors were found not to be significant:
    • Errors which had no effect or no significant effect would not give rise to a duty demand.
    • Any error on a data element not required to be on the BoD was not a significant error.
    • Perhaps most importantly, if the error was easily corrected by reference to stock records or documentation, it was not deemed to be a significant error.

How Can Barbourne Brook Help?

Barbourne Brook is experienced in dealing with common issues and exposures in Inward Processing through work with clients across several industries.  Experienced customs consultants can provide training or offer a full customs management service, depending on your needs, including:

  • A review of current BoD processes and identification of areas of risk and exposure
  • Development and submission of periodic BoDs on your behalf
  • Implementation of our analytical software, CAT360, to record and report post-clearance amendments to ensure they are included in the BoD submission.

For further information, or to discuss any aspect of your customs duty, call Adam Wood for a confidential, no-obligation conversation on 01905 914031 or you can email Adam at

About Barbourne Brook

Barbourne Brook are a proactive team of customs duty planning experts with a wealth of knowledge and insight in the customs sphere, offering scalable solutions backed by industry-leading technology.

Get in Touch

The Hop Merchant
21 Sansome Street

+44 (0)1905 914031


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