Government updates advice on last year's VAT and excise overpayment issue on CDS

Thu 12 Jan 2023
Posted by: William Barns-Graham
Trade News

HMRC logo outside offices in stone wall

The government has issued further guidance to businesses that may have paid excess VAT or excise duty due to an issue with a system update on the Customs Declarations Service (CDS) at the end of last year.

The issue on 30 December led to overcharges for some traders that submitted declarations that day.

HMRC quickly resolved the issue (below) and has issued guidance to the industry on how traders can correct the overpayments.

IOE&IT support

IOE&IT trade and customs specialist Suzanne Alecrim welcomed the guidance and advised affected traders to review it carefully.

“The speed and detail of the advice from HMRC following the issue with CDS at the end of last year is welcome,” said Alecrim. “Affected traders should review this guidance carefully and if you’re unsure about what you need to do, get in touch with the IOE&IT for further support.”

She advised business members to contact the IOE&IT International Trade Technical Helpline, and also advised that VAT and excise consultancies are available for all businesses. She added:

“More broadly, if you are uncertain about completing declarations and the associated VAT or excise charges, getting a health check from one of our team of expert consultants is advisable. Businesses should not cut corners or save costs with compliance because non-compliance can result in fines or being stopped from trading.”

She said excise traders should review the IOE&IT’s training course on excise duty as well.

VAT advice

The government’s Joint Customs Consultative Committee (JCCC) advised customers using a Duty Deferment Account (DDA) to submit a Current Month Adjustment (CMA) before 5 January to ensure that their overpayments were corrected by the next direct debit on 16 January.

Although this deadline has passed, JCCC issued the following advice to traders looking to reclaim their excess payments:

  • If you are VAT registered, you can recover overpayment through the next VAT return you submit to HMRC
  • If you are not VAT registered and pay charges in CDS through immediate payment or cash account, you should complete a C285 form using CDS
  • If you have reviewed your direct debit notification and you are concerned that the debit collected could adversely impact your business, you can contact your bank and stop the collection
    • If you do this, email HMRC urgently with the email subject line, ‘VAT DIRECT DEBIT STOPPED’
    • The email to contact is amttradepartnerreadiness@hmrc.gov.uk
    • Include the following details:
      • Company name
      • EORI
      • Deferment account number
      • Contact details
    • HMRC will contact you after this to discuss your available options

HMRC will not charge fees or interest for any business that cancels its direct debit. However, these businesses will need to reinstate the direct debit instruction with their bank within 12 days of the cancelation to ensure payments can resume in time for the next payment period.

The government will be issuing further guidance soon for intermediaries and fast parcel operators for which the above guidance does not apply.

Excise advice

The JCCC has advised that excise overpayments were also made for certain declarations made on 30 December.

However, as excise duty is collected at a different time to VAT, traders using a DDA have until 19 January to submit a CMA. HMRC is asking firms to submit C285 forms for overcharged excise by 17 January.

For firms that completed a large number of declarations which were impacted by the 30 December glitch, HMRRC has said it will accept an emailed list of impacted declarations by email, rather than multiple C285s.

The following information will need to be provided:

  • MRN(s)
  • Deferment Account Number(s)
  • Amount of excise actually charged
  • Amount of excise overpaid

These companies should email this information to customsaccountingrepayments@hmrc.gov.uk.

Affected traders that paid excise duties by immediate payment or cash account can complete the C285 using CDS here.