Northern Ireland Update - Apportionment: Advice from HMRC

BY:

Gail Leeson & Sarah Adams-Greener

30 September 2021

HMRC have announced their intention to introduce a method of declaring ‘at risk’ goods for delivery into NI using ‘apportionment’ as a method of declaring those goods to be at risk of onward delivery into the EU rather than remaining for consumption in NI.

If a business cannot make a declaration based on knowledge of the specific destination of all the goods in a consignment (for example a large shipment of widgets), the business may still be able to declare based on expectations of which goods should be considered ‘not at risk’ at the point of being declared into Northern Ireland.

An example:

• if you do not know at the point of entry which item within the consignment will go where but do know that 70% of your goods consignment typically moves into the EU, but 30% goes to end customers in NI you can declare 30% as ‘not at risk’. The approach is known as ‘apportionment’.

To use apportionment you must:

• Be authorised under the UK Trader Scheme

• Notify HMRC of your intent to use apportionment

• Have stable enough supply chains or sales stable enough to allow you to accurately assess (within a 10% margin of error) what proportion of the consignment will be sold to, or finally used by, end consumers located in Northern Ireland (or in the case of shipments from GB; in England, Scotland or Wales), for example from historical performance or future contracts.

• Be able to provide evidence to support the declarations that you make and demonstrate that the declarations you have made are accurate.

How apportionment works

• To be able to declare on this basis, a business will need to be authorised under the UK

Trader Scheme and tell HMRC that you plan to use expected outcomes as the basis for your declarations.

• You should state this in your covering email when submitting your application for authorisation, or email uktraderscheme@hmrc.gov.uk to tell HMRC if you have already been authorised. It will be important to include your EORI number in the subject of the email.

• When you move goods into NI you will then be able to declare the proportion ‘not at risk’ based on your expected outcomes for those goods. (HMRC are preparing to provide a New Additional Information code which you can use on declarations to tell HMRC that you are using apportionment on a given consignment.

• Currently a business will simply have needed to have told HRMC in advance that it will be using the apportionment approach.

• Once you have told HMRC that you intend to use apportionment you can choose to use this approach on every consignment, on some consignments, or you can choose not to use it at all.

• It is easiest to apply the apportionment at Stock Keeping Unit (SKU) level (product level) as a business will need to consider the outcomes of goods destination at a SKU level to be able to accurately calculate what tariff is due later.

• There will be no need to store the goods separately, but you will need to be able to provide records of the end destination of all the goods.

• If the actual use of the goods is different to that expected when you made the declaration, I itit will be necessary to inform HMRC appropriately and pay any difference in duty due.

• A business will also be able to claim repayment of any overpayment of duty.

• It will therefore be important to consider the stability of your supply chain and whether the use of apportionment is appropriate for your businesses.

Making a Simplified Frontier Declaration

If a business is making customs declarations using a Simplified Frontier Declaration and a

Supplementary Declaration (this is the process used by the TSS), you do not need to wait to find out the outcomes for the goods before you lodge the supplementary declaration. You should declare as normal then use an under or overpayment form to correct once an error becomes clear.

Supply chain and sales

To use apportionment a business should be able to draw a reasonable conclusion (within a 10% margin of error) about the likely final destination of goods based on previous supply chains and sales and on any predicted future plans such as contracts. HMRC have indicated that this should be based on three years of data. HMRC understand that COVID-19 may have disrupted supply chains and that last year’s data may not be as standard, therefore suggest that a business may need to consider taking further previous years into account.

Expected outcomes should be regularly reviewed and evidence captured for audit.

If circumstances change (for example something has affected sales or the business moves into a new market), end use assumptions should be adjusted accordingly.

Evidence

• Keep evidence on what has been declared as ‘not at risk’ and where goods have ultimately been delivered, or onward delivered (for example, sales receipts are acceptable).

• Data should be kept for 5 years. This evidence is similar to that already prepared to comply with UK Trader Scheme requirements.

Top Tips

HMRC may ask to review the business records, systems and controls.

Therefore;

• Keep evidence to confirm each declaration

• If you’re basing that initial declaration on apportionment principles, you should keep track of this

• Ensure that the overall balance matches broadly to business expectations.

Corrections/reconciliation

• HMRC expect that a business ‘at risk’ declaration reconciliation should be completed and in evidence for every quarter.

• If the end outcome for goods is different to original and declared expectations a voluntary clearance amendment (underpayment) submission should be made. Likewise a business can apply for a repayment (this method of application for an over-payment has yet to be determined).

• HMRC intend to advise those businesses registered to use Apportionment on the method of requesting the return of overpayment of duties

HMRC have advised that further detail will be available in due course

While you are here you may be interested in some Strong & Herd LLP training courses related to this

topic, we offer a wide range of high quality training courses to support all importing and exporting activities.

Trading with Northern Ireland

< Older Post

Newer Post >

OneCall™ Email assistance as and when required; A one-call solution for all your import, export and customs enquiries. Export help. Import help. Customs help.

Stay informed about customs and international trade matters by subscribing to our OneCall™ service. This comprehensive offering includes a dedicated email helpline for support, timely practical updates direct to your inbox (Did You Know?), monthly UK Customs & Trade Briefings and access to an interactive members' area with an exclusive community for our subscribers.

Subscribe Today ➝