Key Takeaways
- UK importers can claim remission (before payment) or repayment (after payment) of import duty under six specific legal grounds in SI 2018/1248
- The general time limit is 3 years from notification of liability, but defective goods claims must be made within 1 year only
- HMRC must determine applications within 120 days (extendable by 30 days); failure to decide counts as a deemed refusal
- Applications require specific information under Regulation 58 and must be submitted in the form specified by HMRC public notice
- Common pitfalls include missing deadlines, insufficient evidence, disposing of goods without HMRC consent, and confusing agent errors with HMRC liability
What Is Duty Drawback?
When UK importers pay customs duty on goods, they expect that liability to be correct and final. But mistakes happen — classifications are wrong, preferential rates are missed, goods turn out to be defective, or HMRC itself makes an error in calculating what’s owed. In these situations, the law provides a route to recover money that shouldn’t have been paid, or to cancel a liability before payment is made.
The statutory term in UK law is “remission and repayment of import duty”, though the industry still commonly uses “duty drawback”. The distinction matters: remission discharges a liability before you’ve paid it, while repayment recovers duty you’ve already paid. Both are governed by Part 7 of The Customs (Import Duty) (EU Exit) Regulations 2018 (SI 2018/1248), which replaced the EU Union Customs Code framework for UK purposes from 1 January 2021.
For UK businesses, unrecovered duty represents a direct cost that affects margins. A single misclassified shipment can mean thousands of pounds in overpaid duty. The repayment scheme exists to correct those errors — but only if you know the grounds, meet the deadlines, and provide the evidence HMRC requires.
Remission vs Repayment: The Legal Distinction
The UK’s post-Brexit customs regime draws a clear line between two types of relief:
Remission applies where import duty is owed but has not yet been paid. You apply to have the debt cancelled or reduced before settlement. This is relevant when goods are under customs supervision and you’ve received a notification of liability but haven’t yet paid.
Repayment applies where import duty has already been paid to HMRC. You apply to recover some or all of that payment. This is the more common scenario — most businesses discover errors after the duty has been settled and the goods released.
The legal framework is identical for both (SI 2018/1248, Part 7), but the practical timing differs. Remission prevents money leaving your account; repayment gets it back after it’s gone. Either way, you must establish that one of the six “reduced duty cases” applies.
The Six Grounds for Claim
Regulations 47 to 53 of SI 2018/1248 define exactly six circumstances in which HMRC can remit or repay import duty. These are exhaustive — there is no general discretion to refund duty outside these grounds. Each has specific requirements you must meet.
1. Incorrect Amount of Duty (Regulation 48)
This applies where HMRC or the exporting territory’s customs authorities made a mistake that you couldn’t reasonably have detected, and you took all reasonable steps to comply with customs obligations.
Example: HMRC issues incorrect binding tariff information (BTI) that you rely on in good faith. When the BTI is later revoked, you can claim repayment for duty overpaid while it was in force.
Key requirement: You must show the error was not reasonably detectable at the time. If the mistake was obvious from the information available to you, the claim will fail.
2. Preferential Rate Applied Incorrectly (Regulation 49)
This covers situations where a preferential duty rate was applied based on inaccurate information from the exporting country’s authorities, and you reasonably believed that information was correct.
Example: You import goods from a country with which the UK has a trade agreement, relying on a certificate of origin issued by that country’s authorities. Later, HMRC determines the goods didn’t actually meet the rules of origin. If you had no reason to doubt the certificate, you can claim repayment of the difference between the preferential rate and the standard rate.
Important limitation: This does not apply if the exporter knowingly provided inaccurate information — unless you can show you reasonably believed it was correct despite their knowledge.
3. Lower Rate Was Available (Regulation 50)
Where a higher duty rate was applied by mistake and a lower rate was actually available, you can claim the difference. This is straightforward but requires you to prove what the correct rate should have been.
Example: You declared goods under commodity code 8517.12.00 (telephones for cellular networks, duty 0%) but HMRC assesses you under 8517.62.00 (other apparatus for transmission, duty 2.5%). If your classification is correct, you claim repayment of the 2.5% overpaid.
4. Defective and Non-Compliant Goods (Regulation 51)
Where goods are rejected by the buyer as not complying with the sales contract, you can claim remission or repayment. This is common in manufacturing supply chains where components fail quality inspection.
Requirements:
- The goods must have been released to a customs procedure
- There must be a pre-existing sales contract between you and the buyer
- The goods must be rejected “as soon as practicable” after the grounds for rejection become known
- The goods must not have been used or processed beyond what’s necessary to test them
Time limit: Only 1 year (see below) — much shorter than the general 3-year window.
5. Just and Equitable Reduction (Regulation 52)
This is an exceptional ground where enforcing the full duty liability would put your business at a competitive disadvantage compared to others in the same sector, and you took all reasonable steps to comply.
Example: A sudden change in interpretation of a commodity code leaves your business liable for significant back-duty that competitors in similar circumstances don’t face. HMRC can remit or repay on “just and equitable” grounds.
Important: This is discretionary and used sparingly. You must demonstrate the disadvantage and your reasonable compliance efforts.
6. Withdrawal of Customs Declaration (Regulation 53)
Where a customs declaration is withdrawn under Schedule 1, paragraph 16 of the Taxation (Cross-border Trade) Act 2018 and duty has already been paid, you can claim repayment.
Example: You declare goods for free circulation, then discover an error and withdraw the declaration before release. If duty was already paid, you claim it back.
Time Limits for Claims
Regulation 59 sets strict deadlines that vary by ground:
| Ground for Claim | Time Limit |
|---|---|
| Incorrect amount (Reg 48) | 3 years from day after notification of liability |
| Preferential rate error (Reg 49) | 3 years from day after notification of liability |
| Lower rate available (Reg 50) | 3 years from day after notification of liability |
| Defective goods (Reg 51) | 1 year only from day after notification of liability |
| Just and equitable (Reg 52) | 3 years from day after notification of liability |
| Withdrawn declaration (Reg 53) | By the deadline for the withdrawal itself |
Force majeure exception: HMRC can accept out-of-time applications if you submit a written request explaining why the delay was due to circumstances beyond your control. This is discretionary — don’t rely on it.
The 3-year window means businesses should audit their import declarations periodically. Many claims are missed simply because companies don’t review old entries until it’s too late. The 1-year limit for defective goods is particularly tight — if you’re importing components for manufacturing, you need a process to flag potential claims as soon as quality issues emerge.
How to Apply: The Process
Regulation 58 specifies what your application must contain. HMRC requires applications to be made in the form and manner specified in a public notice — typically this means using form C285 (application for repayment or remission of import duty and/or import VAT).
Your application must state:
- The goods concerned (description, quantity, commodity code if known)
- Which reduced duty case applies (cite the specific regulation)
- Whether you seek remission or repayment
- The amount of the liability
- The amount claimed
- If payment was made: the amount paid and who paid it
- The location of the goods
You must also provide:
- Your identification details (EORI number, company name, address)
- Supporting evidence (commercial invoices, contracts, correspondence, test reports, etc.)
- Any other information HMRC specifies in its public notice
Applications are submitted to the place specified by HMRC — typically the National Duty Management Centre for postal submissions, or via the Customs Declaration Service (CDS) for electronic filings.
What Happens After You Apply
Once HMRC accepts your application, the clock starts on the determination period:
120-day determination window: HMRC must determine your application within 120 days of acceptance. This can be extended by up to 30 days if HMRC notifies you in writing before the original deadline expires.
Deemed refusal: If HMRC fails to determine within the time limit (including any extension), your application is treated as refused. This is important — silence is not approval. You must be prepared to appeal or resubmit if you receive no response.
Possible outcomes:
- Granted in full: Duty is remitted or repaid as claimed
- Granted in part: HMRC agrees to remit/repay a lower amount than claimed
- Granted with conditions: For defective goods cases, HMRC may require destruction, dismantling, or export of the goods before repayment is made
- Refused: HMRC must state reasons for refusal
Repayment timing: Where repayment is granted, HMRC must pay “as soon as practicable” after the determination takes effect. There is no statutory interest payable on repaid customs duty (unlike VAT reclaims under section 80 of VATA 1994).
Inspection rights: Under Regulation 61, you must ensure the goods are available for HMRC inspection on reasonable notice. You must notify HMRC before moving goods that are subject to a claim. If goods have been destroyed or dismantled with HMRC’s consent, this requirement is satisfied.
Common Pitfalls
Based on typical claim failures, watch for these issues:
Missing the deadline: The 3-year window runs from notification of liability, not from when you discover the error. Keep records of when each declaration was processed and when duty was paid.
Insufficient evidence: A claim without supporting documentation will fail. Keep commercial invoices, contracts, correspondence with suppliers, quality inspection reports, and any other evidence that supports your ground for claim.
Disposing of goods without consent: For defective goods claims, HMRC can require inspection before authorising destruction or export. If you scrap goods before getting consent, you may lose the right to claim.
Confusing agent errors with HMRC liability: If your customs broker makes a declaration error, you remain liable to HMRC for the correct duty. Your route is to claim repayment from HMRC (if a reduced duty case applies) and separately pursue the broker for any unrecovered amounts. Don’t assume the broker’s professional indemnity will cover everything.
Claiming the wrong ground: Each reduced duty case has specific requirements. A defective goods claim won’t succeed if the goods weren’t rejected under a pre-existing sales contract. A preferential rate claim won’t succeed if you knew the origin information was inaccurate. Match your facts to the correct regulation.
Not checking for preferential rates: Many UK importers miss claims under Regulation 49 or 50 because they don’t systematically review whether preferential rates under trade agreements were available. The UK-EU Trade and Cooperation Agreement alone covers billions in trade — errors here are common post-Brexit.
Post-Brexit Context
The UK’s remission and repayment scheme under SI 2018/1248 mirrors the EU’s Union Customs Code (Articles 116-121), but with key differences:
Domestic statutory footing: The UK scheme is established by UK secondary legislation. Amendments can be made through UK legislative processes without EU-level coordination.
HMRC as sole decision-maker: All determinations are made by HMRC, with appeals to the UK tax tribunal system. There is no recourse to EU-level customs decisions.
Continuity from 1 January 2021: The scheme has been in force since the end of the Brexit transition period. Claims for imports from before that date may still fall under the legacy EU framework.
Key Takeaways
- Six specific legal grounds exist for duty remission or repayment under SI 2018/1248 — there is no general discretion outside these
- The 3-year time limit applies to most claims, but defective goods claims must be made within 1 year only
- HMRC has 120 days to determine applications (extendable by 30 days); failure to decide counts as a deemed refusal
- Applications must include specific information under Regulation 58 and be submitted in HMRC’s specified form (typically C285)
- Keep goods available for inspection and don’t dispose of them without HMRC consent
- Agent errors don’t absolve you of liability — claim from HMRC first, then pursue the agent separately
- No statutory interest is payable on repaid customs duty, unlike VAT reclaims
Frequently Asked Questions
What form do I use to claim duty drawback? HMRC typically requires form C285 (application for repayment or remission of import duty and/or import VAT). This can be submitted via the Customs Declaration Service (CDS) or by post to the National Duty Management Centre. Check current HMRC guidance for the latest submission requirements.
Can I claim interest on repaid duty? No. Unlike VAT reclaims under section 80 of VATA 1994, there is no statutory provision for interest on repaid customs duty. HMRC must pay “as soon as practicable” after the determination takes effect, but no interest accrues during the processing period.
What if my customs broker made the error? You remain liable to HMRC for the correct duty regardless of who made the declaration error. If a reduced duty case applies, claim repayment from HMRC. Then pursue your broker separately for any unrecovered amounts under your commercial agreement with them. Don’t wait for the broker to resolve it — the 3-year clock is ticking.
How long does HMRC take to process a claim? By law, HMRC must determine applications within 120 days of acceptance, extendable by up to 30 days with written notice. If no determination is made within this period, the application is deemed refused. In practice, straightforward claims may be processed faster, but plan for the full 120-day window.
Can I claim for goods I’ve already sold or used? Generally no — especially for defective goods claims. Regulation 51 requires that goods must not have been used or processed beyond what’s necessary to test them. For other grounds, the key question is whether you can demonstrate the ground for claim existed at the time of import. Once goods are consumed or transformed, evidence becomes difficult to establish.
What evidence do I need to support my claim? This depends on the ground you’re claiming. For incorrect duty amounts: BTI rulings, classification opinions, HMRC correspondence. For defective goods: sales contracts, quality inspection reports, rejection notices. For preferential rate errors: certificates of origin, trade agreement documentation, supplier declarations. Keep all records for at least 4 years from the date of import.