The European Court has issued its judgment in the case of FG Wilson/Caterpillar, concerning incorrect customs declarations, and which was referred to the ECJ by a UK Tribunal.
The ECJ found in favour of FG Wilson/Caterpillar in a case concerning the impact of using an incorrect customs procedure code (CPC) on customs declarations when goods are being exported from the European Union. FG Wilson/Caterpillar had been authorised by HM Revenue & Customs (HMRC) to use a special customs procedure which allowed the company to import duty free parts used in the manufacture of machinery ultimately destined for export outside the EU.
However, FG Wilson/Caterpillar had used an incorrect customs procedure code when re-exporting the goods. As a consequence of the error, HMRC contended that FG Wilson/Caterpillar had failed to comply with certain requirements of the customs procedure, arguing that a customs debt arose on importation of the parts resulting in a duty.
The ECJ held that while the errors could give rise to a customs debt, those charges may be repaid or remitted by amending the declarations — assuming that HMRC are satisfied that the parts were ultimately exported from the EU.
Giles Salmond, a director in the tax dispute resolution group at Deloitte, who advised Caterpillar in this litigation, said, “This is a fair and just result for FG Wilson/Caterpillar and the many other UK manufacturers who found themselves unexpectedly liable to additional VAT and customs duty and are likely to be entitled to a refund.”
Total demands issued for duty and VAT against about 400 UK manufacturers amounted to in excess of £100m.