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We use general authorisation criteria to assess an applicant’s ability to hold customs authorisations and operate them correctly. The criteria assess the applicant’s:

• compliance history
• financial standing
• understanding of customs
• ability to conduct customs activity using the appropriate controls and record keeping

In most cases the criteria are consistent across all customs authorisations. Where there are bespoke elements required for some authorisations, these are highlighted in this guidance.

HMRC reviews whether the applicant has previously met their customs obligations when conducting international trade, as well as reviewing their compliance with the requirements of other taxes. HMRC reviews the applicant’s compliance history over the last three years and assesses the criterion as met if: 

• no serious or repeated infringements of customs legislation and taxation rules have been committed or repeated
• the applicant has no record of serious criminal offences relating to their economic activity

This assessment considers whether the applicant has sufficient assets to cover any potential customs debts due to the activities of the authorisation(s) being applied for.  

To assess an applicant’s financial standing, HMRC will look at:  

• current solvency and their solvency over the past three years
• resources available to pay customs commitments
• history of payments made to HMRC for customs or other taxes

HMRC assesses the applicant’s experience and knowledge of customs activity, including whether the business is set up to operate customs activities correctly. The applicant must demonstrate that effective customs controls are in place, that they understand how to keep accurate and auditable customs records or they can demonstrate they have the adequate processes in place.  

The applicant will also need to demonstrate that they have an appropriate understanding of customs requirements, either through learning or practical experience.

Applicants for customs authorisations are required to demonstrate compliance with customs activities and other taxes. HMRC will consider whether the applicant has a history of any serious infringement or repeated infringements of customs legislation and taxation rules, including whether they have a record of serious criminal offences relating to their economic activity.

‘Taxation rules� includes not only taxes related to the import and export of goods but are limited to taxes that have a direct relation to the economic activity of the applicant. Infringements relating to  ‘taxation rules� include:       

• tax fraud
• tax evasion
• criminal offences relating to excise duties for example, illegal manufacturing or refining of mineral oil and subtraction
• VAT fraud, including the intra-union movements of goods

Infringements committed by the applicant will be assessed by HMRC as to whether these are serious or minor and whether these infringements are repeated. HMRC will review factors such as whether the infringement was a deliberate act, the nature of the infringement, or whether the infringement was due to obvious negligence.

HMRC will review an applicant’s history of compliance with customs requirements, including all of their customs activities and all relevant taxation activity, including whether there is a record of serious criminal offences relating to the economic activity of the applicant.

Deliberate intent or fraud, which means non-compliance proven to be with full knowledge and intention, should be considered more serious than the same action under other circumstances, even if the nature of the error could be considered to be ‘of minor importance�. This will be the case whether the knowledge and intent was held by the applicant, the person in charge of the applicant or exercising control over their management, or the person in charge of the applicant’s customs matters.

An infringement will be considered a serious infringement of the customs legislation and taxation rules, if it resulted in the imposition of a significant penalty or referral to consider criminal proceedings.

Three factors that should be taken into account when assessing whether an act committed by the economic operator business has been obviously negligent:  

• the complexity of the customs legislation 
• the care taken by the business  
• their experience

Where the customs authorities have established that the business has been obviously negligent, this could result in the infringement being deemed to be serious.  

Serious infringements can come from intentional actions or through unintentional negligence of the authorisation holder. It is essential that authorisation holders take all reasonable steps to ensure that their activities and actions limit the likelihood of serious infringements being committed by actions or omissions.

Taking the aforementioned into consideration and providing that in each case there are no other circumstances to be considered, the following are given as examples of serious infringements: 

• smuggling
• fraud, for example deliberate misclassification, undervaluation and overvaluation or false declared origin to avoid payment of customs duties
• infringements related to Intellectual Property Rights (IPR)
• fraud regarding antidumping regulation
• Infringements relating to prohibitions and restrictions
• counterfeiting
• any other offence related to customs requirements

Infringements of minor importance are acts that, even if there was an actual infringement of the customs legislation and taxation rules, may not result in non-compliance. 

HMRC will consider instances of non-compliance on a case-by-case basis, considering compliance history, nature of activities and size of the applicant concerned. If a decision is taken that the infringement may be regarded as of minor importance, the applicant or authorisation holder must show evidence of intended measures to be undertaken to prevent it reoccurring.  

The following indicative checklist may assist when evaluating whether an infringement could be regarded of minor importance:

• there must be no deliberate fraud intended
• infringements should be looked at on a cumulative basis but relative to the total volume of operations
• establishment of whether the infringement was an isolated act by one person within the general organisation of the business
• the context of the infringement should always be considered
• the internal controls systems of the applicant should be in place, and it should be taken into account if the offences have been detected by the applicant themselves resulting from internal checks and whether they immediately notified customs authorities
• if the applicant has taken immediate measures to correct or avoid those acts in the future

In case of infringements which could be initially considered as minor, HMRC will assess whether there have been repeated identical issues. In this case HMRC will consider whether that repetition is the result of the action of one or several persons within the applicant’s business, or if it is the result of structural deficiencies within the applicant’s systems and would expect the issue to be addressed to prevent it reoccurring. HMRC may consider repeated minor infringements to be evidence of ongoing non-compliance.

In addition to considering the applicant or authorisation holder’s history of compliance with customs legislation, criteria and requirements, HMRC will also consider the applicant or authorisation holder’s compliance with other tax matters. The determination of whether additional taxation rules have been broken will be based on adherence to the rules established by HMRC for each tax:

• failure to pay
• failure to submit required returns

HMRC will consider whether the applicant or authorisation holder has any convictions for criminal offences. This assessment will include any offences committed by the business, company directors, and senior employees. HMRC will consider whether these criminal offences are of a serious nature and related to the economic activity of the applicant. Some examples of offences that may be considered related to the economic activity of the applicant include but are not limited to the following:

• bankruptcy (insolvency) fraud
• any infringement against health and safety legislation for example, placing on the market goods of unsafe nature
• any infringement against environmental legislation for example, illegal cross-border movement of hazardous waste
• fraud related to dual-use regulation
• participation in a criminal organisation
• bribery and corruption
• fraud
• cybercrime
• money laundering
• direct or indirect involvement in terrorist activities for example, carrying out any business or other activities that promote or assist the internationally recognised terrorist groupsâ€� direct or indirect involvement in promoting or assisting illegal migration to United Kingdom

HMRC’s assessment of financial standing is a risk-based assessment on the applicant’s financial position and ability to satisfy any financial commitments that may arise from the customs activity that they are conducting.  

The assessment looks at the applicant’s: �

• current solvency and their solvency over the past three years 
• resources available to pay customs commitments
• history of payments made to HMRC for customs or other taxes

These will be considered for the three-year period before the authorisation application. If the applicant has been established for less than 3 years, HMRC will check their financial standing based on the information and records available.

Duty deferment account (DDA), authorised economic operator (AEO) and customs comprehensive guarantee (CCG) have a different financial standing assessment:

• DDA has a different set of requirements due to its use for VAT and excise duty as well as customs duty
• AEO authorisation holders are required to demonstrate a higher standard of financial standing as set out in the relevant AEO legislation
• a CCG is requested when an applicant does not have a good financial standing, such as where an applicant has negative net assets

Financial solvency assessment examines the applicant’s assets and compares these against their liabilities to ensure that they have a positive net asset position. Having a positive net asset position would indicate that the applicant can cover their liabilities and any potential debt, and therefore they meet this criterion.

‘Insolvency� is an overarching term used to describe different procedures such as  bankruptcy, liquidation and administration all of which involve the formal appointment of an insolvency practitioner (IP) or the official receiver (OR) to administer the estate of the insolvent entity. Bankruptcy applies to individuals with liquidation and administration applying to corporate entities. On most occasions, the appointment of an IP or the OR results in the termination of trading.

Other insolvency procedures such as creditors� voluntary arrangement, individual voluntary arrangement and trust deeds allow for the continuation of trading but could potentially be indicators that the applicant is unable or may in the immediate future be unable to meet its financial obligations. 

If the applicant is subject to bankruptcy proceedings or liquidation, then the criterion of financial solvency is not met, and the application will be denied as the trader will be unable to meet their financial obligations. �

Where a trader is not about to enter bankruptcy, liquidation or administration but has negative net assets, HMRC will check if the applicant has other means of covering any customs debt and consider their past payment history with HMRC. If the applicant is a sole proprietor or partnership and personal assets are being used to support the solvency of the business, the customs authorities may request a list of any personal assets.

The applicant must demonstrate that they have sufficient financial standing to meet their obligations and fulfil commitments in relation to the type and volume of the customs activity. Where customs duty is being suspended or deferred, an applicant must demonstrate that they have or will have sufficient funds to cover the amount that is deferred at the time it is due. The amount that is due may be less than the amount suspended or deferred in certain circumstances. In this case the applicant will need to demonstrate that they can cover the amount of duty that is likely to be owed in the expected course of activity.

If the trader has net assets to cover their obligations, then they will be deemed to have met this criterion. Where the trader does not have enough assets available to cover their customs obligations, then the trader will need to demonstrate that they have alternative options to cover these obligations. This can be provided by the use of an individual guarantee or a Customs Comprehensive Guarantee (CCG) that has been supported by a financial institution.

If the applicant is financed by a loan from another person or financial institution, HMRC can require a copy of the applicant’s business case and the bank facilities letter or equivalent document. 

HMRC may require further evidence such as an undertaking from the lender or a bank facilities letter to establish the period of the loan and any terms and conditions attached to it.

Letters of comfort are documents usually issued by a parent company or other company within a group. They are a written statement of intent to continue with financial support to the applicant company and are usually used where the issuer is unable or unwilling to give a guarantee but wishes to give some comfort to HMRC. 

Letters of comfort are often not legally binding contractual agreements and therefore do not constitute a legally enforceable guarantee. They are not normally accepted as an alternative to a guarantee in a situation where a guarantee is required for potential customs debts. A joint contractual liability (JCL) would be required to meet the guarantee requirement.

A JCL can be provided as security for any potential debts other than debts relating to transit authorisations. This allows separate legal entities (not financial institutions) to guarantee the potential, but not the actual, customs debts of another legal entity in some circumstances. The JCL provider must be established in the UK.

HMRC will establish using their own records and systems whether the applicant has paid or was late in paying the customs duties or taxes that are legally due to customs in the last three years by checking:  

• if accounts have been filed within the time-limits
• whether any concerns on the continuation of the business, or solvency of the business are mentioned in the auditors or directors report
• any additional financial documents such as income statements, profit and loss balance sheet forecasts and in some cases, the cash flow forecast
• any ratio analysis showing ability to meet present obligations from liquid assets

This list is not exhaustive and HMRC will conduct any additional checks it deems necessary.

When an application for an authorisation has been sent to HMRC, HMRC assess the financial standing of the applicant.  

Where the applicant has negative assets (excluding their potential liabilities) or does not have enough assets to cover the duty they wish to suspend (potential liabilities), they may be requested to obtain a CCG.

This applies to GB authorisations only. Northern Ireland established traders applying for a customs special procedure (inward processing, outward processing, end use or temporary admission), DDA and transit, will be required to obtain a CCG regardless of their financial standing position.

For all transit authorisations, regardless of where the business is established, the applicant will need to obtain a CCG but there are waivers available where applicable. 

If the applicant is deemed insolvent by HMRC and is unable to obtain a guarantee from a financial institution, they will be denied the authorisation.

HMRC needs to ensure applicants for customs authorisations understand how to operate the customs authorisations compliantly, keep records accurately, and that they have controls in place to meet the authorisation conditions. This assessment includes ensuring that a trader’s records are accurate and provided within the required timeframes and also looks at internal structures, controls, and practices to ensure that their customs activity meets the legal requirements for authorisations.  

Each customs authorisation may have specific requirements for how goods or locations are controlled, what records need to be maintained and how, and what declarations are required. Information about these authorisation specific requirements can be found in the relevant customs technical handbooks.

The applicant is required to demonstrate that they have internal controls in place to control the movement of goods, which includes the physical control of goods, the security of goods and accurate records of goods. The business is required to have demonstrable processes established to ensure accurate declarations are made, and goods are not moved under an authorisation that they should not be.  

The applicant will also need to demonstrate they have measures in place to ensure any issues are reported to HMRC or Border Force in a timely manner.  

These criteria extend to ensuring that import and export licenses are held and can be provided where required.

Controls may be physical or digital and will be assessed by HMRC or Border Force at the application stage and monitored through the operation of the authorisation.

Record keeping criteria are intended to ensure that an applicant can keep clear, accurate records of the goods being brought into a customs procedure. An applicant must demonstrate an understanding of the requirement to keep accurate and full records for the agreed record retention period. These records must be maintained in a way that ensures they are secure, backed-up and can be supplied to HMRC where requested. HMRC may test the applicant’s digital systems prior to authorisation to ensure that the applicant’s systems can interact and share data with HMRC.

The minimum time for records to be retained from the date the final activity takes place are as follows. 

The following authorisations have a record retention period of 4 years: 

• authorised economic operator (S and C)
• bulk import reduced data set (BIRDS)
• authorised banana weigher
• entry in declarants records (EIDR)
• simplified declaration process (SDP)
• authorised consignee
• authorised consignor
• authorised consignee: transport international routiers (TIR)
• use of seals as a special type
• transit declaration with reduced data requirements
• use of an electronic transport document as a transit declaration
• temporary storage
• custom warehouse
• inward processing
• outward processing
• authorised use (end use)
• transit guarantee
• individual guarantee
• customs comprehensive guarantee (CCG)
• guarantee waivers
• duty deferment account
• approved exporter
• designated export place (DEPS)
• customs supervised exports (CSE)
• authorised issuer for proof of union status
• self-assessment
• non-inventory linked port-loaders
• port, wharf, airport approvals
• air, sea and rail simplifications
• fixed transport installations (FTI) approvals

The following authorisations have a record retention period of 5 years: 

• freeport customs special procedure
• UKTS
• UKIMS
• simplified import VAT accounting (SIVA)

Some goods are subject to controls, prohibitions or restrictions around importing and exporting. It is important that importers and exporters know what goods they are bringing into or sending out of the country to make sure that goods are moved under appropriate customs control and customs requirements are met. Similarly, traders must understand where goods should not be moved at all.  

Some authorisations cannot be used when moving certain goods. It is essential that businesses understand whether any restrictions apply to the goods they are intending to import or export.  

HMRC and other government departments can control goods by government-issued licenses, certificates or permits, including those issued by overseas authorities. Where licenses are required for goods, businesses must demonstrate that they hold these licenses before applying for the authorisation or moving the goods. The following links include more information on some restricted and prohibited goods and how to apply for a license. When looking to import these goods, businesses will need to hold a valid licence before importing the goods:

• animals and animal products
• plants and plant products
• veterinary medicines
• human medicine
• controlled drugs
• waste
• products containing F gas
• precursor chemicals
• guns, knives, swords and other weapons
• weapons and goods that could be used for torture or capital punishment

More information can be found at Exporting controlled goods.

HMRC will assess the competence of the applicant in regard to their awareness of what is expected to operate customs activity in a manner compliant with requirements and the impact of doing this wrong. The assessment of competence will be subjective to the applicant and will consider amongst other things, the size and complexity of the business and the customs activity that they are undertaking, the level of practical experience in customs activity within the business or provided by a 3rd party to the business and the processes in place to ensure control and adherence to customs requirements.

This competence assessment will consider the information provided to HMRC as part of the application as well as information held by HMRC from previous applications or customs activity, including what processes are in place to undertake customs activity as well as ensure records are accurately maintained. There is no minimum period of practical experience that is required to meet these criteria, but applicants should have an understanding of customs controls and their value. Applicants will also need to demonstrate that they are able to operate the specific authorisation applied for as part of the competence assessment. Authorisation holder has an obligation to meet the requirements of their authorisation. It will be the authorisation holder’s responsibility to ensure that once an authorisation has been granted, these standards continue to be met by maintaining ongoing upskilling (improving their competence) to ensure they do not breach the conditions of their authorisation.

Applicants must demonstrate that they are competent to operate an authorisation or regime, meaning they understand how to meet the legal requirements for the authorisations they are applying for. The specific requirements for each authorisation can be found in the customs technical handbooks for each authorisation.

Applicants must make themselves aware of these requirements when applying for authorisations and show how they will meet them during the application process and as part of future reviews or monitoring activity.

The authorisation for approval to use a duty deferment account does not require the applicant to demonstrate customs competence.

It will be the authorisation holder’s responsibility to ensure that once an authorisation has been granted, competence standards continue to be met by maintaining ongoing training of staff within the organisation.  

For in house or other training, it is the authorisation holder’s responsibility to ensure that those members of staff trained in customs activities in this manner continue to operate customs activities in the correct manner.  

By confirming on the application for authorisation that an applicant meets one of these five criteria, an applicant is agreeing that they are competent in customs requirements and are aware of where to find further information if they are unsure. An authorisation holder who has confirmed that they are competent in customs activity should take reasonable steps to conduct activity in the correct manner or seek guidance if uncertain. �

The applicant must ensure that relevant employees are instructed to inform HMRC whenever compliance difficulties are discovered and have established procedures for informing HMRC of such difficulties.