Statutory Interest on Import Duty: The Claim UK Importers Miss

The recovery most businesses never make

HMRC reports that UK businesses overpay approximately £2 billion in import duty every year. Errors in commodity classification, customs valuation, and procedure codes accumulate across thousands of declarations. Post-clearance audit work surfaces those errors and generates C285 amendments that recover the principal overpayment.

But there is a second recovery sitting alongside it that most importers never make. UK law entitles businesses to statutory interest on overpaid import duty — compensation for being deprived of the use of their own money from the date of overpayment to the date of repayment. It is a statutory right, not a discretionary HMRC concession. And it must be claimed separately.

In our experience at CustomsPlus®, this is one of the clearest examples in the customs compliance world of "you don't know what you don't know." The entitlement is real. The mechanism is straightforward. The amounts are meaningful. And the vast majority of businesses who successfully recover overpaid duty walk away without it.

What the statutory interest entitlement is and where it comes from

The legal basis for statutory interest on import duty sits in the Finance Act 1989 and subsequent customs legislation. When a business has overpaid a customs debt and that overpayment is confirmed and repaid by HMRC, the business is entitled to interest on the overpaid amount for the period it was held by HMRC.

The interest is calculated as simple interest — not compounded — at a rate published by HMRC. The rate is linked to the Bank of England base rate and reviewed periodically. It is applied from the date the duty was overpaid to the date HMRC repays the principal.

The calculation is not complex: overpaid duty amount, multiplied by the applicable HMRC rate, multiplied by the number of days divided by 365. On a substantial overpayment covering several years of declarations, that figure can be meaningful. On the kind of overpayments a thorough declaration audit typically surfaces — sometimes tens of thousands of pounds — the interest component is not trivial.

Why the interest claim is almost always missed

The structural reason is simple: the C285 amendment process and the statutory interest claim are two separate things. When a business submits a C285 to recover overpaid duty, HMRC processes the repayment of the principal. It does not automatically calculate or include statutory interest. The interest requires its own separate application.

Most businesses, and many of their customs agents and brokers, are not aware of this distinction. The duty repayment arrives, the recovery is celebrated, and the interest sits unclaimed. By the time the question of interest arises — if it ever does — significant time may have elapsed.

There is also a knowledge gap in the advisory community. Statutory interest on import duty is not a standard part of the curriculum for customs agent training. It is known to practitioners who have dealt with it in practice, but it is not routinely considered as part of the recovery process. The result is that even businesses with experienced advisers can miss it.

A practical example

Consider an importer who has been classifying a product incorrectly for four years. A declaration audit identifies the error and confirms that £80,000 in duty has been overpaid across that period. A C285 is submitted, HMRC repays the £80,000, and the recovery is complete.

What has not happened: a claim for statutory interest on the £80,000 for the period it was overpaid. Depending on when within the four years each overpayment occurred, the interest entitlement on £80,000 at the applicable HMRC rate over that period could represent several thousand pounds of additional recovery. It requires no new audit. No new evidence. The work has already been done. It is a separate application built on the data that already exists.

Most businesses in this situation never make that application.

What you need to do

If your business has recovered overpaid import duty at any point in the last four years and did not separately claim statutory interest on that recovery, the first step is to assess whether a retrospective interest claim is still within the applicable time limits. In many cases it will be. The claim should be made promptly.

If you are currently running a duty recovery process, the statutory interest calculation should be built into the work from the outset. Before the C285 is submitted, identify the interest entitlement on each affected entry. When the principal is repaid, submit the interest claim without delay.

If you have not yet audited your import declarations for overpayment, the statutory interest clock is already running on any overpayments that exist in your history. The longer the gap between the overpayment date and the date of recovery, the larger the interest entitlement — but that entitlement is time-limited once the principal is repaid. Do not allow the principal recovery to be completed without immediately planning the interest claim.

How MyCustomsInfo® handles this

When MyCustomsInfo® runs a declaration audit and identifies duty overpayments, it calculates the statutory interest accrual on each affected entry automatically. Your recovery report shows the principal overpayment and the interest entitlement as two separate line items — so you can see the full value of the recovery before any claim is submitted.

The platform also flags when a principal recovery has been received on file without a corresponding interest claim, so the entitlement is not forgotten once the primary recovery work is complete. For historical recoveries where interest was not claimed at the time, MyCustomsInfo® can assess whether a retrospective claim remains viable within the applicable limits.

The CustomsPlus® consultancy team can support the interest claim process directly for clients who need practitioner involvement in the application.

The entitlement to statutory interest on overpaid import duty is not widely known, but it is real, it is statutory, and it is separate from the duty recovery itself. If your business imports regularly, a declaration audit will tell you what you have overpaid. What most businesses never find out is what interest HMRC also owes them on top of that.

Book a 20-minute compliance review with the MyCustomsInfo® team to discuss your duty recovery position and the associated interest entitlement.