Compensatory interest and late payment penalties
Customs is introducing a new system for charging compensatory (use of money) interest and late payment penalties to importers and excise licensees, when duty hasn’t been paid in full at the right time.
What do you need to know?
- The new system replaces the “additional duty regime” and is designed to be fairer and more transparent and ensure that any charges are proportionate to the offence
- It is also clearer about when remission can be granted
- Compensatory interest and late payment penalties are different:
- compensatory interest compensates the Crown for loss of use of money, and applies whenever duty isn’t paid in full, including when it wasn’t assessed correctly, or on time
- late payment penalties apply to late payments, and aim to encourage people to pay on time
- The new system is based on Inland Revenue’s use-of-money interest and late payment penalties and will apply in the same way to both importers and excise licensees.
Who does this impact?
- Importers
- Excise clients
- Brokers.
What is the impact?
- Importers will receive an interest charge for shortfall payments, where previously no additional duty was charged
- There are strengthened incentives to voluntarily disclose shortfall payments
- Incorrectly claimed refunds/drawbacks will now attract interest, where previously there was no additional duty charge.