When The Details Demand Expertise
Many importers rely on freight forwarders to manage their customs declarations. While this approach can work well for routine movements, issues can arise when customs procedures require specialist technical knowledge or follow-up actions.
Quotas vs Tariffs
Certain imported goods are subject to quotas and/or tariffs, such as steel. A tariff refers to a tax imposed on imports or exports. A quota, on the other hand, sets a numerical restriction on imports. While a tariff imposes a duty on imported goods, a quota restricts the volume that may be imported at a preferential duty rate.
UK Steel Trade
The UK introduced a new steel trade measure on 1 July 2026, cutting tariff-free import quota volumes by 51% compared to previous safeguard levels. Any steel imports exceeding these reduced quotas face a 50% out-of-quota tariff. The strategy aims to protect domestic producers from global market overcapacity.
Allocations to these quotas are live and dynamic; they are allocated on a first-come, first-served basis. For customs clearance, that means they change in real time and, unlike static tariff measures, what happens on one declaration can affect all other waiting entries claiming that same quota. Errors in quota administration can have wider implications for other importers relying on the same quota allocation.
Your Import Cleared, But Don’t Quota Me On That.
This highlights the importance of submitting quota claims correctly. Whether the correct procedures are followed or costly errors arise often depends on the party responsible for customs clearance. Overriding duty on a customs declaration has only one effect: it removes the duty charge from that declaration. It does not, and never has, constituted a valid claim against an import quota.
As a result, the declaration is processed without duty being paid, while the corresponding quota balance remains unchanged in HMRC's records. From the trader's perspective, the outcome appears the same, as the goods are released and no duty is paid. However, this creates a significant compliance issue: while the duty has been removed, the quota itself has not been claimed or allocated.
This raises an important question:
What happens when imports exceed the available quota, and those volumes have not been properly accounted for?
If the import quota is not claimed, then HMRC cannot control the amount of duty-free steel that enters GB. If steel imports exceed the available quota and override codes are used in place of a valid quota claim, the corresponding duty liability is not collected, resulting in a loss of revenue to HMRC.
The distinction between duty overrides and quota allocation went largely unnoticed for several years. However, as HMRC's compliance activity has increased, historic declarations have come under greater scrutiny. As its compliance resources and analytical capabilities have developed, HMRC has begun reviewing declarations where duty charges were overridden. From HMRC's perspective, there is a significant distinction between overriding import duty and claiming quota. An override code merely removes the duty charge from the declaration; it does not reserve or allocate any volume against the relevant import quota.
Override codes were accepted as a practical way to allow goods to clear without importers having to pay duty unnecessarily while quota availability was being determined. However, to ensure quota balances were accurately maintained, a retrospective quota claim still needed to be submitted once the quota position had been confirmed.
This is where the problem arose. Many freight forwarders failed to submit these retrospective quota claims. As a result, goods entered the UK without duty being paid, but the corresponding quota allocation was never recorded. HMRC is now revisiting these declarations to determine whether the imports should have been counted against the quota and, where appropriate, whether duty remains payable.
The Value of Specialist Customs Expertise
Freight forwarders play a vital role in global supply chains. However, customs compliance is a specialist discipline that requires expertise beyond the physical movement of goods. The steel quota issue has highlighted the varying levels of customs expertise within the sector. It has underscored the importance of ensuring that duty overrides are supported by the appropriate quota claim processes to avoid potential compliance and duty liability issues.
After speaking with several importers who have received substantial duty assessments from HMRC, a common theme emerged. Most traded primarily with EU suppliers, and the customs intermediary they relied upon was often focused on freight operations rather than specialist customs compliance.
In many cases, these were not experienced customs agents accustomed to managing the complexities and risks associated with duty and quota regimes on non-EU imports. Following Brexit, the UK customs sector faced an unprecedented challenge, with an estimated 27 million additional customs declarations required each year. To meet the surge in demand, many freight forwarders, hauliers, and logistics providers entered the customs clearance market despite having limited prior involvement in customs formalities.
While this helped address the immediate capacity shortfall, it also introduced compliance risk. In some instances, customs processes that required specialist knowledge and ongoing follow-up action were not always fully understood or completed, leading to issues that are only now coming to light through HMRC compliance activity.
At the other end of the spectrum, experienced customs agents were generally familiar with these types of challenges. Having previously managed quota-related issues on imports from non-EU countries, they understood that using an override code was only the first step in the process. By submitting a retrospective quota claim, typically through a C285 application, shortly after the declaration was accepted, they ensured the importer could benefit from the available quota while keeping quota records accurate and up to date.
This approach enabled goods to be released without unnecessary delay while ensuring that the relevant quota allocation was properly recorded and administered.
A customs declaration is, in effect, a formal declaration to HMRC with legal and financial consequences, much like a VAT return. As such, it requires appropriate expertise and oversight. While freight forwarders play a vital role in moving goods, customs compliance is a specialist discipline. Professional customs agents bring together detailed regulatory knowledge and practical operational experience, helping businesses meet their compliance obligations while supporting the efficient movement of goods through the supply chain.
Don’t Let Poor Paperwork 'Steel' Your Duty
We have seen importers incur significant duty liabilities because they did not submit retrospective C285 quota claims after using duty overrides. In one case, this resulted in costs exceeding £170,000.
HMRC is currently limiting retrospective quota claims to the final open quota quarter, rather than the usual three-year period, while continuing to recover unpaid duty. Importers of steel products should therefore review their customs records to ensure quota claims were submitted correctly and within the required deadlines.