Customs and Excise quarterly update – May 2026

Welcome to the May 2026 edition of RPC's Customs and Excise quarterly update.

News

Launch of new feature on the Online Trade Tariff

HMRC has announced the launch of a new feature on the Online Trade Tariff (OTT) which will allow users to receive customised notifications regarding OTT changes specific to the user's business.

The feature contains two optional sections, the commodity watchlist and the stop press watchlist, which can be used separately or together:

• Using the commodity watchlist, a user can upload a spreadsheet of the commodity codes traded and receive alerts when changes are made to the tariff database.
• Using the stop press watchlist, users can select tariff chapters they are interested in and receive email notifications when a stop press is published in relation to those selected chapters.

HMRC state that the new feature should result in a reduced administrative burden, faster visibility of changes, improved compliance and flexibility in updating and amending alerts at any time.

HMRC's summary of the new feature is available here.

UK's steel trade measure to come into effect from 1 July 2026

On 19 March 2026, the government announced a new steel trade measure that will take effect on 1 July 2026 and apply to imports of steel products that are also manufactured in the UK.

The govrnment will limit tariff-free steel imports, reducing quota volumes by 60% compared to the steel safeguard measure. Steel goods imported outside of the quota will face a tariff of 50%. The duty is calculated on the price of the goods before any other import duties are applied.

The measures are a result of a decline of more than 50% of the UK's crude steel production within the past 10 years, caused by overcapacity and high operating costs, and is part of the government's wider steel strategy, which sets out a long-term plan to revitalise the UK steel sector and restore domestic production to sustainable levels.

The Government's summary of the measure is available here.

HMRC updates Guidance on Post Clearance Amendments on import declarations

The Guidance allows users to check if they can amend or cancel their import declarations and provides support on what to do if there is an error message or if a declaration has already cleared.

The key update relates to amendments made to importer details. The importer cannot be changed post clearance, unless it is to correct an error. The updated Guidance lists out information that must be provided in these circumstances, with supporting evidence now being required upfront:

• Movement reference number or entry number
• Name of new importer
• Address of new importer
• EORI number of new importer
• Evidence of empowerment for the creation of the original declaration
• Explanation for the error made and the reason
• Commercial invoice

The Guidance is available here.

Case reports

HMRC v O'Neill Wetsuits Limited [2026] UKUT 134 (TCC)

HMRC appealed to the Upper Tribunal (UT) against the decision of the First-tier Tribunal (FTT) in O’Neill Wetsuits Ltd v HMRC [2024] UKFTT 1071 (TC) (the FTT Decision) in relation to the classification of wetsuits imported by O’Neill Wetsuits Ltd (O’Neill) into the UK (the Wetsuits).

HMRC had issued an Advanced Tariff Ruling which classified O'Neill's neoprene Wetsuits under commodity code 6113 0010 00, typically used for rubberised textile fabrics, attracting an 8% duty. O'Neill disputed this classification, arguing that the Wetsuits should be classified under code 4015 9000 00, which applies to vulcanised rubber apparel, attracting a lower 4% duty rate.  

The FTT allowed O’Neill’s appeal and decided that the Wetsuits should be classified as “apparel” made of “vulcanised rubber” under Commodity Code 4015 9000 00. The UT granted HMRC permission to appeal. 

UT Decision 

The UT allowed HMRC's appeal, concluding that the Wetsuits should be classified under Commodity Code 6113 0010 00 as garments made from rubberised textile fabric, rather than under commodity code 4015 9000 00 as articles of vulcanised rubber.

The UT found that the FTT had erred in treating the textile layers as merely reinforcing the neoprene. In the UT’s view, the textile covering on the majority of the neoprene panels performed functions beyond reinforcement and therefore formed an integral part of the material’s essential character.

The UT placed significant reliance on the General Interpretative Rules, the HS Explanatory Notes, and the composite construction of the Wetsuits, concluding that the predominance of double-sided textile-covered neoprene panels meant the goods were more appropriately characterised as textile garments for tariff classification purposes.

Why it matters

The decision highlights the importance of carefully assessing the material composition and essential character of composite goods when determining tariff classification. Businesses importing products made from multiple materials should not assume that the dominant or core material alone will determine classification, particularly where other components contribute significantly to the product’s function and identity. The case also underlines the need for importers to maintain robust technical evidence and product specifications to support their chosen tariff classification and manage potential customs duty exposure.

The decision can be viewed here.

Phoenix Food and Drink Ltd v HMRC [2026] UKFTT 264 (TC)

Phoenix Food and Drink Limited (Phoenix) appealed to the FTT against HMRC’s refusal to approve it under the Alcohol Wholesaler Registration Scheme (AWRS). HMRC’s refusal was based on its view that Phoenix was not a “fit and proper person”, focusing on the involvement of Phoenix’s sole owner and director, Mr Geoffrey Monkman. HMRC relied in particular on Mr Monkman’s previous involvement with Lakeland Artisan Limited (Lakeland), which entered liquidation owing HMRC approximately £85,000. Phoenix contended that HMRC’s refusal did not properly engage with the context of how Lakeland’s liabilities arose, the steps taken after those liabilities came to light, and Phoenix’s own compliance position.

The key issue was whether HMRC’s AWRS refusal was “reasonably arrived at” for the purposes of section 16(4) Finance Act 1994. 

FTT decision

The FTT allowed Phoenix’s appeal. It directed that HMRC’s refusal decision should cease to have effect and required HMRC to carry out a further review within 56 days, taking into account the FTT's findings.

In reaching that conclusion, the FTT found that HMRC’s decision was not reasonably arrived at because the HMRC decision maker failed to take into account matters the FTT considered relevant to the AWRS “fit and proper” assessment, and also took into account matters that were not relevant on the facts as found.

The FTT considered it relevant (among other matters) to address the evidence said to show Mr Monkman’s lack of responsibility for, and knowledge of, the tax debts of Lakeland as they accrued; Lakeland’s earlier period of compliance when run by Mr Monkman; the reduction in the HMRC debt after July 2023; Phoenix’s own compliance position; and the fact Phoenix was not trading in duty-suspended products. The FTT also found HMRC had taken into account alleged Phoenix liabilities which were not owed at the date of the refusal decision.

The FTT accordingly directed that the decision to refuse AWRS approval should cease to have effect and that HMRC must carry out a review of the original decision.

Why it matters

AWRS decisions remain susceptible to public law-style scrutiny on appeal: HMRC’s conclusion must be reached through a rational and evidence-based assessment, rather than by treating historic tax debt in a connected business as determinative without engaging with responsibility for those debts, remediation and current compliance profile and controls.

The decision can be viewed here.

MSD Wholesale Ltd v Revenue and Customs Commissioners [2026] UKFTT 266 (TC)

MSD Wholesale Limited (MSD), a wholesaler of alcoholic beverages, brought consolidated appeals in the FTT against a VAT assessment of £470,209, three excise duty assessments totalling £2,275,416, and HMRC’s refusal to approve MSD under AWRS.

The assessments related primarily to MSD’s alleged purchases from a number of suppliers to whom HMRC’s investigations indicated were missing traders (or supplied by missing traders) and were deregistered for VAT.

The FTT had to decide whether MSD had paid consideration for supplies (relevant to input tax recovery), whether the excise duty assessments were in time under the one-year rule in section 12(4)(b) Finance Act 1994, whether MSD had shown excise duty was paid or an earlier duty point arose before the goods reached MSD, whether MSD was the “holder” of seized goods, and whether HMRC’s AWRS refusal was unreasonable.

FTT decision

The FTT dismissed MSD’s appeals in full.

On VAT, MSD relied on payment acknowledgements and receipts (and Sage-type spreadsheets) said to show cash payments to suppliers. The FTT held this did not amount to sufficient evidence of payment without an audit trail or reconciliation to invoices, and with no explanation for large cash movements given MSD’s financial position.

On excise duty, MSD argued that the first and second duty assessments were out of time, but the FTT held the one-year limit runs from when the assessing officer has evidence of sufficient weight to justify the assessment, not when HMRC first has information that might support one. The FTT accepted that the HMRC officer did not have sufficient evidence until his investigations had progressed to the relevant point, and the assessments were therefore in time. The FTT also rejected MSD’s case that duty had been paid (or that earlier duty points existed), finding uncorroborated supplier assurances and invoice statements were inadequate, particularly in the context of missing trader findings and the lack of supporting evidence about the supply chains and warehousing arrangements.

As to the seized goods, MSD failed to show it was not the holder of the goods, having accepted ownership in correspondence and with no supporting documentation for the alternative claim that the goods belonged to a customer.

Finally, the FTT upheld HMRC’s AWRS refusal as reasonable. It considered MSD had not demonstrated commercial viability, had connections with non-compliant related companies, showed repeated involvement in tax loss chains indicative of ineffective due diligence, and had record-keeping weaknesses (including in relation to the seized goods).

Why it matters

The decision underlines the evidential burden and record keeping requirements on traders in alcohol supply chains. Unsupported acknowledgements/receipts and general “duty paid” statements are unlikely to evidentially suffice without a clear audit trail and credible explanations for cash flows and goods movements.

The decision can be viewed here.