When the Government Offers You a Refund, Read the Small Print

There is a pattern I have observed across government-administered reclaim mechanisms — duty drawback, VAT repayments, state aid refunds, and now IEEPA duty refunds — that I think deserves to be stated plainly:

When a government agency offers to give you money back, the process through which they do so is also the process through which they can examine whether they should have collected more.

This is not cynicism. It is the structural reality of how reclaim mechanisms work, and understanding it changes how you should approach every claim you make.

The current example is IEEPA. On 12 March 2026, CBP filed a declaration with the U.S. Court of International Trade confirming it is building a CAPE-based mechanism to process IEEPA duty refunds. Most commentary on this development has focused, quite reasonably, on the refund opportunity. I want to focus on something else: what the refund mechanism also is, and what that means for how you approach it.

The Structural Reality of Government Reclaim Mechanisms

Every government reclaim process has two characteristics that exist simultaneously and are inseparable:

• It is a mechanism for returning money the government has determined it over-collected.
• It is a mechanism through which the government verifies the basis of that determination using the data you provide.

The second characteristic is not incidental to the first. It is built into the architecture of every reclaim process I have encountered across UK, EU, and US customs and tax environments.

Duty drawback in the US requires the claimant to substantiate export, re-export, or destruction of the imported goods. The substantiation process is also the audit process. VAT repayments in the UK and EU require the claimant to demonstrate input tax credit eligibility. The repayment process is also the compliance review. IEEPA refunds through CAPE will require importers to submit entry-level data that CBP will match against its own ACE records. The refund process is also the data reconciliation process.

The question is never just ‘am I entitled to this refund?’ The question is also ‘will my data survive the scrutiny that the refund process applies to it?’

Three Cases That Illustrate the Pattern

Duty Drawback

US duty drawback allows importers to recover duties paid on goods that are subsequently exported, destroyed, or incorporated into exports. The opportunity is real and significant — and chronically underutilised, with an estimated 70% of eligible drawback going unclaimed.

The reason is partly awareness, partly complexity, and partly what I would describe as the rational fear of the audit that comes with the claim. Filing a drawback claim requires a level of documentary precision — import records, export records, manufacturing records, bill of materials — that exposes any gaps in your compliance programme. Importers who have been sloppy with record-keeping face a disproportionate cost to claim what they are owed. The refund mechanism reveals the compliance deficit.

Post-Brexit VAT and Duty Reclaims

Following the UK’s departure from the EU, numerous businesses found themselves with overpaid import VAT and customs duties arising from classification and valuation errors during a period of significant regulatory uncertainty. The reclaim process was, for many, the first time their import records had been subjected to systematic review.

For businesses whose records were well-maintained, the reclaim was largely administrative. For those whose records were not, the reclaim process became an uncomfortable discovery exercise — and in some cases, the review uncovered not just overpayments but underpayments that required separate correction.

IEEPA — The Current Case

CBP’s CAPE mechanism will operate on the same logic. Every IEEPA entry submitted for refund is an entry that CBP will reconcile against its ACE records. Misclassifications, valuation discrepancies, country of origin errors, and any other data quality issues will surface through the refund process rather than through a separate audit cycle.

Importers who file CAPE submissions on unreviewed entry data are not saving time. They are bringing forward a compliance review they were not anticipating.

The Rational Response

None of this is an argument against claiming. The IEEPA refund is a legitimate entitlement and importers should pursue it. Duty drawback is money that importers are owed and they should claim it. VAT and duty reclaims should be pursued wherever the entitlement exists.

The rational response is to treat the reclaim process with the same rigour you would apply to a compliance review — because that is what it is.

Before submitting any government reclaim, the practical steps are consistent across mechanisms:

• Review the entries or transactions you intend to include before submission, not after a CBP or HMRC query
• Identify and resolve known errors before they become the basis of a submission under scrutiny
• Document your compliance rationale for each claim, not just the refund calculation
• Exclude entries where the data quality risk outweighs the refund value — this is a judgement call, but it should be a deliberate one
• Treat the preparation work as compliance investment, not administrative overhead

The businesses that approach reclaim mechanisms this way recover what they are owed, avoid compliance exposure, and build the internal data infrastructure that makes the next reclaim faster and safer. The businesses that approach it as a quick claims exercise often get a more expensive outcome than the one they were anticipating.

A Final Observation

The IEEPA refund opportunity is real. CBP is building the mechanism. The CIT is watching the timeline. Importers who are prepared will be positioned to recover significant sums.

But the preparation that positions you for an accurate, timely refund is identical to the preparation that protects you from a compliance review. That is not a coincidence. It is the structural logic of every government reclaim process I have seen.

Read the small print — not because the government is adversarial, but because the process was designed to verify the claim. Build your submission to pass that verification. That is how you get paid.

Dominic McGough

Founder & Director, CustomsPlus® | MyCustomsInfo®