Small trader perceptions of customs authorisations

Question 1

1. Glossary and abbreviations

Accepted Answer

Customs Authorisations: Certifications given by HMRC which allow traders to follow either simplified customs processes, or customs processes that apply to specific circumstances (such as the temporary admission of goods into the UK). Authorisations are referred to as being ‘held’ by businesses throughout the report.

Customs Declaration: The process required in order to notify HMRC of a particular assignment of goods being either exported out of the UK, or imported into the UK.

Customs Declaration Service (CDS): HMRC’s computer system for managing customs services, which is replacing CHIEF (see below) as the main way for traders and intermediaries to interact with HMRC as of 2022.

Customs Handling of Import and Export Freight (CHIEF): HMRC’s computer system for managing customs services. CHIEF is being phased out over the course of 2022 to 2023 and replaced by CDS.

Intermediaries: Third-party businesses that provide services for traders to support them in importing and exporting goods. The exact form of the services may vary from carrying out paperwork, to handling goods themselves and providing specialist transportation services.

Making Tax Digital (MTD): HMRC’s strategy and associated policies to digitise the tax system, by requiring businesses and individuals to keep digital records, use compatible software and submit updates every quarter.

Question 2

2. Executive summary

Accepted Answer

2.1 Methodology

Ipsos interviewed 30 small traders with fewer than 50 employees who were importing and/or exporting goods either to the EU, or to the rest of the world. Traders were asked about their experiences of applying for authorisations and were also asked to comment on HM Revenue and Customs (HMRC) proposals to modernise the authorisations system. Fieldwork was conducted between December 2022 and February 2023.

2.2 Experience of the current authorisations system

Small traders’ knowledge of the current authorisation system varied, with many unsure of the differences between authorisations and other customs processes, such as declarations. Authorisation applications were generally seen as frustrating due to the amount of information required, though not particularly difficult to understand. However, traders were worried about getting paperwork wrong due to perceptions about risks of being fined or goods being stopped at borders.

2.3 Proposed changes to the authorisation system

Small traders were positive about the proposed simplification of the authorisation system into 5 groupings, suggesting this would reduce their application burden. Traders believed having the simplified groupings would make the system much easier to navigate for first-time applicants. Participants felt that the new system would benefit both those holding their own authorisations and using authorisations held by an intermediary. However, those already holding authorisations did not feel this change alone would encourage them to apply for additional authorisations and tended to think they had all the authorisations they needed.

Traders were also positive about the proposed plans to digitalise the authorisations application and re-application process, particularly the potential for automating some of their data entry as part of the application forms. There was a perception that there might be some costs associated with moving to a new application system, both around the time taken to understand the new system, and financial costs of paying for licences if any new software was required as part of the plans.

2.4 Experiences of previous changes to the tax system

The transition to Making Tax Digital (MTD) was generally seen by participants as an example of a well-managed switchover on HMRC’s part, primarily due to the phased migration as well as clear communication about what was required from businesses. Conversely, participants were not as positive about the ongoing implementation of the Customs Declaration Service (CDS), with small traders reporting that the reasons for the change were not always clear, and they felt that the shift required significant time and money.

2.5 Ideal communications

Small traders spoken with as part of the research see customs administration as part of a single system, rather than being broken up into different sections – communications should reflect this experience. Participants reported that they would like HMRC to be more prescriptive and instructional about the information that is required when applying for authorisations, rather than allowing traders to make up their own minds, which many participants felt is the case at present. Sector-specific information was seen as very useful due to highly individual needs of small traders, though there was a recognition that this might not always be possible.

Question 3

3. Aims and methodology

Accepted Answer

3.1 Aims and objectives

Customs authorisations exist to simplify customs processes for traders who meet certain criteria, or are in specific circumstances (for example, temporarily importing or exporting). However, feedback from traders has suggested that the application process can be a complex, time-consuming, burdensome, and a costly experience. HMRC is working on potential changes to reduce complexity and increase the benefits of applying for and holding customs authorisations. This piece of research was aimed at understanding these changes from the perspective of small traders (those with fewer than 50 employees), and explored:

small traders’ current experiences of the authorisations system, in terms of applications and day-to-day holding and management of authorisations
impressions of the proposed changes, and any ways in which they could be improved
how previous communications about system changes have been received in the past, as well as what ‘ideal communication’ from HMRC would look like

3.2 Qualitative methodology

A qualitative methodology was chosen for this project. In-depth interviews with traders were seen as the best way to fulfil the objectives of the study, due to:

the need to understand the trader experience in detail and be led by traders in understanding what they have found difficult or complex throughout their interactions with HMRC
having the ability to present HMRC’s proposals in detail
HMRC and Ipsos anticipating that customs challenges were likely to be highly specific to individual businesses, depending on their operational model and importing/exporting behaviour, with this richness best captured through qualitative interviews

Due to the qualitative nature of the methodology, findings should be interpreted within the following limitations:

insight cannot be presented in % or statistical terms, due to the open-ended nature of discussions with traders
whilst the sample size of the study is robust enough to give a good understanding of the common experiences of the businesses interviewed, findings should not be interpreted as statistically representative across the population of small traders
findings from this report reflect the experiences most commonly raised throughout interviews with small traders

Ipsos interviewed a total of 30 small traders between the 14 December 2022 and the 9 February 2023. Five interviews were conducted as part of a pilot stage, and these traders were recruited from publicly available sources and lists. The remaining 25 interviews were recruited from HMRC’s database of small traders. Interviewees from both sample sources were screened to ensure that Ipsos could interview the most appropriate person within each business (a decision-maker around customs arrangements), as well as to confirm characteristics of their firm for monitoring purposes.

The small traders came from the following 4 categories, forming our primary sample criteria:

Table 1: Breakdown of interviewee categories

Category	Number of interviews
Pilot interviews: small traders with experience of customs declarations who are either currently involved in submitting customs declarations or have done so in the past	5
Small traders who hold authorisations and handle some/all their own customs declarations with intermediation	15
Small traders who hold authorisations and always use intermediaries for customs declarations	9
Traders who do not hold authorisations but handle some/all their own customs declarations without intermediation	1
Total	30

3.3 Detailed breakdown of sample

Participants were recruited with the aim of having a spread of business characteristics, including a mixture of importers/exporters, nations within the UK, micro and small business and businesses that traded with the EU, the rest of the world, or both.

In addition, for those that held authorisations, organisations were recruited holding a range of different authorisations, including storage/warehousing or processing authorisations, reliefs or deferments, guarantees and guarantee waivers, authorised consignees, authorised economic operator, and ports or similar approvals.

Table 2: Detailed breakdown of respondent firm characteristics

Respondent characteristic	Number of interviews
Type of trader: importer	7
Type of trader: exporter	1
Type of trader: both importer and exporter	22
Nation: Wales	1
Nation: Scotland	5
Nation: Northern Ireland	0
Nation: England	24
Business size: micro (2-9)	14
Business size: small (10-49)	16
Partner region for imports/exports: European Union	21
Partner region for imports/exports: Rest of World	3
Partner region for imports/exports: both	6

Question 4

4. Experience of the current authorisations system

Accepted Answer

4.1 Trader knowledge about authorisations

Ipsos found that the small traders interviewed as part of the study had varying levels of knowledge about the current authorisations system. These interviewees were on a spectrum, with some being very knowledgeable (knowing about various different authorisations and understanding their different purposes). Others held authorisations but rarely used them and had little understanding of how the authorisations system interacted with their wider customs obligations. Within this spectrum, 2 broad typologies emerged, which are explored below.

Small traders with little knowledge of authorisations

Lack of knowledge was often due to confusion about the differences between elements of the customs processes. As a general rule, these small traders do not see distinctions between declarations, authorisations, or other any other obligations as part of customs processes. Instead, all of these elements are understood as ‘requirements’ for traders to comply with (even in the case of authorisations, which should benefit traders who hold them). As an example, one small trader mentioned that they thought their Economic Operators’ Registration and Identification number (EORI), a registration system used between GB, the EU, the rest of the World and Northern Ireland, was an authorisation, because the requirements from their perspective were similar.

Relatedly, authorisations are typically not seen as something which businesses ‘benefit’ from, but instead something that is necessary in order to import/export in the way that they do. Many small traders report being instructed by HMRC that they need to apply for certain authorisations, or that they were told by other businesses what they would need in order to operate.

Traders in this group were the least likely to actively seek out other authorisations, with many saying that they rarely considered applying for any other authorisations (partly because knowledge outside of the authorisations that they held was in general limited).

Case study

Sector: Fashion industry

Authorisation: Duty Deferment Account, held since 2020

Level of knowledge about authorisations:

Generally, finds the different authorisations confusing, and was not sure of the differences between them. They were told by their suppliers that it would be better to have their own Duty Deferment Account, rather than relying on the supplier, which is why they applied for their own. However, they are very reliant on their supplier for day-to-day customs management, with their suppliers using their account on their behalf. The respondent has an MBA degree, but still mentioned that the information on HMRC’s website assumed a lot of knowledge about customs administration.

Regular users of authorisations and long-term authorisations holders

This group of small traders was characterised by a greater level of understanding about the authorisations system and tended to have held authorisations for a long time (many traders reporting 10+ years). This group were also more likely to use their own authorisations regularly – those with lower levels of knowledge of the authorisation system tended to rely on using the authorisations held by intermediaries. They also tended to have a better understanding of the purpose of authorisations. The main difficulty that this group has is the re-application for authorisations when they need to be renewed. This is covered in more detail in Section 4.3 of this report.

As with those with lower knowledge, authorisations were again not seen as particularly ‘for the benefit’ of traders. However, the reasoning behind this differed between the two groups. For those with a higher level of knowledge about authorisations, since many had held their authorisations for a long time, they had become the baseline expectation of the small traders holding them, rather than something that enabled them to navigate the customs system in a simplified way.

Case study

Sector: Antiques dealership

Authorisation: Storage or warehouse processing/Guarantees/Consignee, held for 10+ years

Level of knowledge about authorisations:

Imports and exports high-value antiques to and from international clients, involving use of a customs warehouse in order to delay paying duty and VAT. They often use intermediaries, but can handle all of the customs processes themselves if needed. They usually use intermediaries because there is a sense that they are less likely to have issues with high value items which are often hand-carried through customs if a well-known intermediary is used (perception is that they are less likely to be stopped by customs agents). The Customs Warehouse authorisation has been integral to the business model over the past 10+ years, and is a well-established part of the respondent’s role as an Operations Manager. They are also looking into applying for the Authorised Economic Operator authorisation, as there is an appreciation that this may have further benefits for them, even if it’s not essential to their operation.

4.2 Use of intermediaries and relationship to use of authorisations

Ipsos interviewed small traders with a range of approaches to using intermediaries for their customs administration, including those who use a mixture of intermediaries and in-house processing, and those who always use intermediaries.

Table 3: Motivations and behaviours around use of customs intermediaries

In-house customs processing	Customs processing using intermediaries
Processing customs in-house allows small traders to have a greater degree of control over costs, as they have more flexibility around the way costs are managed	Saving time is the main motivation for use of intermediaries, with small traders in particular being very time poor
In-house processing often incurs the costs of maintaining software licenses for various pieces of necessary software (frequently mentioned around the Customs Declarations Service)	Using intermediaries was seen as less risky than processing in house, given the expertise of intermediaries, particularly if they are sector specific (specific risks are experiencing fines or hold-ups, which can then impact their own customers’ experience)
	Those using intermediaries report that costs are worth paying for the level of service

Small traders who were managing customs arrangements in house tended to have a higher level of knowledge about authorisations. This was because they were more engaged in the process and were motivated to find ways of reducing their administrative burden through the use of authorisations. In contrast, some of the traders using intermediaries are less likely to be knowledgeable about authorisations. This may be because traders that use intermediaries have less personal insight into the authorisations system. It may also be that those that have a lower level of knowledge about the system are more likely to use intermediaries.

However, we also interviewed small traders who held their own authorisations, whilst using intermediaries for customs declarations, and in many cases, there was a reasonable level of knowledge around authorisations within these organisations. In general, small traders saw declarations as more complex than authorisations, perhaps explaining why some participants outsource the declarations whilst also holding authorisations and having a good level of knowledge about their purpose.

4.3 Application and re-application for authorisations

Participants rarely mentioned that the application processes for authorisations were particularly complex. Instead, applications were seen as administratively burdensome, as well as sometimes frustrating. Frustrations with applications arose out of the following factors.

Eligibility for different authorisations

Small traders mentioned that different authorisations had different eligibility criteria, causing confusion about whether businesses were able to apply for certain authorisations.

Difficulty of retrieving customs specific information

Information needed for forms was not something that participants calculated regularly (for example, trade volumes and commodity codes traded), leading to a significant amount of time needed to compile paperwork.

Administration around reapplication

Small traders mentioned that re-applications for authorisations were very repetitive, with participants often going back to previously submitted forms to carry forward much of their previous supplied response. Some participants mentioned that information was unlikely to change between application rounds, and one even suggested that bringing in previous answers automatically would be beneficial, before this was presented as part of the discussion around proposed changes.

When looking through previous applications, small traders were typically looking to understand the level of detail required, as well as information given around their trading behaviours. Whilst this kind of information would be stored elsewhere within the business, this was seen as the quickest way of retrieving it.

“The application process is reasonably intuitive, so it didn’t require a great deal of thought, it’s just generally quite a mechanical process, it’s just basic information about the use of authorisations and the kind of business you conduct.” Art gallery

“I don’t think it was too horrific to be honest. It wasn’t too difficult but there was some work involved in collating reports and just making sure that we had all of the information that was required from HMRC.” Antiques Dealer

The ‘fear of getting it wrong’ was dominant when it came to applications, with small traders anxious to enter correct information, to avoid fines later down the line and worries about being able to use their authorisations for the correct goods. However, some participants also pointed out that HMRC review submitted applications, meaning that anything that gets missed is picked up straightaway, rather than later down the line. Ensuring this is communicated clearly to first time applicants might ease the fear of getting things wrong.

For a small number of participants, the administrative burden of applications was sometimes more demanding. One participant mentioned that they hired an external consultancy firm to advise on, and write some of, their application. This interviewee was applying for Inward Processing Relief (IPR), which is one of the more administratively burdensome authorisations to apply for. Whilst this piece of research could not pick up any differences between specific authorisations (due to the size of the sample) it is likely that there is significant variation in experience between different authorisation applications.

Question 5

5. Proposed changes to the authorisations system

Accepted Answer

5.1 Proposed changes presented to participants

Research participants were either presented with (via MS Teams) or talked through (via phone) HMRC’s proposal for simplifying the authorisations system.

First, participants were shown the proposal to group similar authorisations together to create 5 groupings – Authorised Economic Operator, Transit, Fiscal, Simplification and Declaration, Ports and Wharfs. It was explained that businesses would only be required to submit 1 application for each of the groupings, reducing duplication. Businesses would then supply additional information within this grouping if there were specific requirements for each individual facilitation. Participants were presented with descriptions of the 5 groupings. Details of the authorisations included in each grouping can be found in the annex.

The second part of the proposed changes revolved around making the authorisations system fully digital. Respondents were presented with the following description of this proposed change:

The revised customs authorisations process, that I have just told you about, will be a digital system, you will not be required to fill in paper forms, and when applying for an authorisation the system will pre-populate fields with existing data from customer records (once and done approach).

All the information on your authorisations will be accessible on a single digital platform, bringing together all the information about a trader’s authorisations in one place.

5.2 Response to the simplified 5 authorisation system

Participants generally responded well to the proposed changes, with most seeing them as an improvement to the current setup. Small traders believed having 5 groupings would make the system much easier to navigate for first-time applicants. The simplified groupings, along with definitions, also helped participants more easily understand the purpose of other authorisations that they did not already hold. Relatedly, the groupings themselves were generally seen as sensible, with a few exceptions detailed below. Most respondents reported their current authorisations being in the ‘Simplification and Declaration’ or ‘Fiscal’ groupings. The simplified approach was also seen as beneficial regardless of intermediary use, with respondents confident that they would benefit, regardless of whether the authorisation was held by themselves or an intermediary.

“It would make it simpler and it sounds great. If all of ours came under the fiscal category then that would be fantastic.” Chemical Manufacturing

“Some of the authorisations that we use are actually very similar so I think they could very easily be grouped together under a wider category, that would make a lot of sense to me.” Antiques Dealer

Despite this, participants suggested that there were still issues carried forward from the current authorisations system that they would also like to see addressed, detailed in table 4 below.

Table 4: Suggested improvements to authorisation groupings

Issue raised by respondents	Explanation
Confusing language remains in the authorisation names	The names used for the group headings were confusing to participants, particularly Authorised Economic Operator (AEO) and Transit. This was partly because these names offered little explanation about the purpose of the authorisation. Participants would ideally like to see category names more accurately reflect what authorisations are used for in practice. HMRC provided detailed explanations of the groups for the purposes of the research. Participants commented that these explanations were too technical.
Small traders misunderstood the purpose of some of the authorisations	For Ports and Wharfs and Transit, participants frequently thought that any goods requiring transport through a port or being transited in some way would require at least one of these authorisations – as opposed to something port and wharf operators were required to hold. Again, the further descriptions did aid understanding, but it was not immediately clear to respondents.
The improvement was not seen to offer a longer-term benefit to traders	Participants saw the proposed changes as having most benefit to first-time applicants. Whilst the simplified system was useful for understanding more about other authorisations, it was unusual for small traders to apply for further authorisations over time, with most participants reporting few changes in their activity over time. One respondent did mention that they were looking to apply to get their business approved under the AEO authorisation.

“I would struggle to fully understand which of the groupings I fell under… but there could be a nice workflow process to say… please declare… the business that you’re doing… And it says, ‘Well, in this case, you only need to do an authorised economic operator’. The language description probably isn’t too hard to understand, I think it’s the titles they’re using are quite hard.” IT sector

5.3 Response to digitalisation of the authorisations system

Respondents were again positive about the proposed digitalisation of the authorisations service. In contrast to the simplification into 5 groupings, small traders saw this as having a long-term benefit for management of authorisations, as well as applications going forward. Concerns were more based around the setup costs and transitioning to this new system.

Table 5: Benefits of digitalising the authorisation system

Benefit of digitalisation of authorisations	Explanation
Single point of interaction	The idea of having a single system across all of the authorisations was very attractive to small traders. In an ideal world, participants would like as many of the different functions of HMRC to be brought under a single platform as possible. In particular, small traders would like this to extend to customs declarations, given that they are seen as the most complex part of the customs process. Small traders would like to be able to see what goods are being traded under which authorisations. Whilst such a proposal is out of scope for HMRC’s proposed updated to the authorisations, it is worth noting that this is something that multiple participants raised, and reflects the fact that small traders see the customs system as a single process, rather than something split up into multiple different processes.
Reduced application burden	Small traders responded well to the idea of pulling through data from previous applications, with many spontaneously pointing out that little of their information provided changes between re-applications. Whilst few participants mentioned that they would actively look to apply for more authorisations than they currently hold, respondents understood the benefit of a reduced application burden when applying for other facilitations within the same grouping.
Records kept by HMRC	Small traders usually kept track of their authorisation and declaration information using their own systems (often in a simple Excel sheet). Participants mentioned that having easily accessible records of what was actually given to HMRC (having a record of what is on HMRC’s systems), would be useful as a single point of information. This might even be able to replace their own internal data capture, if it was easy to use. Small traders felt that record keeping on the portal would be particularly beneficial if, as suggested above, information on declarations could be included on a single portal. The burden of recording and storing declaration information is much higher than for authorisations, given the frequency with which declarations are made (the main point of interaction with authorisations is the reapplication process once they have expired).
Few security concerns raised	Participants rarely mentioned security concerns with the portal, for both HMRC and intermediaries. Small traders mentioned that they would not like competitors to have access to commercially sensitive information. One participant suggested having a login to give businesses confidence that their information could not be accessed by competitors, either directly, or through intermediaries.

“There’s nothing worse than having to look at multiple places or things. And it should allow us to reconcile entries and things much more simply.” Sports equipment producer

“Having access to all of our customs authorisations and declarations information in one place would allow us to make sure that all of the information was correctly entered and keep it as a record of what we had uploaded… at the moment we have to keep a record of all of the information, so if it was all on the Government gateway then that would be very useful.” Art Gallery

“I suppose the only thing is, would be… you wouldn’t want someone to see everything that you brought in and out… and if you’re a competitor or not.” IT sector

Participants were also confident about the prospect of moving to a fully digital system, with the vast majority saying that this was already their preferred way of communicating with HMRC. Small traders would, however, like some reassurance that any changes made to the authorisation system would be long-term, with businesses fearful of the costs of constantly adapting to new processes and ways of doing things.

Participants were also worried about the need for specialist software and in turn the costs of licensing for any new software required. Whilst this may not be a requirement of a new digital authorisation portal, it is worth noting that there is a perception amongst small traders that such costs have been required in the past (these are particularly mentioned around CDS where some software providers charged traders to access CDS functionality through their software) and therefore might again be required for future changes. Reassuring participants about the costs they will face may improve uptake of any digital tools.

“Would you need to pay for that? Would that be an additional cost? Would you need a licence? Because I know when you needed a [software] licence for …CDS… how much financial implication would that have, for a small business like me.” Sports equipment producer

Whilst there were very few concerns about moving to a digitalised system, participants would still like to have the option to phone up HMRC if they had any difficulties with their application or the ongoing management of authorisations.

5.4 Experiences of previous changes to the tax system

In order to understand what has worked well or not so well in the past, small traders were asked about their experiences when preparing for other customs or tax processes over the last couple of years, and in particular how these changes were communicated.

The communications around Making Tax Digital (MTD) changes were well received by the participants in this research and seen as a good model to follow as the messaging was prominent and clear. The phased migration of MTD was a model that participants felt should be replicated.

“I think the way they did Making Tax Digital was really good where you had a phased migration but it had to be done by a certain date.” IT Business

However, the current changes from the CHIEF system to Customs Declarations Service (CDS) were not as well received by the small traders who took part in the research. Participants reported that their businesses have had to invest time and money to adapt to the changes. Participants said that they did not always understand the reason for change and felt HMRC were not acting in the businesses’ best interests, putting small traders at a disadvantage to larger businesses. This was particularly the case for those who trade with Europe and had had to adapt to new customs regulations.

“The move from CHIEF to CDS means lots of logistics businesses were in a better place than our small team. We struggled to understand the reason for change and what impact it had. It was not communicated, and we didn’t have time to change.” Fast Moving Consumer Goods

“Because sometimes HMRC undertakes changes so often it’s not in the businesses’ best interests.” Lighting Business

Question 6

6. Ideal communications

Accepted Answer

6.1 Business approach to customs information and informational needs

Small traders tend to think about customs processes and information as a whole; they often do not distinguish between the customs processes when thinking about their information needs. This means that in many of the more generic discussions around ideal communications they think about all their customs information needs together rather than separating out information requirements for customs authorisations or customs declarations. Small traders look for information as they are either trying to better understand the process or seek answers to specific questions. Sometimes the information they are looking for is very specific to their sector, the product they are transporting or the regulations and duties of the country they are trading with.

Participants report that customs information is often very difficult to find and often unclear. Overall, while GOV.UK is seen as a good resource, the customs information was seen as hard to navigate and too generic. For those small traders who have relatively little knowledge of authorisations, the information on processes was often unclear which caused confusion. The information needs of small traders, who were familiar with and regularly use authorisations, tended to be on more specific elements such as commodity codes for declarations and they struggle to find the detail needed.

“The actual GOV.UK can be quite clunky so have to know what you are looking for. So the IT search could be simplified, or the headers… The search function could be easier to navigate.” Manufacturing

“The information is not easy to understand and [HMRC] support staff do not have enough knowledge.” Fast Moving Consumer Goods

Small traders were worried about getting their customs information wrong as the impact on their business, if it is fined or the goods are held at customs, is significant. If the information is not accessible, clear, or specific enough, participants said that it can become quite stressful and lead to small traders seeking out alternative sources of information. This can lead to additional costs as they are often choosing to pay an intermediary or consultant for the reassurance that they have understood and followed procedures correctly. Examples of the information sources used by small traders include online searches, blogs and YouTube, informal networks, the Chamber of Commerce, and the Institute of Export. One frustrated participant contacted his MP.

“GOV.UK guidelines are helpful once you’ve found them although some of them could do a bit more clarity and not relying on people reading between the lines as to what’s required.” Wine and spirits

“We didn’t find HMRC that useful so we used our independent consultant who was really helpful… We’d be lost without him.” Beverages

6.2 Ideal content of communication from HMRC

As the customs authorisations process is less frequent, or for some not relevant, it was the information small traders needed for customs declarations that was more top of their minds and often referred back to when considering their communication needs. Participants wanted more detailed information than they felt HMRC were providing. Information that is easy to find and navigate, and step-by-step instructions on how to complete customs declarations were frequently mentioned as possible solutions by participants. Across all customs information, sector-specific information was also frequently raised as something that would be useful.

“I often need to know information in more depth than HMRC are able to give me.“ Lighting Company

“A ‘How To Guide’ which has clear instructions. Real practical day-to-day stuff.“ Fast Moving Consumer Goods

More specifically in relation to authorisations, information needs to be in simple, clear language. Many small traders found that the information currently available was hard to comprehend and open to misinterpretation. For example, different members of staff reached different conclusions of the actions a business needed to take from the same guidelines. This reinforced the need for advice from intermediaries and/or customs consultants. In addition, they would like the information to be up to date.

Overall small traders were keen to understand, within each authorisation grouping:

which authorisations are relevant and/or beneficial to their business, particularly as they found the language used in the grouping and authorisations names difficult to understand
what duties to pay; what codes they need to use
clarity over changes particularly due to EU Exit

Some small traders were unlikely to understand or proactively seek out other authorisations which might help them, they were more inclined to wait until someone told them what they needed rather than searching for information. Even among small traders who regularly use authorisations, there was little appetite to seek out new authorisations. They tended to think that they had all the authorisations they required and were not interested in looking for others that could be useful for their business.

“It would be helpful to have a list of other authorisations that could benefit us or we are eligible for because I’m not going to seek it out proactively.“ Lighting Business

6.3 Ideal format of communication from HMRC

Participants were clear on the range of communication formats that worked well. Notifications of changes by emails were seen as the ideal way to keep businesses up to date with changes, in conjunction with a range of tools to educate and inform such as training videos and the GOV.UK website.

Email

When communicating changes or updates participants’ preferences were for the initial contact and updates to be sent by email. This email could then be used to signpost to further detail if needed. Participants said they would like to see the same format being used on the GOV.UK website.

Small traders said they are most likely to find the emails useful if they:

were relevant to the recipient
clearly stated the content in the subject heading so they can be saved and easily referred back to
contained short, succinct bullets
included hyperlinks to further information to avoid too much text within an email

“An email… It is quick and you can open up the attachment… It doesn’t want to be too wordy… You can get a bit word-blind. Keep it punchy.” Manufacturing

“Emails with PDFs with live links to the information required. The information needs to be detailed but in a simple language.” Fast Moving Consumer Goods

“Use very simple and bullet points to say, “We’re changing the process. This will be rolled out… Businesses will be able to enrol in this new process over X period of time. This is the reasons why you need to do it, X, Y and Z. Click here to get your customer’s authorisation process started,” and just some really straightforward bullet points.” IT Solutions

Videos tend to be well received by small traders, particularly if they were a step-by-step guide. There was some praise for the HMRC webinars about the Customs Declarations System. Some small traders also accessed information through webinars on YouTube. One participant suggested his younger staff would welcome guidance on TikTok.

“I use HMRC webinars on CDS as it gives you a more detailed overview. They are good, they give you instant information which you can follow-up with HMRC.” Manufacturing

“Personally, I like text, I can read and assimilate text faster than watching a video. However, I have some younger members of staff who would probably be delighted if they were all on TikTok videos.” IT Components

Helpline

Helplines were seen as essential, however it is important that the call handler is knowledgeable, and that contradictory advice is not given by different call handlers. Advice from helplines was usually needed quickly, with helplines often being used as a last resort, but difficulties in accessing help or getting clear guidance can be very frustrating and cause stress.

Given that information can be hard to access and/or understand, and the negative impact on small traders if they get the information wrong, it is particularly important for small traders to get additional support beyond emails or the website, either through a chatbot or helpline. It is vital that the messaging and advice from HMRC is both timely and consistent. While the information given out by advisors on the HMRC helpline, needs to be correct, and needs to come from call handlers who understand the processes and requirements.

“Communication is critical…. I want to be able to communicate with a department directly, for example inward processing relief who had experience and expertise in this field, and not get passed on.” Cleaning Equipment

“The guidelines are written, but everyone’s interpretation of them was different. And whenever we rang up HMRC, we would have a different person that we spoke to, who told us what we’d done was wrong.” Beverages

It is also worth noting that small traders were frequently sent information from HMRC which was not relevant to their business. This did not encourage small traders to engage with communications from HMRC and it was often felt that HMRC should be able to inform the business what they needed as they held information about the business.

“I get emails from HMRC, but they are mostly not relevant to us. It makes you want to ignore them.” Fast Moving Consumer Goods

“It would be good for HMRC to contact us about anything that is appropriate to the business. HMRC know the processes involved from the information they hold on us.” Electronics

Question 7

7. Conclusions

Accepted Answer

Levels of knowledge around authorisations varied greatly, and many small traders did not understand a great deal about authorisations outside of what they already held. Most participants did not actively consider further authorisations that might benefit their business. Simplifying the authorisations system into 5 different groupings, as well as emphasising that the digital application process will make applying for further authorisations easier, should make it better for small traders to understand wider benefits of authorisations as well.

The fear of getting it wrong was dominant in how small traders thought about their customs obligations. First time applicants would benefit from reassurance that HMRC will review their application and make sure any mistakes are corrected before it is submitted (this was mentioned as being useful by existing holders of authorisations).

The proposed simplification of the authorisations system was well-received, and small traders believed that first-time applicants would benefit from a system that was easier to understand. Participants also felt that the simplified system would be beneficial regardless of whether authorisations were held by the trader or an intermediary acting on their behalf. The proposed changes were viewed as most beneficial for first-time applicants because regular users felt they already had everything set-up and tended to think they had all the authorisations they needed. Communicating about the benefits of authorisations may encourage uptake amongst those who hold some authorisations, but do not realise that they can benefit from others.

Small traders still found the terminology used as part of the new system confusing. HMRC could simplify some of the language, changing names of authorisation groupings to better reflect their overall purpose, as well as making short descriptions in simple non-technical language.

Clear, instructional information would assist applicants, with some mentioning that a flowchart or authorisation tool would help businesses identify which relevant authorisations to their business.

The proposed move to a digital authorisations system was seen as beneficial, with small traders particularly positive about having a single point of contact for all authorisation-related information. Small traders would ideally like other aspects of customs administration to be brought under this system as well (particularly declarations). This was seen as particularly beneficial to those who were re-applying, given that information could be carried forward from the initial application.

There were concerns about adjusting to a new system with small traders wary about digital systems changing further down the line. Communication from HMRC could emphasise that the move would be an update that would be relevant for years to come. Small traders were also concerned about the potential costs of maintaining licences for any required software or additional software functionality – HMRC should be clear about expectations around any cost upfront, or mention that licences will not be required, if this is going to be the case.

The Making Tax Digital transition was highlighted as a strong model to follow, given that participants felt that communication was clear and the phased transition gave businesses time to adapt to the new system.

Communicating with traders through a variety of communication channels is important given that traders all have different preferences, though email was frequently mentioned as being the more useful way of hearing about updates.

Sector-specific communications were frequently raised by participants who mentioned that advice given by HMRC is often very vague and designed to apply to all businesses, but in doing so can end up being unhelpful. Small traders also raised the idea of having sector-specific advisors, who might be able to deal with more specific queries over the phone.

Question 8

8. Annex

Accepted Answer

Table of proposed authorisation groupings*

Authorised Economic Operator (AEO)	Simplification and Declaration	Ports and Wharfs	Fiscal	Transit
AEO Customs Simplification (C)	Self Assessment	Seaport/Wharf Approvals	Temporary Storage	Authorised Consignee
AEO Safety and Security (S)	Bulk import reduced Data Set (BIRDs)	Airport Approvals	Temporary Admission	Authorised Consignee TIR
AEO C and S combined (F)	Entry in Declarants Records (EIDR)	Rail port Approvals	Customs Warehouse	Authorised Consignor
	Simplified Declaration Procedure (SDP)	Fixed transport Installations (FTIs) approvals	Inward Processing	Use of Special Seals
	Registered Exporter (REX)		Outward Processing	Individual Guarantee Customs Comprehensive Guarantee
	Approved Exporter		End Use / Authorised Use Relief	Transit Declaration with reduced data requirement
	Authorised Banana Weigher		Duty Deferment Account	Use of Special Loading Lists
	Authorised Issuer for Proof of Union Status		Simplified Import VAT Accounting (SIVA)	Authorised Clearance Upon Presentation
	Customs Supervised Exports (CSE)		Freeports Custom Special Procedure	Use of an Electronic Transport Document as a Transit Declaration
	Designated Export Place (DEPS)		Freeports Customs Site Operator
	Non-Inventory Linked Port-Loaders		Guarantees and Guarantee Waiver
	Fast Parcel Operators MOU
	Transhipment MOU

*Groupings are still under policy development and subject to change.

[1] Traders in this category were deprioritised during fieldwork in order to pursue more interviews with those who held authorisations. Ipsos found that interviewees from these businesses typically had very limited knowledge of authorisations, and therefore were not able to comment much on the modernisations that HMRC proposed.