Customs law and HMRC compliance strategy: legal provisions that apply to Customs penalties
Customs civil penalties are governed by various pieces of legislation. These are set out below.
Finance Act 2003
Part 3 of Finance Act 2003 and subsequent statutory instruments make provision for a civil penalty where a person contravenes a
- requirement, or
imposed by or under legislation relating to any relevant tax or duty.
The Act defines a relevant tax or duty as
- customs duty
- community export duty
- community import duty
- import VAT, and
- customs duty of a preferential tariff country.
There are two sets of regulations.
- The Customs (Contravention of a relevant rule) Regulations 2003 (as amended) [2003/3113] are made under the Finance Act 2003.
- The Export (Penalty) Regulations 2003 (as amended) [2003/3102] are made under the European Communities Act 1972. They make provision for civil penalties for contravention of Customs rules that are not directly related to a relevant tax or duty.
The schedules that apply to the above regulations are
- the schedule to the Customs (Contravention of a relevant Rule) Regulations 2003 as amended, and
- the schedule to the Export (Penalty) Regulations 2003 as amended.
These schedules provide details of
- the relevant rules which, if contravened, attract a civil penalty
- the person(s) who is liable
- the maximum penalty amount applicable in each case.
Our tables of contraventions mirror these schedules but have an extra column for the three digit ‘reason code’. (Please note these codes are an identifier set by HMRC and indicate the legal provision that has been contravened - they do not form part of the actual Statutory Instrument laid before Parliament.)
These civil penalty provisions cover all EC and UK Customs law except
- TIR and ATA Carnets (which are international contraventions, not legal provisions)
- prohibitions and restrictions where criminal sanctions are applied, and
- smuggled goods subject to excise duties such as alcohol and tobacco.
Note particularly the following
- Community Transit is provided for in the Customs Code. Where goods have gone missing there will inevitably have been an infringement of the Customs Code or Implementing Regulation.
- The provisions cover customs duty (including agricultural duties), import VAT but not excise duty
- Common Agricultural Policy (CAP) exports are subject to an EC penalty regime administered by the Rural Payment Agency (RPA). Arrangements are in place to ensure that contraventions are dealt with by either HMRC or the RPA but not both. In cases of doubt, Compliance officers should speak with the CAP team in CITEX.
- When free circulation goods in the Channel Islands and goods which originate in the Channel Islands move to the UK, import VAT should be declared and paid. The civil penalty provisions do cover contraventions regarding import VAT declarations on such movements.
Note: Although the Channel Islands are part of the customs territory of the European Union, they are not part of the VAT territory. This means that movements of goods from the Channel Islands to the UK are subject to import VAT provisions. They are required to comply with Customs formalities as set out in Part 3 of the Finance Act 2003 and subsequent statutory Instruments.