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HMRC internal manual

Customs Civil Penalties Guidance

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HM Revenue & Customs
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Providing education: examples of where to provide education

The following are examples of situations that might arise and the different types of education that a compliance officer might use.

Example 1

Tania begins trading as a fashion retailer importing clothing for resale using her recently designed website. Her first few months are hectic as she learns how to operate her business and how to overcome all sorts of problems that are new to her. She works very hard and long hours. She doesn’t know a lot about importing goods so she uses various clearance agents and asks them to organise the importation of the goods on her behalf.

After nine months we carry out an intervention. We find that there have been 3 contraventions in respect of the information she has entered in her customs declarations for Import (Reason Code 051). In all three declarations she has failed to include the freight charges in the total customs value of the goods imported. Tania co-operates fully during the intervention and tells the compliance officer that she wants to learn more about the processes she needs to carry out and the records she needs to keep to avoid making a similar mistake in future.

The compliance officer decides that, given the circumstances surrounding the contraventions, on this occasion it would not be appropriate to take CCP action. They compete a CPAC and have their decision agreed by their manager.

However, they provide Tania with education by

  • explaining that when employing a clearance agent to prepare and submit Customs Declarations to HMRC on her behalf she must provide them with clear written instructions on how her goods are to be declared and give them the correct details in respect of description, commodity code, customs procedure code (CPC) value etc. She must also make sure they give her a copy of any customs declaration they complete and submit on her behalf.
  • explaining that she must retain all of the information and records in relation to her imports and set up management assurance systems which allow her to cross reference the original supplier’s invoice and supporting documentation against the customs declaration. This will confirm that the information declared to Customs is accurate in all respects.
  • referring her International Trade leaflets on HMRC website. These will help her to set up these systems - What Records Must I keep and Recommended Management Assurance Checks for Importers.
  • showing her how to access some useful links using the HMRC Website - Tariff Classification and our International Trade Public Notices.

At the end of the intervention the compliance officer gives Tania a letter of written instruction which sets out clearly the details of the education and advice provided.

Example 2

Jim has been trading for two years as a Woods & Crafts business. He has learned a lot about operating his business and how to comply with the customs rules that affect him.

During an intervention we find that his compliance has been generally very good. However, recently he imported two small consignments of timber from China. He declared the goods as Preference Goods which means that the duty rate applicable was only 2%, not the normal 7%. This is the first time Jim has imported preference goods. The compliance officer asks Jim to provide the paperwork that substantiates his claim of Preference. Jim tells the compliance officer that he would need to look for this, but he is happy to forward it. When the compliance officer gets back to the office they draft a quick e-mail to Jim setting out the information they require to confirm that he is entitled to claim Preference for the two consignments, via GSP Certificates. They ask Jim to produce this documentation within the next 7 working days.

Three days later Jim calls the compliance officer and says that he cannot produce this paperwork. He explains that when he bought the goods from his supplier in China he was advised that he would be entitled to declare these goods as Preference because they were originating from China but he didn’t realise that he needed supporting paperwork to substantiate this claim. He says that he wishes to pay any outstanding duties and he would welcome any advice or education so that he does not make similar errors in future.

There is a Reason Code 230 contravention, because of Failure to Produce the GSP certificates he requires in order to claim Preference. There is also a Reason Code 051 Incorrect Customs Declaration contravention as these goods were not eligible to be declared as Preference Goods. However, the officer decides that in these circumstances, education is more appropriate. They complete a CPAC and have their decision agreed by their manager.

The compliance officer decides to provide the following education.

  • They provide Jim with a copy of the Public Notice 826 which sets out clearly the qualifying conditions to be met to claim Preference. They also send him the web links for International Trade Public Notices, Tariff Classification and the Education and Business Advice Service.
  • They also make Jim aware of a workshop called ‘An introduction to International Trade’. This provides an overview of the basics of importing and exporting, the detail of the information and records he should keep, the systems he needs to have in place and the details of the support available through the Education & Business Service Team.

The compliance officer also confirms the education and advice provided to Jim in a letter of written instruction.