Processing the application: pre-authorisation visit
It is essential that a pre-authorisation visit takes place to ensure that the applicant can meet all the relevant conditions and obligations of the authorisation. The results of any recent audits to the trader should be taken into consideration.
This visit should provide the opportunity to discuss any issues arising from the trader’s application form or noted in the pre-authorisation checklist and to obtain any additional information necessary to confirm their eligibility for authorisation. You must also ensure that the trader is fully aware of their responsibilities.
If the trader is an AEO you will need to ensure that the CFSP processes are fully recorded in the traders documented procedures. If they are not, these should be documented before the visit and then discussed and examined during the visit.
The pre-authorisation visiting officer’s report (see CFSP02400) should be used as an aid memoir to record the results of the completed authorisation checks.
Pre-authorisation systems audit
Compliance with CFSP regulations, legislation and operating procedures is assured through systems based audit controls. Traders wishing to become authorised for CFSP should be subject to a full pre-authorisation systems audit.
This will ensure that their operating and/ or computer systems are compliant with all the criteria and conditions required to operate CFSP. These pre-authorisation audits should provide assurance that the trader’s systems will be fully auditable and will allow officers to make an effective check on CFSP operations and compliance post-clearance. Officers should ensure that the trader:
- maintains adequate, fully cross-referenced records
- is able to communicate electronically with HMRC systems
- will transmit complete, valid, accurate and timely declarations to Customs
- will properly endorse, exhaust, record, maintain and surrender (as required) all supporting documents
- will not pose a significant risk to the EU/ to the revenue in their operations of CFSP
- has satisfactory documented procedures and management controls in place to minimise any ‘risks’ and
- fully understands their obligations and will meet their authorisation requirements.
At their own discretion the visiting officer may wish to consider the involvement of specialist computer audit staff with regard to the design, testing and implementation of the applicant’s CFSP system prior to authorising the trader. In making this decision the following aspects should be considered:
- applicant’s compliance history
- revenue and other risks, eg BIS licences and
- size and complexity of applicant’s system and operations.
Also see CFSP15000 on testing the traders system.
Pre-authorisation compliance checks
The trader should have informed HMRC of any instances of non-compliance via Section 3 of the C&E48. The checks carried out by the pre-authorisation team may also have highlighted compliance issues. If so, they should have made recommendations in the checklist for follow up action. If there are any doubts about the trader’s compliance you should research its exact nature to establish whether:
- it was a one off occurrence
- it was the result of recklessness or negligence
- it was a deliberate attempt to avoid the payment of revenue
- it was a deliberate attempt to evade their responsibilities
If you are satisfied that the trader has introduced sufficiently improved controls to mitigate the occurrence of future errors, the authorisation may be progressed. If not, the application should be halted and a time limit agreed for the trader to put these improvements in place.