Supplementary memorandum from the Export
Group for Aerospace and Defence (EGAD)
Further to the oral evidence that we gave to
the Committee on 19 April 2006. Towards the end of the session,
we were asked by the Chairman "whether it might be possible
for the EGAD to let us have a paper, before we see HM Revenue
and Customs, in which they just list the particular improvements
that they would like to see, in the present system, fall firmly
within the parameters of not doing anything that is going to damage
the tightness, such as it is, of the existing export control system."
As promised, I have taken soundings from Members
of EGAD in general, and the Members of the special HMRC Sub-Committee,
in particular. The comments which we have are as follows.
GENERAL BACKGROUND
Resources
There is a widely-held perception within Industry
on the low level of priority apparently given to export control
matters by HM Revenue & Customs (HMRC), whose main focus (as
reflected in the prioritization given in its new name) appears
to be on revenue collection. Resources are being further cut,
and this further limits the effort which can effectively be put
into export control compliance enforcement. Whilst enforcement
is taking place, as best it can, within the resource limitations,
HMRC will say that their controls are based fundamentally upon
risk analysis and intelligence, and targeted at attempts to avoid
export controls, and not at those companies who have good compliance
records. We believe that the Government should be actively encouraged
to provide additional resources for HMRC's vital enforcement work—at
present HMRC is being pulled in several different directions by
its revenue raising, enforcement and trade facilitation roles,
and enforcement is suffering, as a result.
We believe that Industry can provide constructive
comment and suggestions to HMRC on how, within the reality of
its current deficiencies and considerable resource limitations,
it can be more effective in its enforcement activities.
We believe that the current risk-based assessment
system is not thorough enough. It is widely agreed that the British
Defence Industry (generally speaking) has an excellent and demonstrably
proven track record of having a very high level of commitment
to compliance—however, we believe that this level of awareness
and commitment is not necessarily replicated in all other sectors,
who are also affected by export control issues.
The truth that no-one has ever been bold enough
to stand up and say is that there are no totally 100% effective
systems, procedures or mechanisms which can prevent proliferation
from taking place, and it is impossible to identify any mechanisms
or procedures which would effectively catch 100% of all attempted
export control violations and problems which might arise. No such
systems exist, or ever could do so. This is a fundamental reality
which must be recognized and cannot be ignored. The recent extension
of our control systems also to encompass the intangible transfer
of technology and trade activities make any potential entirely
theoretical 100% effective system even more remote. It must be
recognised that some things in the new regulations cannot be fully
implemented and enforced at the practical level (eg the intangible
transfer of technology controls). The current system has been
described by one person within the Industry as being "the
collusion of the willing"—if you are willing to be
subject to and bound by export controls, then you are, and if
you are not . . . then you are not. This situation is unacceptable.
The current poor level of checking of shipments
(for import and export) by HMRC, is a significant problem—we
all too frequently come across perfectly law-abiding companies
who have been in business for many years, and exporting during
that time, blissfully unaware that what they are doing is caught
by export controls, and whose shipments (which have always been
accompanied by complete and accurate normal shipping documentation)
have never been stopped by HMRC officers querying why there is
no export licence. One of the most extreme cases was one we came
across back in early-2004 involving a company heavily involved
in the export of Chemical, Biological, Radialogical & Nuclear
(CBRN) protective clothing, which had been in business for over
20 years, and never applied for a single export licence (entirely
through ignorance), and also never had any shipments stopped!
How many more, similar cases are there out there?
The UK needs to ensure that its export control
system is as universally respected as possible, or major problems
will develop. HMRC needs to pick up on non-compliant exports more
than it currently is. Meanwhile, it is clear from the June 2005
Joint Customs Consultative Committee (JCCC) paper that HMRC regards
much of Industry as being hopeless in its paperwork! The main
highlighted findings of the reviews (which looked at the activities
of some 1,600 traders of all types, involving over 18,000 export
declarations) which this paper summarised were:
"The findings of these two reviews indicate
significant non-compliance with requirements for the completion
of export declarations. Some of the more serious shortcomings
are:
— 19% of declared values were incorrect
— 20% of commodity codes were incorrect
— 14% of declarations did not agree with
the actual weight/packages actually exported".
One of the fundamentals is for exporters (of
all types) to get their shipping documentation right, and the
apparent lack of thoroughness which these reviews identified is
a potential concern—what else are these companies getting
wrong? There are those within Industry who believe that mechanisms
must be made to pick up on these errors prior to shipment and
not permit the goods to leave the UK until the documentation is
corrected and more accurate. Whilst, undoubtedly, this would result
in many complaints by the traders involved about Government "jobs
worths" (quite possibly to their MPs) affecting their business
and delaying their shipments, such an initiative would actively
encourage Industry in general to start getting its paperwork correct—a
fundamental facet of exporting correctly.
In our view a reasonable goal is to increase
a "culture of compliance" for most and tools for the
enforcers to try and cut back on the recalcitrant others.
Whilst to the uninitiated it might appear to
be perverse that some of us are arguing that it is in Industry's
best interests to encourage HMRC to be more rigorous in its enforcement
of export control regulations, there is a logic behind this, quite
apart from the recognition of the fundamental vital strategic
importance of the basic raison d'etre of export controls. The
current system puts the non-compliant at a commercial advantage
over the compliant, who bear the costs of compliance and put the
resources and efforts into being compliant. The current system,
and the seemingly ad hoc and uncoordinated way in which HMRC officers
around the country seem to implement the regulations are: undermining
the role and authority of export control compliance managers within
companies with their colleagues in other disciplines/departments;
undermining the procedures that compliance staff are trying to
put into place; wrecking the credibility of compliance staff and
the regulations with their other colleagues elsewhere; and giving
other staff the innate perception that export controls are just
a farce. This is not in anyone's interests.
There are three types of non-compliance:
— Deliberate, premeditated and fraudulent
non-compliance;
— Frivolous, ad hoc non-compliance;
— Ignorant non-compliance.
We believe that some effective mechanisms need
to be found to enable HMRC to pick up on these non-compliance
cases more regularly and effectively, in order to get some in
Industry to take compliance more seriously. There is clearly an
issue of where and how it is best and most effective to target
and use the limited resources available within HMRC to achieve
this. This must involve not just the high profile, and most serious
cases, but also the more minor ones.
HMRC Staff Knowledge and Locations
Whilst export controls are relatively easy for
specialist, dedicated teams, this is frequently not the case for
front line staff—this is so for HMRC, just as it is for
other Government Departments and Industry. Ease of identification
and recognition of controlled goods and technology is a major
problem for HMRC's front line staff, who are the last line of
defence against proliferation. It is widely agreed within Industry
that the awareness of HMRC front-line staff with regard to the
rules on hand-carry items is generally very poor, as are the mechanisms
to check the related documentation. When hand carrying equipment
and laptops go out through airports many companies find that there
is frequently not a customs officer available to check the goods,
either for carnet or licence purposes, and this causes all sorts
of problems for them.
We believe that whilst some effort has been
made in the training of HMRC staff, especially by the Export Control
Organisation (ECO) at the Department of Trade & Industry (DTI),
which is to be welcomed, more effort needs to be put into this.
Whilst there has been much discussion within EGAD on whether Industry
could constructively offer to assist in the training of HMRC staff,
it is recognised that there would likely to be a lot of opposition
to this from within some quarters of HMRC.
There is frequently discussion within Industry
on different and inconsistent interpretations on IPR authorisations
between Entry Processing Unit (EPU) officers, and the lack of
quality control within HMRC. There are due to be only six EPUs
left across the UK, due to rationalization, and there are many
who query how HMRC intends to look after Industry's interests
with only six EPUs spread across the country. As EPUs are being
reduced, so is trade facilitation!
This also raises the issue of local customs
offices, and the recent reduction in their numbers. When a UK
company ships to a European destination against a SIEL, the export
licence should be endorsed by its local customs office. Many companies
report that they have found in the past that their local customs
offices (which sometimes can only be regarded as being "local"
in inter-galactic terms!) do not know anything about licences,
so they have been unable to get them to endorse the licences,
as necessary.
They then have to find other means (such as
getting their freight forwarders to get these licences endorsed
at the port/airport) but quite often the port/airport customs
office have either complained or sent the licence forward with
the goods in error. It would be better for companies if all licences,
irrelevant of the destination, were handled in the same way—consistency
and harmonization.
THE PUBLICATION
OF INFORMATION
ON PROSECUTIONS,
ETC
As we have already told the Committee before,
we believe strongly that more public information is needed to
be made available by HMG to demonstrate that HMRC is undertaking
its enforcement role seriously and proactively. HMRC frequently
states that whilst prosecutions, of which there had only been
three reported over the previous three years, were the visible
side of actions taken against companies, there is a very considerable
amount of other, behind the scenes, activity also taking place
on a regular basis, including a lot of investigations, and that
these can, and do, result in companies being shut down altogether.
Yet, at present there is very little information published on
identified violations. We believe that more publicity should be
given of cases, not just of prosecutions, but also of other actions
and disruptive activity which is undertaken against companies.
Perhaps, if it is felt there may be confidentiality concerns,
such publicity could avoid stating the names of the firms involved.
We believe that, as is the case in the USA, giving much more publicity
to actions being taken against companies could have a significant,
beneficial and galvanizing affect on promoting proper consideration
and commitment to routine compliance issues and mechanisms within
Industry.
Whilst it has been stated that HMRC is looking
to undertake more prosecutions in the future (something which
is seemingly borne out by the publicity given to the three prosecutions
which have taken place since January 2005), and that it is now
starting to look in more depth at paperwork, it is clear that
they are only pursuing cases where these will, with some certainty,
stand up in court, and there is a marked reluctance otherwise.
At a seminar in London in June 2005 an HMRC official explained
why it was difficult, or even (for instance in the case of the
intangible transfer of technology controls) seemingly impossible,
to bring successful prosecutions which will be upheld by the courts.
At least two of the cases which have been publicized
over the last two years have been perceived by many within Industry
to indicate a new, and more harsh, interpretation of administrative
errors by HMRC, and that HMRC is only interested in "soft
targets". Until HMRC manages to succeed in going after more
substantial and challenging cases, this perception will remain:
that HMRC, under political pressure from the Government to be
seen to be doing something about export controls and pursuing
prosecutions, is opting for the simple expedient of going after
the "easy meat" of companies who have committed some
form of administrative error which is unarguable, rather than
pursuing those who are more illicit in their activities. The publication
by HMRC of more information on what enforcement it has been doing
would help to rectify and counter-balance this perception.
THE NEW
EXPORT SYSTEMS
(NES)
NES is an electronic-based system that enables
exporters/agents to send their export declarations to Customs
and Excise electronically. NES was implemented at all UK maritime
ports on 27 October 2002, and at all UK airports by 31 July 2003.
Details on NES are available at:
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=
true&_pageLabel=pageImport_InfoGuides&propertyType=document&id=HMCE_PROD_009741
There are many within Industry who believe that
the NES system is flawed in several ways, and could be improved
upon. Whilst there are good, efficient and professional shipping
agents who have to use NES, and do so effectively, there are also,
sadly, all too frequently, far less competent ones, whose staff
are seemingly unable to use it properly. There is a perceived
need for much greater awareness amongst freight forwarders in
the use of NES.
There is widespread agreement that the best
thing in awareness and commitment to compliance terms would be
for HMRC to start to enforce the regulations more forcefully and
consistently than is currently the case, and NES could, and should,
be able to be used by HMRC as a more effective tool to enable
them to do this.
We believe that thought should be given to possible
software solutions and tools which would assist HMRC staff, and
benefit companies. Industry would be very happy to make constructive
suggestions to the HMRC on "warning flags" for the NES
system to assist HMRC staff in making intelligent use of its resources
and focus these on shipments of real potential concern. HMRC could
make better use of the information at its disposal (eg companies'
VAT numbers) to identify shipments of potential interest to them.
We would suggest that a computer-based trigger system, linked
to NES, which was built around the commodity codes and country
codes listed on the shipping paperwork, and the companies' VAT
numbers, could be a good basis for such a system to be created.
At present there appears to be a marked reluctance to put active
profiles on the NES system. Efforts are being made to refine the
profiling, using CN codes, and NES has a keyword search facility.
We also believe that more concentration needs to be given to quantities,
rather than values, given on NES.
We believe that the amount of information required
in Box 44 on the NES should be increased, if only to require the
exporter to quote the Military List (ML) or Dual-Use rating associated
with the goods involved. We believe that any entry into Box 44
on the NES that indicates that a licence is needed (and it would
also be useful to know what percentage of declarations contain
a reference in Box 44 to DTI licensing as there licences other
than those issued by DTI to consider) should result in an increased
likelihood of Route 1 sampling, for closer scrutiny, and Route
1 declarations should be checked in the following way:
— Exporter should be checked for registration
for the Open General Export Licence (OGEL) quoted on the NES entry
(whilst also managing those entries referring to post-shipment
registration OGELs or no registration needed, by exception);
— Destination country should be checked
against the quoted OGEL;
— Use of the DTI's new OGEL Checker
to ensure that the use of the OGEL is valid.
Using such a system involving greater use of
Route 1s will do two things:
Firstly, it will, admittedly, slow down the
automatic export, possibly adding a day to the whole process—this
will find some (possibly considerable) opposition from some quarters
of Industry, but should probably be acceptable in most cases.
However, what exporters do not want is HMRC holding up urgent
shipments when all the correct export licence process has been
complied with before shipment.
Secondly, when there are problems, HMRC should
perform some sort of "seizure" pending resolution—they
already have this kind of a process. These seizures should be
considered serious and would need written explanation from a Company
Director, etc., and they would be reportable back to ECO.
As it is generally the Shipping Agent who enters
the details into Box 44, rather than the exporting company, maybe
an additional check could also be against what is listed on the
exporter's documents against what is listed in Box 44—if
the goods have not been declared correctly in Box 44, currently
there would be no Route 1 checks made anyway.
We believe that checking is needed and that
this should be done during the electronic processing of the declaration,
with any errors to be sent for further checking. This could be
achieved by introducing an electronic interface between the DTI
and HMRC licensing processes. There must be reconciliation between
the OGEL quoted and registration with the DTI, but only to confirm
that the exporter is registered. Conformance to the conditions
of the licence would be checked via the DTI's audits. If the exporter
is not registered with DTI, then the shipments should be seized.
The adoption of such a policy would be fundamental
to any enhanced system as it means that exporters will have to
start to pay the same attention to open licensing as they do for
Standard Individual Export Licences (SIELs).
There is also an inherent incompatibility between
NES and Crown Exemption, which the NES system is incapable of
recognizing, and it would appear from discussions with HMRC that
perhaps the most obvious solution to this, involving a change
to NES to allow it to accept a Crown Exemption entry, would be
prohibitively expensive for HMRC. It has been suggested that a
CPC code could be created as a possible solution, and Industry
has agreed that this would be a very practical way to address
the issue, but still nothing along these lines has been done about
this issue, after over a year since this problems was first brought
to HMRC's attention.
We believe that the creation of a joint Industry/HMRC
working group, with HMRC's NES staff and Industry experts, on
the NES system, and how this could be enhanced, through flagging
up shipments which might be worth examining carefully, should
be seriously considered.
We would also like to propose that companies
should be able to have access to their NES records, for their
record-keeping needs. At present many shipping companies/freight
forwarders do not send details of the records that they have passed
on to HMRC via NES to their exporter customers. Whilst best practice
should dictate that companies demand this information, if only
to ensure that their freight forwarders are submitting accurate
paperwork, this is frequently enormously difficult to obtain.
It is illogical and indefensible for freight forwarders to refuse
to allow their customers to have this essential data, yet many
seem to do so. It would be very helpful for companies, and avoid
nugatory duplication of record keeping effort, if companies could
have access to their NES records and make use of them for their
compliance auditing record keeping. At present Industry puts data
in, but cannot then access it—one database entry into NES,
which companies could then access afterwards to meet all of their
Customs record-keeping needs, would be invaluable, and save on
nugatory additional duplicated administrative effort. This would
also ensure consistency of records kept. We recognize that NES
was originally designed as an HMRC tool, and was not intended
for companies to be able to use it as well. Therefore, there could
well be (for HMRC, unacceptable) cost implications if amendments
were needed to allow firms to have access to these records. However,
we believe that this possibility should, at least, be looked at
carefully.
We would also like to propose that companies
should be able, in return for a small fee, to submit post-entry
export declaration amendments, to rectify any inadvertent errors
which may have occurred. Currently there is no post-export amendment
procedure, although there is for post-import. We believe that
it would be very useful for companies if this facility could be
made available.
ELECTRONIC LICENSING
There has been much discussion within Industry
over the last few years on the proposed introduction of a system
of electronic licensing. It is recognized that systems of electronic
licensing operating in other countries have demonstrated that
such a system is not always a panacea to solve problems, and that
these have not worked everywhere smoothly (eg the DSP5 system
in the USA). Nevertheless, Industry is extremely keen to see the
introduction of a system of electronic licensing here in the UK.
There is a perceived lack of electronic interface between DTI
and HMRC on the export licensing front which such a system would
help to remedy. In this regard, HMRC is well ahead of the game
(and to be commended as such) as NES is all set up to enable it
to cope with electronic licensing, and HMRC is ready to go when
such a system is eventually introduced by the ECO.
One of the reasons for companies' keenness to
see the introduction of a system for electronic licensing concerns
the issue of lost licences, which is an increasing enormously
frustrating one for firms. Industry has a major issue with lost
licences—whenever an export licence gets lost (almost invariably
somewhere between the freight forwarder and HMRC . . . and also
almost inevitably at Heathrow!) the company, if it still has some
outstanding goods covered by the licence which it still needs
to ship, has to go through the whole process of applying for a
brand new export licence all over again to cover this residue
amount which is still yet to be shipped . . . and, of course,
this will show up in the annual reports as a separate SIEL approval.
So one deal = twice the number and value of licences approved,
thus distorting the figures and presenting an unrealistic impression
in the annual report.
To avoid the inevitable delays with having to
submit a whole new licence application (to be processed from scratch),
with the inherent delays that that entails, we understand that
it is not unknown for some firms to play safe and apply right
up front for duplicate licences, just so that they have one in
their back pocket in case the first one goes missing . . . and
we have heard of one case where one firm's standard policy is
now to apply for up to four licences to cover each export deal—thus
quadrupling the entries in the annual report for numbers of licences
and values over the actual figures. At a DTI seminar in 2005 one
of the companies present reported that in recent months they had
had (as ever at Heathrow!) 15 (fifteen!) export licences which
had gone walk-about—some of them then eventually re-appearing
with the goods concerned out in Mauritius, or wherever. Apparently
some freight forwarders at Heathrow seem to regard the words "export
licence" as an instruction, rather than a title!!!
This is a very common experience, (especially
at Heathrow). Customs are not necessarily to blame—invariably
they will blame the freight forwarder, and vice-versa, and the
exporter is caught between the two and left having to apply for
a replacement licence. Blame might well be shared between the
two, but if the licence actually turns up with the goods in country,
then there is a very strong likelihood that the freight forwarder
is the one at fault. The procedures used by Customs in processing
licences (at Heathrow), should make the shipping of the licence
with the goods almost impossible and the fact that a licence will
not have been processed or stamped means that an illegal shipment
has taken place.
A best practice solution for the current situation
is for exporters to ensure that they always enclose a self-addressed,
stamped envelope attached to the back of the export licence, when
this is being presented to Customs. This should help to ensure
that the licence is sent back to the exporter, provided the freight
forwarder presents the licence to Customs in the first place,
of course! Also, we always advise companies to make sure that
the freight forwarder used is fully briefed on what is required
of them, and not to take it for granted that they know what they
are doing.
The planned introduction of electronic export
licences would help enormously in this problem being dealt with
and, potentially, eliminated. We understand that this is really
a matter for the ECO, with HMRC ready, willing and able to implement
such a system on its existing systems, and would like to see the
ECO encouraged to expedite developments in this regard.
INFORMATION AVAILABLE
TO CUSTOMS
OFFICERS
It would be enormously valuable if HMRC front
line staff had now immediate and ready access to information,
to assist them in spotting potential infringements of export control
regulations that is, we believe, currently the case. At present
the DTI has a 24 hour, seven day a week emergency hotline that
HMRC officers can contact with queries about shipments which have
been presented to them, but we believe that more than this could
be done. Amongst the information which should be made automatically
readily available to HMRC front line staff are:
— access to a listing of OGEL registrants,
to ensure that those shipping under an OGEl are actually registered
to be able to do so—this could be done via a linkage between
the ECO's list of OGEL registered companies and NES;
— access to a listing of OIELS by company,
country and expiry date.
These measures will really affect the majority
of law abiding companies but should start to sharpen them up.
To assist HMRC in profiling the ignorant or
criminal, we would propose that frontline HMRC staff could be
provided with something as simple as a listing of most defence
and aerospace companies worldwide, and those know to be involved
in the dual-use sector, to support HMRC's own intelligence tools.
In the event of HMRC catching illicit exports
there needs to be some sort of real penalty (as in the USA where
the fines are regularly enforced and huge). There is some perception
that we are not going to get that here in the UK (for the reasons
set out above), so HMRC should consider what other measures could
be taken instead which are short of prosecutions, but are also
disruptive in their effectiveness. What really motivates companies
is the recognition that their goods will not make it to customer
in time . . . so delaying this will have some beneficial impact.
AWARENESS RAISING
We believe that considerable effort needs to
be made on promoting awareness within Industry aimed at achieving
a greater understanding of how HMRC operates and how companies
can help the latter to focus their resources more effectively,
and help themselves at the same time. We believe that outreach
awareness activities to exporting companies, freight forwarders,
shipping companies, the non-containerised shipping industry, and
couriers (who pose a particular proliferation threat), etc should
be undertaken.
Any feedback which could be gleaned from HMRC
staff on their perceptions of best practice by companies, which
was of assistance to them, and how to use HMRC's systems correctly,
would be immensely helpful, and could be disseminated Industry-wide
both on HMRC's own website, as well as those of other bodies (eg
via EGAD's own website). Seminars on Customs Procedures, with
a speaker from a knowledgeable shipping company giving a freight
forwarder's view, as well as from HMRC, itself, would also be
invaluable. These could address the mechanical processes of HMRC,
and how companies can help HMRC to help them, including on documentation
requirements.
Inclusion in the course syllabus for any qualifications
for the freight forwarding community of such information from
HMRC would also be helpful.
There needs to be greater liaison between most
exporters and their freight forwarders, and examples of best practice
in their dealings with each other, and with HMRC, would be invaluable,
and assist enhancing the quality of Industry's inputs to NES,
etc.
There are many who believe that the best thing
in awareness and commitment to compliance terms would be for HMRC
to start to enforce the regulations more forcefully and consistently
than was currently the case, as more robust enforcement of the
regulations would also have its own awareness raising benefits.
For instance, with regard to the controls on technology, and its
effect on those leaving the country carrying laptops, if HMRC
undertook a short (six to eight week) crack down focusing on this
and stopping everyone leaving the country carrying a laptop to
question them about the technology which was on it, there could
have great benefits in raising awareness. For instance, in March
2006 we received the following "interesting" message
from one of the EGAD Executive Committee Members:
"I am currently ensconced in Paris doing
a course. Two of the other attendees report that on the Eurostar
between London and Brussels, upon which they are regular passengers,
Customs are making regular checks for licensed technology on laptops.
A fellow British industrialist was horrified that all of his export
control compliance officer's warnings were coming true. The Belgian
was absolutely mortified! The two people from the MoD(UK) who
were involved in the conversation were ashen!! "
It would appear that this was just a blip, but
a more concerted and long-duration effort on HMRC's part along
these lines could have a significant impact on those whose attitude
to export controls is currently too dismissive.
Also, we fear that the experience of many within
Industry is that the HMRC national "helpline" is operating
in breach of the Trades Description Act! In addition, a lot of
the information available online from the HMRC's website is not
very good or clear. Trying to find out the contact details of
your "local" customs office, or where in an airport
terminal the HMRC offices are, is often akin to a soap opera,
and ways must be found to make this information simpler and easier
to find, in a more user friendly way. We strongly believe that
this should be achievable through HMRC's website, perhaps (with
regard to enquiries on where a company's local customs office
is) through the use of a postcode linked search facility, where
the company inputs its postcode and the system immediately locates
the details of the local office for them to use.
For many firms the closure of "local"
HMRC offices means that they have to send their paperwork to their
new "local" offices, which can frequently be a long
way away, and they can often insist on allowing for a 3-day turnaround.
Although they are often very co-operative for urgent shipments,
this means an extra 3 day delay for intra EU shipments. Some more
effective solutions to these problems are needed to be identified,
perhaps involving measures such as empowering individuals at local
Business Link offices to endorse licences or a same day fax back
system. Whilst some exporters are aware of some mechanisms which
can be used in these circumstances, knowledge of these is not
Industry-wide, and it would be very helpful if HMRC could produce
guidance on these for everyone's benefit.
As we have stated previously, references to
"free movement of goods" which results from the submission
of certain enquiries (for instance when using NES), can be very
confusing and result in the enquirer, who is trying to do the
right thing, being led to believe that this refers to licences,
when it is, in fact, merely a tax term. Clear clarification on
this is essential
IMPORTING
We believe that considerable more awareness
raising effort also needs to be given to the import sector, as
well as the export one. Even highly knowledgeable companies with
dedicated export control compliance staff can be left completely
unaware of import regulations, how to deal with them and what
they need to do. Again, more information on this needs to be made
available both from HMRC and the DTI.
Some companies involved in the relevant sector
have voiced their concerns with the import procedures when clearing
"Explosive/Hazard Goods" consignments. For health and
safety reasons, Dock Authorities insist that goods unloaded from
vessels must be cleared and removed from the docks as soon as
the vessel is discharged. If they are not, then the vessel may
be turned away unloaded. However, a lack of Custom Officers to
clear the cargo can then become a very major problem. Absence
of Customs Officers may be because of the unsociable hour of the
ship's arrival, or the fact that due to cut backs one Customs
Officer has now to cover a very large number of arrival points
across his allocated part of his country, and may not be on or
in the vicinity of the arrival site at that time in question.
We believe that it would help the Industry greatly
if, for imports of explosives (hazard goods and/or chemicals etc),
a pre-clearance procedure could be operated in the same way as
is allowed with exports. We feel sure this would be easily achievable
and beneficial.
THE FUTURE
On HMRC's activities, it must be pointed out
that the planned future adoption of the Authorised Economic Operator
system by Customs bodies across the EU will be a major development
which must be borne in mind. The proposed adoption of such a registration
system, especially if linked to NES, would potentially make things
easier for HMRC in being able to identify registered, and, thus,
law-abiding and compliant firms, and filter them out from others
whose own exports might need more close scrutiny.
The adoption of a system to register pre-qualified
or certified companies, who have undertaken adequate in-house
training, have qualified export control compliance staff and have
the necessary mechanisms and procedures, which are subject to
regular robust auditing by DTI, is a welcome development. This
would put into place a system whereby such companies can come
to be viewed by HMRC and Government to be reliable exporters,
and, thus to be granted certain special and commercially desirable
privileges (such as expedited licence processing or clearance
by HMRC) so that effort and resources can be concentrated on more
problematic areas. In this regard we welcome Authorised Economic
Operator (AEO) rating system initiative currently being planned
by EU Member States in Brussels (for introduction on 1 January
2008), to which such a system could be tied. This could be further
linked to a system for corporate self-certification, which reduces
the risk posed by those certified firms and enables the limited
resources available to be focused more effectively and efficiently
on those who are not certificated and who do not meet the safety
and security criteria for approval as AEOs.
Hopefully the adoption of such a system would
allow the introduction of a faster track "Route 6" mechanism
for companies with proven compliance tracks records, so that scarce
HMRC resources can be focused elsewhere.
CONCLUSION
We believe that the "seizure" process
needs to be beefed up by HMRC, and we would be more than happy
to discuss the intelligence work HMRC do in one way or another
way to see if it is felt that we can contribute some constructive
comments on how this can be further enhanced. We are more than
happy to offer any help we can give to HMRC to enhance their effectiveness
and efficiency, as we believe that this is in everybody's interest.
We hope that the above additional comments may
be of interest to the Committee.
May 2006
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