Quadripartite Select Committee Written Evidence

Supplementary memorandum from HM Revenue and Customs

  2. To comment on the effectiveness of the regulatory system in relation to intangible transfers and trafficking and brokering.

  1.1   The regulatory system is based mainly on open licensing coupled with record-keeping requirements and exporters' own controls on their intellectual property. As intangible exports and brokering offshore supplies do not involve the movement of goods passing through customs controls we advised policy departments that there was no regulatory role that we could fulfil in relation to the new controls. This was accepted.

  1.2   From the information and intelligence available to us, and from breaches so far we do not believe that there are shortcomings in the system. We hold periodic liaison meetings with DTI ECO and we would expect to discuss any emerging issues at that forum. So far breaches have been relatively minor and straightforward and dealt with by visits, disruption and warning letters.

  2. To clarify whether the exhibitors at the DSEI exhibition submitted brochures for inspection by the organisers of the arms fair or by officials; if not, would HMRC consider doing so at future events.

  2.1  We can confirm that there was no requirement for exhibitors to submit brochures in advance for inspection, either by organisers or by officials. As we said, there are some lessons that we can learn from the exhibition and we will take this point forward into planning for future exhibitions.

  2.2  However, there are a number of issues to be considered, including powers and the practicalities of vetting and checking. On powers, neither DTI nor HMRC have powers to compel exhibitors to submit brochures and similar material for inspection. HMRC do have powers to require exhibitors to produce for inspection any temporarily imported firearms. Our current advice is that it would be difficult to frame legislation that did not create a regulatory burden on all organisers and exhibitors, going beyond arms.

  2.3  We believe that the way forward is to build on the current approach whereby HMG work with the organisers to:

    —  Improve the clarity and communication of information to exhibitors of their obligations in respect of this legislation—for example, providing clear examples of what is not permitted;

    —  secure voluntary compliance with submitting brochures in advance and backed with selective scrutiny; and

    —  underpin these arrangements in the contracts between organisers and exhibitors.

  2.4  We will pursue these and other possible solutions with DTI ECO and others. At this stage we should point out that we do not envisage any change in our priorities for action at these events, with controlling weapons remaining our top priority and then missile components. And we should perhaps sound a cautionary note that, whilst we accept the need to tackle potential trafficking and brokering, we will do so on the basis of risk. Finally on this point to underline that our approach is fully coordinated with DTI ECO, whose technical assessment staff would be approached for a ruling on the control status of any goods appearing in brochures or other material.


To clarify whether HMRC employ staff engaged on the dedicated monitoring of the internet and if so, whether they include strategic exports in their responsibilities.

  3.1  Part of the job of staff within our Intelligence National Coordination Unit is to carry out regular search of the Internet for the use of specific terms of interest or concern to HMRC. The search terms include terms relating to strategic goods but for operational reasons we are reluctant to put them in the public domain. This role currently forms part of the job of one person.

  3.2  Internet is one of the tools that officers working in frontier related areas use day-to-day to do their jobs. Our front line Detection Target and Selection staff use the internet to carry out supporting checks on the credibility of imports and exports—for example checking authenticity of consignee, delivery address, business details and nature of goods. Our export control intelligence officers use the Internet to follow leads from the intelligence agencies and other sources indicating a potential breach of the controls. Officers in our Analysis and Intelligence area are expected to research the internet as a tool in the course of their normal duties eg for horizon scanning and background research in relation to the topic on which they have been tasked—for example a tax issue or trade sector related project. However, with the exception of the postholder in our NCU as mentioned above there are no posts dedicated solely to researching the internet.


To clarify the numbers of staff attending in the seminars each year.

  4.1  Since 1 January 2004 HMRC, together with DTI experts, have held the following export control awareness seminars for HMRC front line staff. Attendees are expected to cascade to their local colleagues. HMRC policy advisers are supported by Investigation/Intelligence staff and DTI experts. Some figures are exact whilst others are approximate.

DateLocation Number attending
March 2004Reading18
April 2004Luton Airport 25
April 2004Nottingham 25
June 2004Felixstowe 25
October 2004Dover20
November 2004Heathrow 36
January 2005Leeds23
October 2005Heathrow 13
January 2006Oxford30
February 2006Northern Ireland 20
February 2006Glasgow 20


To clarify our assurance at Q405 that the WMD activities could no longer be continued by the individuals under investigation while the individuals concerned were not in custody.

  5.1  That particular criminal "enterprise" in relation to procurement of WMD materials and equipment has been stopped by coordinated UK and international multi agency action. The individuals" scope to act covertly has been reduced and the market constrained. We cannot say any more without prejudicing potential proceedings and breaching our obligations under the Commissioners for Revenue and Customs Act 2005. However, we can say that the capability of any criminal enterprise to continue once under active investigation by HMRC is a matter that we treat with utmost seriousness.

June 2006

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