Supplementary memorandum from HM Revenue
and Customs
- OPEN LICENSING
- 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.
- PROCEDURES AT
ARMS FAIRS
- 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.
3. INTERNET
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.
4. STAFF ATTENDING
TRAINING SEMINARS
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.
| Date | Location
| Number attending |
| | |
| March 2004 | Reading | 18
|
| April 2004 | Luton Airport |
25 |
| April 2004 | Nottingham |
25 |
| June 2004 | Felixstowe |
25 |
| October 2004 | Dover | 20
|
| November 2004 | Heathrow |
36 |
| January 2005 | Leeds | 23
|
| October 2005 | Heathrow |
13 |
| January 2006 | Oxford | 30
|
| February 2006 | Northern Ireland
| 20 |
| February 2006 | Glasgow |
20 |
| | |
5. WMD INVESTIGATION
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
| 
