Examination of Witnesses (Questions 120-125)|
HM REVENUE AND
UK BORDER AGENCY
9 MARCH 2009
Q120 Nigel Griffiths: Paragraph 13
on page six highlights the level of errors among new traders.
To what do you ascribe that increase which is labelled as significant?
Mr Tweddle: If I can continue, as the
Report showsand as I am fully awareimporting is
a complex process. We would love to make it simpler but there
are lots of reasons why it is difficult to do that. Of course
new businesses actually do find it extremely difficult, having
to comply with all the myriad requirements. That is why we do
have as a priority to actually help new businesses and to contact
them, to see what assistance we can give. We did contact 33,000
of the 40,000 new businesses. What the Report does not go on to
sayI think that might have come lateris that the
remaining 7,000 were contacted within 16 weeks of the end of that
year. We will continue to give priority to helping new businesses
and indeed we can report at the moment that all new importers
who come to our attention will be contacted within the current
Q121 Nigel Griffiths: In terms of
the complexity, how much of that is domestically grown and created
and how much of the complexity complies with necessary EU rules?
Mr Tweddle: Most of what we are talking
about here is actually directly applicable EU law rather than
national law. I mentioned earlier that there are something like
30 different customs regimes. Each of those has been developed
to actually give some beneficial arrangement to particular segments
of business, for example, to take a simple one, customs warehousing
where you bring your goods into the country and you do not have
to pay the duty until you take them out of the warehouse. That
is a complication but clearly it is a very beneficial complication
if you want to delay the payment of your duty. There are a lot
of other regimes like that. I think it is true to say that the
complexity is as a result of trying to give beneficial treatment
to particular segments of trade and traffic.
Q122 Nigel Griffiths: You have mentioned
the complexity and it is highlighted in the Report as well. In
terms of the errors that you detect, what proportion do you think
are because of genuine mistakes as against the proportion due
to fraud? If you increased to 9.1% and increased your staff from
4,000 to 12,000 how much would you drive down either element of
that, the fraudulent element I suppose being the most important?
Mr Tweddle: My view would be that most
of it is error rather than deliberate fraud. If we actually tripled
the number of physical examinations we made it would not make
a great deal of difference to that level of error but it would
certainly significantly interrupt UK-international trade.
Ms Dawes: I think it is important to
get across here that the 2% to 3% physical examination rate which
compares with the 9.1% EU average, certainly it is clear that
the EU figures are not a reliable benchmark at the moment and
the European Commission recognised that and they have actually
put some work in train to try to improve that. Secondly, a lot
of what we are doing to check that errors and documents are correct
is not actually done through physical examinations, it is done
through documentary checks generated by CHIEF where the checking
rate is around 12% either pre-clearance or post-clearance. In
addition to that we do a lot of audit work on the fiscal side
with new traders, as Doug has already mentioned, but also through
audit in our compliance team. So the overall level of activity
is considerably higher than that 2.8 figure suggests because we
are doing checks for a number of different reasons.
Q123 Nigel Griffiths: If you were
to summarise the control of the facilitation of imports, how would
you rate your performance as against other European countries.
Ms Strathie: We do not have the evidence
to back up anything that we would say; the comments have already
been made. To give an example, France carries out product safety
examinations which HMRC in the UK does not; these are carried
out by trading standards. We believe that we are improving and
we believe that the 9000 resource deployment the UK Border Agency
has has built on that physical examination. We do not believe
that there is any evidence in any of the comparisons of a greater
proportion of physical examination giving a greater hit rate overall.
We think there will always be increased changes to risk and increased
risk but we believe we can continue to get better and we really
do genuinely believe that we are building a compliance regime
with trade and we are getting the balance right between facilitating
trade and collecting duties and control of the border.
Q124 Chairman: Mr Tweddle, who might
lobby you to increase the number of checks, apart from ourselves?
Mr Tweddle: Probably not many people
I would think.
Q125 Chairman: That concludes our
hearing, Ms Strathie. As you know, you are a great favourite of
this Committee because we have launched you into the stratosphere
because of your management of Jobcentre Plus. We look to you to
get a grip on this because, although obviously there has to be
a balance between facilitating trade and imports, this Report
does highlight the lack of clear accountability and management
information, so we look to you to put things right.
Ms Strathie: Thank you very much. We
shall do all we can to ensure that your confidence is well placed.