HMRC: The Control and Facilitation of Imports - Public Accounts Committee Contents

Examination of Witnesses (Questions 120-125)


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 shows—and as I am fully aware—importing 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 say—I think that might have come later—is 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 fiscal year.

  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.

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