1.In its letter to Her Majesty’s Revenue and Customs of 13th February 2019 the Committee requested a memorandum on the following points:
1. Explain why the preamble to this instrument does not contain the usual express wording stating that it appears to the relevant person that it is necessary or expedient for references to EU instruments to be construed as references to those instruments as amended from time to time.
2. Explain by reference to examples what is intended by the reference to a person acting in good faith in regulation 5(2)(b).
2.This memorandum has been prepared by Her Majesty’s Revenue and Customs (“the Department”).
3.Paragraph 1A of Schedule 2 to the European Communities Act 1972 is cited as an enabling power because the Commissioners considered it expedient for references to EU instruments to be construed as references to those instruments as amended from time to time. The Department regrets that reference to this was omitted from the preamble.
4.The Customs Safety and Security (Penalty) Regulations 2019 provide in regulation 3(1) that a person who contravenes a relevant safety and security rule (“a relevant rule”) is liable to a civil penalty, this is subject to the exceptions in regulation 4.
5.Regulation 5(1) provides that where a person is liable to a penalty, the Department on review or the tribunal on appeal may reduce or increase the penalty as they think proper. However, under regulation 5(2), the Department and the tribunal are not entitled to take into account specified matters when exercising this discretion. One of the matters specified is “the fact that the person liable to the penalty, or a person acting on that person’s behalf, has acted in good faith” (regulation 5(2)(b)).
6.As a result, whether a person has acted in good faith (e.g. honestly/without intending to contravene a relevant rule) is not a relevant consideration in determining whether a penalty should be increased or reduced under regulation 5(1).
7.A person could be liable to a penalty whilst acting in good faith if, for example, they have failed to comply with a relevant rule:
a)on the mistaken assumption that a customs agent/someone else had done so on their behalf;
b)owing to a mistaken belief that goods are arriving in the UK a week later than they actually arrive;
c)due to an unforeseen event, such as an illness;
d)by mistakenly omitting relevant information from an exit/entry summary declaration.
8.Regulation 5(2)(b) is similar to provision made by section 29(3)(c) of the Finance Act 2003 and regulation 5(3)(b) of the Export (Penalty) Regulations 2003. These provisions are part of the current customs import and export penalties regimes.
Her Majesty’s Revenue and Customs
19 February 2019
Published: 1 March 2019