Problem areas that traders often experience:
Communication between Trader and Customs Agent
It is critical to ensure that your shipping instructions are clear and precise detailing what you are intending to achieve. For example, if you are completing your own customs declaration make that clear and provide the Declaration Unique Consignment Reference (DUCR) that relates to the customs entry to other parties involved in the movement of the goods. If you want them to complete a customs entry on your behalf, you are responsible for giving them the data for customs compliance purposes. Details confirming whether it is a permanent export from the UK to a non EU country or if the goods are ex customs warehouse should be clearly communicated. Additionally giving them a description of the goods, value of the goods and the corresponding commodity code on the export invoice will help ensure there are no misunderstandings.
Third party held records – not returned to trader
When the export customs declaration is made, you as the trader should be declared as the Consignor (box 2) and the customs agent as the ‘Declarant’ (Box 14) . This should be clearly printed on the C88 as evidence of what was declared to HMRC on your behalf. The other vital data elements to check are the CPC (Box 37) and the Commodity Code (s) declared (Box 33). If a range of products were being shipped, should it have been a multi item customs declaration? If you don’t have sight of the completed declaration, how do you know it was declared correctly? A visit from HMRC may be the first time you find out it wasn’t!
Customer arranges Shipment (‘Ex Works’)
This is just quite simply a nightmare waiting to happen. Shipping goods under these terms, which are not recommended by most industry experts and are not listed in the INCONTERMS 2010, will likely end up lacking a paper audit trail, leading to an exposure to VAT liability.
Use of Duty Relief’s (e.g. temporary export for exhibition)
If you do not make it clear what is happening to the goods unnecessary customs duties could ultimately result. If you hold an existing authorisation for Inward Processing relief (IPR) and have imported them under that IPR authorisation, you have to show that they were exported as IPR goods. If not you could be exposed to an unexpected duty bill from HMRC i.e. if the proof of export is not sufficient to cover the original import under IPR and the suspension of duties.
Incorrect Information (e.g. wrong or single commodity code quoted on entry)
As mentioned before, if you don’t see the copies of the declarations made on your behalf, how can you tell they have declared the complete set of commodity codes required? Possibly even if you have provided that information, is it not a good idea to check? Did you know that each export infringement identified by HMRC, could incur a civil penalty of up to £2500 per infringement and tarnish your compliance history with HMRC. That could then have an impact on any HMRC applications for trade facilitation e.g. AEO and CFSP.
No Evidence of Shipment
HMRC Audit Officers and VAT Inspectors expect to see evidence of the Customs entry and confirmation that the goods were given ‘Permission to Progress’; a report called DTI X2-XH from CHIEF shows this. Another report, a Departure Advice Report known as the S8 report, shows that the goods have been departed. These documents provide the evidence needed for HMRC audits.