Focus On Customs Declaration Accuracy

‍

The very nature and pressures of international trade operations mean that few customs and international trade compliance frameworks within companies attain clean sheets. Customs declaration errors inevitably crop from time to time, be they those of the importing / exporting company itself, or of others. What is important is to have in place relevant policies and standard operating procedures (SOP), applied by appropriately trained personnel, to detect them early and resolve them promptly. If using an agent, this should entail obtaining copy-entries from them to make your checks on and for ensuring that your instructions to them were carried out correctly.

‍

To import to and/or export from the UK requires the prior reporting of specified information to His Majesty’s Revenue & Customs (HMRC) on the goods concerned, their movement and the parties involved in the transaction. This takes the form of a formal Customs Declaration to HMRC, completed by the company taking responsibility for customs formalities, or on their behalf by an agent they instruct, supported by applicable commercial and official documentation. The declaration must be accurate, and the importer / exporter concerned is legally responsible for getting it right.

‍

Fortunately, as of March this year, HMRC has made your customs declaration data (also referred to as  Customs Declaration Service (CDS) or Management Support System (MSS) data) freely available to you to use (per Economic Operator Registration Identification (EORI) reference) in support of your customs compliance programme. It includes all of the main data elements necessary to enable you to check that your particular import / export consignments have been correctly declared to HMRC. This is the same data source HMRC reviews when auditing your international trade transactions.

‍

Apart from supporting your customs compliance checking and internal customs audits, your declaration data should prove very useful to you in the analysis of your international trade, enabling the broadening of internal visibility of key aspects of your customs related activities.

‍

Use Your Customs Data To Manage Your Compliance

‍

Your customs declaration data is now freely available to you (see HERE), and it is invaluable in helping you to stay compliant because it:‍

• Facilitates internal compliance / audit checks, enabling you to establish whether your consignments are customs compliant and you are accounting for any duty / tax due correctly.

• Enables you to cross-reference your internal records with those held by HMRC, and to promptly deal with, and investigate any discrepancies. For example, ensuring amendments to discrepant customs declarations are made, as appropriate.

• Identifies any misuse of your company’s EORI reference by others.

• Provides you with the key data elements with which to evidence export for VAT purposes, as applicable.

• Simplifies and improves the accuracy of your company records, and supports compliance with company HMRC record-keeping obligations.

• Helps to avoid ‘sleeping liabilities’ and issues at HMRC audits, and reduces the risk of HMRC penalties.

‍

Have in mind of course that this declaration data visibility and transparency cuts both ways. It seems likely that Customs, having made the entry data so easy to obtain, will expect  you to routinely check yours and to correct any errors and discrepancies discovered, or to make any notifications you are obliged to make, reasonably promptly.

‍

When errors and discrepancies are detected it is important to trace them back to their source and to seek to appropriately address their original causes to prevent repetition. Recurring errors in your customs data will negatively impact your HMRC company risk profile.

‍

The remedy required, may for example, be a change to the instructions provided to your customs agent(s), action of the part of your customs agent(s) if at fault, refresher training of staff, in a particular technical area, and so on and so forth. Note that there is a standing responsibility and obligation to correct an inaccurate customs declaration on the part of the party ‘making’ and/or ‘lodging’  it with HMRC.

‍

Managing Your Errors Is Managing Risk

‍

Failure to manage your customs entry errors properly can have serious implications for your business. If they are relatively frequent, it can be regarded as symptomatic of inadequate control over your customs administration. Indeed, any systematic errors, if left undiscovered, may lead to significant duty / tax liabilities being built up over time. All will have a negative impact on your company’s HMRC risk profile.

‍

At some point, if not addressed appropriately, the errors are likely to lead to more frequent HMRC checks and audits, which could in turn lead to assessments for unpaid duty / tax, penalties, and fines, and/or the suspension or withdrawal of any relevant customs procedure authorisation(s).

‍

According to HMRC the most common error is entering the wrong EORI reference however, apart from checking that, the following are fertile areas for error and, therefore key areas for you to focus on to make sure you are getting it right:

• Use of the correct commodity code - (aka. tariff, HS, or HTS (USA) code).

• Clarity in product description and accuracy in quantities.

• Valuation for customs duty and import VAT purposes.

• Goods’ customs origin.

• Accuracy in paperwork.

• Quality of instructions and communications issued.

• Proper use of incoterms.

• Technical knowledge / training of relevant personnel.  

‍

How BKR Can Support

‍

At BKR we have a wealth of experience and expertise with which we can help you by, among other things:

• Using our special software ‘tool’ to audit and analyse your customs declaration data to enable errors to be spotted and remedial action to be taken, such as the amendment of incorrect declarations, the reclaiming of any overpaid duty (or the payment of any underpaid) etc.

• Reviewing the customs commodity codes you are using and the customs valuation calculations you are making, to provide you with an objective assessment as to correctness. We can also support you in securing a HMRC advanced tariff and/or valuation ruling to enhance commercial certainty for your business.

• Advising on the quality of paperwork used in relation to your transactions, including that of any documented instructions, agreed incoterms,  and standard operating procedures used, benchmarking them against good practice.

• Advising on applicable goods’ customs origin rules (preference and non-preference) and providing support to you in securing a HMRC advanced origin ruling.

• Drafting your application for any HMRC special procedures you may wish to be considered for, to improve your business operations, for example customs warehousing, inward processing, authorised use etc.

• Providing tailored technical customs administration training for your business.