Policy & Compliance
responsible for such freight, duties, charges, dues or other expenses.” It makes clear the Customer is responsible for all expenses arising out of performance of the Customer’s instructions, including duties and taxes. Clauses 17(A) and 20(A) supplement clause 12(B). Clause 17(A) is a warranty clause, which is an undertaking from the Customer that all information it provides (including the particulars of the goods to be imported/cleared) are full and accurate. Clause 20(A) is the indemnity clause, to be read in conjunction with clause 17(A). If the customer breaches the warranty in clause 17(A), the BIFA Member is entitled to be indemnified for all financial consequences including those that may arise out of post-entry examinations and demands. As already said, whilst the BIFA STC provide the contractual entitlement to be indemnified for any expenses incurred by the Member, enforcing those rights may not always be possible. Customers based overseas, potentially seeking to avoid (or at least unlawfully minimise) duties and taxes are unlikely to stand behind their freight forwarder if and when HMRC raises substantial post-entry demands. Strong advice BIFA’s strong advice is to ensure that you undertake careful due diligence of all customers for whom you act as a Customs Agent. Do not presume that a UK registered company will not be treated as an NETP. Do not take any information at face value. Check EORI and VAT numbers to ensure that they are valid and registered to the party seeking to use them (and re- check that information on a regular basis). Be vigilant to the possibility of fraud. Obtain written authority directly from the importer on whose behalf you act, to act as its Customs Agent (see BIFA Good
Practice Guide on the Appointment and Responsibilities of a Customs Agent – scan the QR code). Commodity Codes should be checked, and declared values should
Members to undertake their own due diligence and satisfy themselves that the customers are ‘good for the money’, including possible post-entry demands. It is not straight-forward to identify the extent of the financial exposure that exists, considering that HMRC can look back several years when assessing entries and making post-entry demands. Problems in relation to PVA entries will take several months, at least, before they come to light. Will your customer still be around and willing to indemnify you after such a passage of time? Regardless of the protections that may be contractually available under the BIFA STC, if the customer is not good for the money (or not accessible to effective legal process due to inefficient or inaccessible legal systems in the customer’s place of domicile) then this will be little consolation. Members should not take false comfort from the contractual provisions within the BIFA STC. However, where the customer is financially sound, the BIFA STC do provide the tools required to ensure that Members are contractually entitled to be reimbursed for liabilities that the Member may incur in discharging the customer’s instructions. The STC define ‘Customer’ widely as “any person at whose request or on whose behalf the Company undertakes any business or provides advice, information or services.” This may catch multiple parties involved in a request to a Member to undertake import declarations. Clause 12(B) provides “…the Customer shall remain
be sense-checked. The method of valuation should be considered – if Method 1 (scan QR code below) is to be used, is there a genuine transaction underpinning the movement of the goods into the UK? If not, Method 1 (the transaction value) may not be the appropriate method
“ BIFA’s strong advice is to ensure that you undertake careful due diligence of all customers for whom you act as a Customs Agent
and you will have to consider which method should be used (see HMRC Notice 252). Be cautious of ‘commercial invoices’ that are in fact a document created by the importer for import purposes only and not representative of a genuine transaction.
There are clear risks involved in acting as a Customs Agent, whether Direct or Indirect, and it is important to understand those risks and to carefully assess the likelihood of your customer being willing and able to indemnify you for any financial obligations that fall at your door. It should be noted that this generic guidance does not constitute advice and Members should consider taking formal legal advice where appropriate, with a view to writing bespoke contracts for their customers. Acting as an Indirect Agent increases a Member’s risk exposure, and Members should always ensure that they conduct the appropriate due diligence checks on clients.
August 2023 | 13
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