Policy & Compliance
Taxation (Cross Border) Trade Act 2018 and Customs representation
Understanding Customs Representation and the implications of being an Indirect Customs Agent have been discussed in previous BIFAlink articles. In this article we look at the primary Customs legislation covering this aspect of Customs activity.
‘representation’. This is largely covered in Section 21 Customs Agents of the Act under consideration. When acting as a Direct Customs Agent, the representative acts in the name of and on behalf of a third party. The important difference is that as an Indirect Customs Agent, on the other hand, the representative acts in his or her own name but on behalf of the stakeholder. This significantly increases the likelihood of HMRC pursuing the Indirect Customs Agent for any Customs debts. The reader is reminded that this legislation is applicable to both import and export Customs processes. As we have seen, it is possible to incur Customs liabilities when acting as a Direct Customs Agent. These liabilities can be incurred by the agent, particularly if they breach the terms of empowerment by, for instance, failing to follow the importer’s instructions. For Direct Customs Agents this means that it must ensure that its appointment to act as a Direct Customs Agent is both current and valid. For Indirect Customs Agents, the agent is jointly and severally responsible for the Customs debt with the party on whose behalf it acted. This financial liability can be significant, particularly with VAT at 20% being included in the debt. The reader should pay particular attention to Schedule 1 of the TCTA 2018 Section 2 “Eligibility of persons to make a Customs declaration”, which makes specific reference to the often overlooked question of establishment. The law is clear on this, stating that “persons may make Customs declarations only if they are established in the United Kingdom or a specified place outside the United Kingdom”. Any party not meeting this criteria for establishment is referred to as a Non-Established Taxable Party (NETP). Therefore, when making a
O ver the last few editions of BIFAlink we have highlighted to Members concerns regarding Customs representation, especially where Members are acting in an ‘indirect’ capacity. This led to the conclusion that it was logical to examine the primary legislation that governs these regimes. Liability is established The first point to make is that the language used in law is not the same as used in the commercial world and this is certainly the case in the world of Customs. For instance, we still use the term “direct Customs representative” although it should be “direct Customs agent”. Also, Customs agents tend not to use terminology such as “on behalf of” or “in the name of”. Section 4 (1) of the Taxation (Cross Border) Trade Act 2018 (TCTA) states that the liability to import duty is established when “chargeable goods are declared to the free circulation procedure” and secondly when “HMRC accepts the declaration”. Covering the second point, the simplest explanation is that a pre-lodged declaration is not ‘accepted’, but when the goods arrive then it is accepted. It is important to point out that the ‘liability’ is created and that the amount of duty and other taxes due may vary from the amount calculated from the data in the initial declaration. This allows for amendment during the clearance process and post-entry compliance checks. The VAT Act includes clauses under which the tax point ‘acceptance’ of the Customs declaration triggers that tax liability
for other taxes such as VAT. This point is reinforced in the guidance Customs debt liability (scan the QR code) in
which it is stated: “A Customs debt is the amount you owe for import or export
duties. Import duty is any Customs duties payable on goods imported into the UK or EU, such as: • Anti-dumping duties, • Common Agricultural Policy (CAP) charges, • Import VAT.”
Parties responsible for a Customs debt
Section 6 of the TCTA covers this in considerable detail. Section 6 (1) confirms that primarily the person in whose “name the declaration was made” is liable for the debt. Section 6 (3) expands on this point, widening the range of potentially liable parties. Particular attention is drawn to the following in sub-section (d) “a person otherwise involved in a breach of a relevant Customs obligation”. Section 6 (4) looks at this breach of a relevant Customs obligation. The first line is clear on this matter: “For this purpose, a person is otherwise involved in a breach of a relevant Customs obligation if: (a) the person provides false information in connection with a chargeable Customs declaration, and the person knew, or ought reasonably to have known, that the information was false.” Whilst most Members will be
“ For Indirect Customs Agents, the agent is jointly and severally responsible for the Customs debt with the party on whose behalf they acted
aware of the following, it is appropriate to differentiate between the types of
20 | September 2023
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