Customs Administration Obligations
Traders have compliance obligations to the Irish Revenue and UK HMRC in the event of customs controls applying, regardless of whether there are customs duties or not. They are in addition to trader’s existing VAT and other obligations. However, the broad Revenue and HMRC enforcement and administration are similar, which traders will be used to.
A further question which traders need to address relates to requirements and obligations in retaining customs data. Regardless of who makes the declarations on the trader’s behalf, where they are the importer or exporter of record, they retain responsibility even though the logistics provider or customs broker may be their agent. Traders need assurance that they will preserve the customs declarations (SADs) in electronic form and make them available to traders on an ongoing basis.
If there are other associated documents in the process such as invoices and licences (not generally applicable) they need to be associated with the relevant returns. They are normally referenced in the declaration. The supporting documents may include the commercial invoice, packing list and in the case of any controlled goods any licences and associated data. They need to be retained.
There is an obligation to have and maintain the requisite documents and information for establishing customs liability. They can be required in a customs audit by Revenue or HMRC. The data must be kept and retained and be available irrespective of whether traders no longer use the logistics provider or another supplier or any of them have gone out of business. They would have no duty to retain documents unless traders require them to do so under the contract with them.
Traders need to retain the customs data for at least four years (and in some cases six years) after the relevant date under customs legislation and sometimes longer under other legislation. Traders need assurance that they will be held and retained even if the logistics provider goes out of business or there is a break down in the relationship with the logistics provider or supplier. Preferably traders need to have the data available to traders on trader’s system on an ongoing basis.
It is vital that traders obtain from trader’s logistics provider (if traders were to use them for customs declarations) a service commitment to both undertaking the declarations in a timely fashion and storing and transmitting to traders the electronic returns linked with invoices and other commercial documents relevant to the movement. These would be required in the event of a customs audit on either side
Recordkeeping requirement for Customs is 4 years from the end of the year of the date of declaration. VAT record keeping requirement is normally 6 years in Ireland but can vary between EU Member States.
- Outsourcing the preparation and filing of customs declarations is not outsourcing of responsibility and liability.
- Adhere to a clear document retention policy.
- Evidence of right to make entry – airway bill, bill of ladings, etc.
- Packing list
- Bond information
- Commercial invoices
- Shipping documents
- Free Trade Agreement Declarations
- Certificates of Origin (e.g. EUR1’s/commercial declarations, supporting calculations/ documents).
- Copies of any correspondence with global customs authorities
- Any other entry-type documentation
There are general tax obligations to retain evidence of transactions and supporting documents for a period of up to 4/ 6 years. Unless traders retain paper files, they need some mechanism of scanning basic documentation, having access to it through the providers and retaining supporting documents such as commercial invoices and any compliance requirements in the case of goods subject to authorisation licensing. The data would need to be associated with the customer, case, and order electronically. The declaration would refer to the trader’s reference
Regardless of who makes the customs declarations on the trader; s behalf, where it is the importer or exporter of record, it retains responsibility for compliance. The trader should obtain and retain the required data available in its IT or other system on an ongoing basis. Most agents provide a pdf copy of the declaration.
There is an obligation to have and maintain the requisite documents and information for establishing customs liability. They can be required in a customs audit by Revenue or HMRC. This is the case, even though the logistics provider or customs broker may be its agent. Therefore, a trader should have assurance that its agents will preserve the customs declarations in electronic form and make them available on an ongoing basis as required, in particular in a customs audit.
Associated documents such as the commercial invoice and licence (where applicable to the goods or the import or export) must be retained and be capable of being linked with the relevant customs declarations. The supporting documents may also include packing lists certificates and other documents as may apply to the particular category of controlled goods concerned. documents. A certificate of origin will often be required to avail of reduced or zero duty under free-trade agreements. Dangerous or hazardous goods must be accompanied by special dangerous goods note A certificate of origin will often be required to avail of reduced or zero duty under free-trade agreements.
In each of the UK and Ireland. there are both administrative penalties i.e. on the spot fines and criminal offences for breach of customs obligations. Directors and persons involved in the company at a level of instrumentality who cause the company to make the relevant breach, can be prosecuted individually, fined or even imprisoned.
On both the Irish Revenue and UK HMRC side, there is the possibility of enforcement on the ground at the border, at premises and/or in an audit. This is in addition to routine border checks. All customs issues, including origin, classification and valuation are open to challenge on an audit.
Officers of the customs have greater policing powers in relation to customs, than in the case of other taxes. They have stop and search powers. They may search computer and electronic records. They may search commercial premises without a court warrant. Goods can be forfeited for breach of customs law. There are provisions for appeal.
As in other tax areas, customs audits can be exacting, stressful and burdensome. If the trader has made an error in customs returns, it may incur the costs of an underdeclation, interest, and even penalties in the event that the issue later emerges and is challenged in an audit.
One might reasonably expect that Revenue and HMRC would be each “light touch”, at least at first, in their dealings with traders, who undertake customs declaration for the first time. They might be expected not to apply the full riquor of the rules in the event of genuine mistakes as opposed to deliberate reckless or careless actions.