Quantifying Customs Risk: Customs Penalties  

Businesses thrive on certainty and are keen to understand the risks of customs compliance failures. This understanding can help formulate appropriate procedures and controls within a business. Customs penalties do not flow from the same regulations as other taxes and many businesses are struggling to quantify these risks. This paper gives an overview of all the risks and then focuses on the current penalty regime.

 

Customs errors can result in:

• Collection of any underpaid customs duty going back three years
• Delays in customs clearance
• Seizure of goods
• Time consuming investigations
• Fines for Senior Accounting Officers (usually the FD) for companies with turnovers over £200m
• Money laundering offences
• Preclusion from customs facilitative programs such as Authorised Economic Operator (AEO)
• Increases to a company's overall tax risk score
• Exposing overseas customers to additional duty demands and penalty action if issuing incorrect origin statements
• Customs penalties

In our experience, HMRC are likely to demand payment of any underpaid customs duty. Many of the other risks, except customs penalties, are only experienced in a handful of cases.

 

 

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