Customs get tough on unpaid excise duty 14 other transport


UK authorities are fining firms who handle goods on which duty is unpaid, warns TT Club legal consultant, Ian Hyslop


Warehouse operators, hauliers and


service


providers in the UK need to beware of their liability for unpaid excise duty. Customs authorities are clamping down and imposing


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fines on unwitting operators, who are storing or are involved in the movement of goods on which the proper duties have not been paid. While HM Revenue & Customs (HMRC) has had the legal


By Ian Hyslop


Host Port


authority to impose wrong-doing penalties since April 2010, the UK Warehousing Association (UKWA) has recently warned warehouse keepers and hauliers that they need to increase their vigilance. UKWA says there has been increased focus by HMRC on excise goods supply chains and also an increased willingness to impose penalties on storage companies and others. This is happening where HMRC is unable to recover the excise duty from the goods’ usually elusive owners. HMRC has the authority to


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impose penalties on individuals and companies which handle goods on which excise duty has not been paid or deferred, or which have otherwise been improperly diverted from bonded storage. Such ‘handling of goods’ is deemed to include carrying, removing, depositing or keeping the goods and therefore extends to warehouse operators, hauliers and other parties in the supply chain who don’t own the goods, but do have physical possession of them. As a result, anyone who holds


excise goods (such as alcohol or tobacco) on which duty has not been paid is potentially liable to a penalty of up to 100% of the unpaid excise duty. The actual penalty depends, among other things, on whether the wrong- doing was deliberate or whether any disclosure has been made to HMRC. Warehouse operators, hauliers


and other suppliers of third party logistics services may have a ‘hold harmless’ or


indemnity


provision in their contract with their customer, which in theory allows them to recover fines and duty from the customer where the customer is at fault. Standard terms and conditions recommended by the British International Freight Association (BIFA), for example, include a standard clause of this type. However this will clearly have little use if the “guilty” customer has disappeared or cannot be sued. So what should an operator


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do to guard against the risk of unwittingly handling goods on which excise duty has not been paid or deferred? They should look out for


general indicators that duty may have been evaded. For example if goods are offered via unsolicited e-mails/fliers with limited information about the supplier or


they are offered at unrealistically low prices; the supplier insists on dealing in cash; or if there is a lack of documentation such as purchase invoices, duty stamps and fiscal marks. In addition, there are specific


steps which service providers should take. Non-excise warehouse operators should obtain evidence that duty has been paid whenever they receive goods. They should consider obtaining a signed declaration from their customer that the excise duty has been paid and/or include a warranty to this effect in their terms and conditions. For hauliers asked to move


excise goods, the advised actions will depend on the origin and destination point. If the goods are being moved from an excise warehouse to another location, hauliers should ask for evidence that the excise duty has been paid and the goods have legitimately leſt the duty suspension regime. As with warehouse operators, hauliers should also consider obtaining a signed declaration from the customer that the excise duty has been paid and/or include a warranty to the same effect in their terms and conditions. If the goods are being moved


from an excise warehouse to another location and the haulier is told that duty is not payable, they should ask for evidence of the movement guarantee and the supporting documents. They should also consider whether the destination is an excise warehouse which is known to them, and whether there are legitimate commercial reasons for the movement. If there is any doubt about the legitimacy of the movement, or the movement guarantee, operators should contact HMRC. If goods are being collected


from a small warehouse, or the movement appears to be to non- commercial premises, the haulier should take particular care to ensure that they obtain evidence that all excise duty has been paid. As long as they act reasonably,


TT Club will insure its members for this type of demand from HMRC, subject to the terms and any sub-limits in individual policies. The Club will also normally pay the costs of recovery from the member’s customer, or any other party which appears liable.


Issue4 2013


///INSURANCE


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