BIFAlink


Policy & Compliance


www.bifa.org


A reminder: customs representation


A recap on the law regarding customs representation and the definitions of direct and indirect representation


Over the last two years BIFA has published a number of articles on the importance of choosing the correct Customs representation type. We have also developed a comprehensive guide on this subject available in the BIFA Good Practice Toolbox, but this aspect of every customs clearance broker’s operations comes back to the Secretariat on a very regular basis. Therefore, it is appropriate to remind Members of the key aspects of the various types of representation and the related implications.


The law


The Union Customs Code (UCC) is very specific about the role of the customs representative. Article 18.1 commences by simply stating: “Any person may appoint a customs representative.” The UCC then allows the representative to be appointed on either a direct or indirect basis. It is crucial that the customs agent understands the fundamental difference between the two types as each differently impacts on its responsibilities and liabilities. Direct representation – In this scenario the customs representative acts in the name of and on behalf of another party, which puts it in position of an agent and not the declarant. The declarant (usually importer or exporter) therefore becomes solely liable for all customs debt and is


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obliged to meet all the obligations arising from the declaration. The declarant will also be responsible for maintaining the records and also providing an audit trail. It is the type of representation that is the


agent’s preference, but there are a few caveats here that agents should be aware of. Firstly, it is crucial to remember only those entities that are established in the EU can be represented directly. It is important that Members realise that EORI, or even VAT registration, do not automatically mean that a business meets the establishment criteria. BIFA published a dedicated article in the September edition of BIFAlink on this subject. Secondly, certain restrictions may apply when agents use their authorisation for special procedures on behalf of their clients. And thirdly, in the e-commerce environment HM Revenue & Customs (HMRC) usually does not allow use of direct representation, but this will normally depend on the CPC and/or authorisation types. Indirect representation – In this case the customs representative acts on behalf of another person, but acts in its own name. The consequence of this is that the indirect representative becomes jointly and severally liable for all customs liabilities arising from the customs-related transactions.


It is then incumbent on the customs


representative to maintain a full audit trail with regard to the customs declaration.


Empowerment Regardless of the type of representation chosen by agents and freight forwarders, it is crucial that agents are positively empowered to represent their customers or traders on whose behalf they are acting. This means that the Member must be in possession of documentary proof of its empowerment, preferably in the form of a signed representation letter appointing it to be a customs representative. This approach would cover all scenarios, including sub-agency work and ex-works exports where the forwarder has no contract with the exporter. Also, a positive incorporation of BIFA STC, retaining evidence that the customer has seen, read, understood and accepted in writing the BIFA STC, would allow Members to rely on the protection of Clause 7, whereby “in all and any dealings with HMRC for and on behalf of the customer, and/or owner, the company is deemed to be appointed and acts as a direct representative only”. It is essential for Members to remember that without evidence of empowerment, agents “shall be deemed to be acting in their own name on their own behalf” (Art. 19 UCC), which makes them solely liable for all customs debt. The unintended consequence of a lax approach to representation may prove very costly. The purpose of this short article is not to


explore all the intricacies relative to representation, but only to remind about the basics and the need to apply due diligence where necessary.


And we will say it again – know your customer and know your role in the process to remain compliant.


December 2018


Courtesy of the Port of Felixstowe


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