Policy & Compliance
Practice Toolbox. 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 impacts differently 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 a Customs agent and not the declarant. The declarant (usually an importer or exporter) therefore becomes solely liable for all customs debt and is 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 (going forward post-Brexit this is likely to be the UK) can be represented directly. It is important that Members realise that Economic Operator Registration and Identification (EORI), or even VAT registration, do not automatically mean that a business meets the establishment criteria. A separate article on the establishment criteria appears elsewhere in this edition of BIFAlink. Secondly, certain restrictions may apply when agents use
their authorisations for special procedures on behalf of their clients. And thirdly, in the e-commerce environment, HM Revenue & Customs (HMRC) does not usually allow use of direct representation, although this will usually depend of 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-
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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, will 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 of their own behalf” (Art. 19 UCC) which makes them solely liable for all customs debt. The unintended consequence of lax approach to representation may prove very costly. The purpose of this article is to highlight to Members that
there is non-compliance in the supply chain, and the ways in which they can protect themselves relative to Customs. These issues are likely to increase in a post-Brexit environment where new traders, who have only traded with the EU, will start to have to comply with customs regulations for the first time. We hope that the reader will also
peruse the accompanying article on the rules of establishment and the longer guidance contained within the Good Practice Guides on the BIFA website relative to Customs Representation and due diligence. It is important to regard the advice given in each paper together and not in isolation. It is only by combining together all the elements described that Members will be able to formulate effective methods to protect themselves.
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