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Policy & Compliance


www.bifa.org


Customs representation after the end of the transition period


The legal basis that allows agents to represent their customers will be replaced on 1 January 2021. Everything will change – although in a way nothing will change


Customs representation rules are one of the key elements governing freight forwarders’ daily operations and the law behind these rules is changing from 1 January 2021. Despite de jure (1) leaving the EU earlier this year, the UK is still part of the Customs Union and the Single Market until the end of 2020. This means the regulations of the Union Customs Code (UCC) and Acquis Communautaire(2)


in general still apply in the UK,


but from 1 January 2021 they will be replaced by new UK legislation, specifically the Taxation (Cross-border Trade) Act 2018 (TCTA 2018). What this means for representation and wider


liability to import duty can be summarised by saying that everything and, yet in a way, nothing will change. Firstly the legal basis allowing agents to


represent their customers will change. Article 18 UCC which applies today says the following:


Customs representative 1. Any person may appoint a customs representative. Such representation may be either direct, in


which case the customs representative shall act in the name of and on behalf of another person, or indirect, in which case the customs representative shall act in his or her own name but on behalf of another person. This will be replaced by Section 21 of the


Taxation (Cross-Border Trade) Act 2018, which stipulates that:


Customs agents (1) A person (‘the principal’) may appoint any other person (a ‘Customs agent’) to act on the principal’s behalf for the purposes of this part, and: (a) the agent may make Customs declarations in the name of the principal (and in that case the agent acts as a ‘direct agent’), or


(b) the agent may make Customs declarations in the agent’s own name (and in that case the agent acts as an ‘indirect agent’). It is evident from the above text that the


14


principle of customs representation remains largely unchanged. Most importantly, the distinction between direct and indirect representation has been retained and it carries the same implications as it does in the UCC. Going further, the requirement for agents to be


empowered by the represented party in order to use a specific type of representation currently included in Article 19 UCC will be replaced by a similar requirement specified in Section 21 of the TCTA 2018, Subsection (2): (2) The appointment of a person as a Customs agent, and the withdrawal of an appointment of a person as a Customs agent, must be disclosed to HMRC in accordance with regulations made by HMRC Commissioners. And, Subsection (3):


(3) The effect of an appointment of a person as a Customs agent is that anything done under, or otherwise for the purposes of, this part by, or in relation to, the agent is regarded as done under, or otherwise for the purposes of, this part by, or in relation to, the principal (and not by the agent).


The meaning and implications resulting from these two subsections are very important. A customs agent needs to able to prove that it is properly appointed by the principal. In the case that an agent is unable to disclose its appointment to HMRC, it will become jointly and severally liable to import duties as per Section


21 Subsection (6) of the TCTA 2018: (6) If a Customs agent acts as a direct agent, the agent is also liable to import duty if: (a) the agent acts at a time when the appointment has not been disclosed to HMRC as mentioned in subsection (2),


(b) the agent acts at a time when the appointment of the person as a Customs agent has been withdrawn,


(c) the agent otherwise purports to act on behalf of the principal when the agent has no authority to do so, or


(d) a liability to import duty is incurred by reference to the importation of goods declared for a Customs procedure and the declaration was not made in accordance with regulations under paragraph 9 of Schedule 1 (simplified Customs declarations).


Discussing the subject of an agent’s liability, it


is important to highlight that Section 21 should be read and applied in conjunction with Section 6 of the TCTA 2018, which specifically covers liability to customs duty. Last but not least, there is one aspect of the


future legislation which cannot be overlooked and that is the requirement for the declarant to be established in the territory of the UK. What this means in practice is that customs agents will only be able to use direct representation when acting on behalf of traders established in the UK. Forwarders representing EU established businesses under direct representation today will not be able to benefit from the same facilitations unless these businesses establish themselves in the UK. Consequently Members should carefully review their contractual arrangements with non-UK established businesses and take appropriate measures. The legislation, which will come into force in


2021, includes a number of other potential changes as well. Their impact may not be as visible on Day 1 and BIFA will analyse them in the coming months. Ignorantia iuris nocet (3)


so it is now important


for Members to review their operations and familiarise themselves with the new law and


apply from Day 1. (1)


(2) (3) By law / as a matter of law


The cumulative body of European Community laws


Ignorance of the law is harmful December 2020


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