BIFAlink


Policy & Compliance


www.bifa.org


But I am only a freight forwarder…


A government consultation has been looking at the regulation of tax advice – which is an extremely broad arena. Some BIFA Members may be offering bespoke consultancy services – but others are in a very grey area when, for instance, just offering an opinion on a particular tax regime


Business is becoming increasingly complex and regulated by the day. Regardless of political colour, government seems have a significant appetite to regulate and control business. Historically, freight forwarding as an


intermediary function has not been regulated. However, the sector does have to comply with significant regulation surrounding the movement of dangerous goods, for instance, various IATA regulations for airfreight, etc, and of course national and international law. Unlike in many countries, in the UK the


provision of customs intermediary services has not been a separate function from forwarding. It developed largely as a value-added service to support general forwarding, and in particular the consolidation services offered by forwarders. However, the EU Exit has seen an increase in the number of companies entering the UK market to provide customs clearance services.


In the spotlight EU Exit has placed the emphasis firmly on the logistics and customs intermediary sector. In the 2020 spring budget, the government published a call for evidence to look at ways to raise standards in the tax advice market. What has become increasingly clear is that this market is extremely broad, and it does not merely include the professions such as accountants and solicitors. This consultation is aimed at all those who


offer advice or assist their customers in complying with HM Revenue & Customs (HMRC) requirements. There is currently no standard definition of ‘tax advice’, so this consultation


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seeks to understand whether – and why – there should be exceptions to a broadly drawn definition of ‘tax advice’ and ‘tax adviser’. In the foreword to the 40-page consultation


document, it is stated that “The government recognises the importance of applying the standards to the right activities”, which explains the emphasis in the consultation on “the relevant definition of tax advice”. What would be the consequences of the


customs intermediary sector being classed as tax advisers? The first in all probability would be greater monitoring by HMRC, although in what form and how HMRC’s standards for agents could be enforced is still to be determined. The second possibility, as mentioned in the consultation, is that ‘tax advisers’ would be compelled to take out professional indemnity insurance, something that would not be popular with the sector. In certain areas, ‘tax advice’ is relatively limited


in scope; for our sector it is much broader. Given the current law regarding the function of the Direct/Indirect customs agent and the responsibilities of their import/export customers, it is believed that a case can be made to exclude the transactional customs clearance work from the definition of ‘tax adviser’. One significant issue is that there are


numerous conversations between Members and customers that are not covered by any contract. The Member might be asked to express a view on a particular regime, and is likely to provide the best response it can on the information provided – but how accurate will it be? This sort of conversation is a very grey area. At the other end of the scale, Members may be offering bespoke tariff and customs consultancy services which could be regarded as within scope of the definition of ‘tax adviser’.


BIFA response BIFA will be bringing these matters to the attention of its Customs and Legal & Insurance Policy Groups, and will formulate a response prior to the 15 June deadline to submit to government. For Members interested in responding directly


to the consultation, entitled Raising Standards in the tax advice market: professional indemnity insurance and defining tax advice, it can be viewed at www.gov.uk/government/consultations/raising- standards-in-the-tax-advice-market


If Members wish for their views to be included in BIFA’s consolidated response, please send comments to r.windsor@bifa.org by 4 June.


May 2021


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