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Ensuring the validity of a Customs authorisation empowerment


Members need to ensure that the documents empowering them to represent other parties are valid from the legislator’s perspective


Customs representation has always been an important and sensitive element of any freight forwarder’s operations, which is reflected in the numerous articles and pieces of guidance released by BIFA and HMRC. While the concepts of direct and indirect representation have received deserved coverage, the technical element of the empowerment process, or what choice of words should be used on an authorisation document, has received less attention.


The legislation The premise of Customs representation is set out under Section 21 of the Taxation (Cross- Border Trade) Act 2018: 21 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’).


(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.


(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).


Validity of appointment


While the legislation is clear that the appointment of a person must be disclosed (and obtained in the first place) it does not specify any particular procedural requirements that the


August 2021


appointment must meet. But this does not mean that there are no such requirements. In fact, the appointment must be legally valid and, in order for it to be so, one needs to refer to another piece of legislation which in this case is the Companies Act 2006.


Section 44 of the Companies Act says: Due diligence


Execution of documents (1) Under the law of England and Wales or Northern Ireland a document is executed by a company: (a) by the affixing of its common seal, or (b) by signature in accordance with the following provisions.


(2) A document is validly executed by a company if it is signed on behalf of the company: (a) by two authorised signatories, or (b) by a director of the company in the presence of a witness who attests the signature.


Even a brief analysis of the legislation relative to representation and execution of documents makes it clear that Members need to ensure that the documents empowering them to represent other parties are valid from the legislator’s perspective. In an environment facilitated by web tools such as Companies House website, it is relatively easy to verify the information and such checks should become part of any freight forwarder’s due diligence checklist. A document signed by an unauthorised person will not be valid and the consequences of lack of empowerment may be serious and costly.


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(3) The following are ‘authorised signatories’ for the purposes of subsection (2): (a) every director of the company, and (b) in the case of a private company with a secretary or a public company, the secretary (or any joint secretary) of the company.


Practical consequences


When analysing the text of the legislation it becomes apparent that an empowerment document will only be deemed to be valid if it meets the execution criteria set out in the legislation. The document must be signed by authorised signatories and any document which is not legally executed will not be accepted as a legal proof of empowerment for Customs or other purposes.


The natural consequence of the above


requirement for BIFA Members is to ensure that all the representation documentation in their possession is legally valid. But what about the choice of words on a representation empowerment?


The legislation does not mandate any specific


text requirements. The document needs to be clear in its meaning, it has to clearly state who is empowered by whom and in what capacity. It has to be legally executed and leave no room for interpretation or ambiguity. BIFA’s Guide on the Appointment and Responsibilities of a Customs Agent (https://www.bifa.org/media/4642393/107484_g pg_customs_representation.pdf) contains specimens of representation empowerment letters which have become industry standard over time, but Members are free to modify these in order to meet their requirements.


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