Business, Freight News, Logistics

Customs has a rethink on excise goods fines

[ November 15, 2013   //   Chris ]

HM Revenue & Customs (HMRC) says it will carry out an ‘internal review’ of penalties on companies involved in excise goods. If follows representations from the United Kingdom Warehousing Association (UKWA) and others concerned that logistics service businesses such as third party warehouse keepers and hauliers could risk duty assessments and huge penalties for making a simple procedural error with ‘duty-suspended’ excise goods stored or distribute on behalf of their clients.

Alan Powell (pictued below), UKWA’s advisor on excise matters, explains: “We identified significant dangers in the law introduced in 2010 that can result in honest businesses being assessed for duty as a result of a genuine minor error in the duty-suspended supply chain – literally ticking the wrong box. By ticking the ‘wrong box’ while goods are under duty suspense – whether in production, holding or movement – a company effectively creates a ‘duty point’ and if duty is not paid at that time, a liability of up to 100% will be incurred for ‘holding’ duty-unpaid goods.”

Powell adds “As UK law currently stands, legitimate businesses are facing massive risks of unfair taxation for each and every minor genuine error during transactions, together with associated penalties. Meanwhile, those who actively seek to cheat the revenue by ‘committing irregularities’ in the supply chain continue to flourish almost unhindered.”

He said that, in fairness to HMRC, there has been concern within sections of the Department over disproportionate sanctions that might have unintended consequences.

Powell has already been invited by HMRC policy officials to discuss industry concerns and problems with the law, most of which have been identified as themes within the draft terms of reference of the review.

Alan Powell adds: “What we would like to see is a formal mechanism for HMRC to be able to remit duty in cases of irregularities caused by genuine error where the relevant products have been secured in a tax warehouse or there is proof of export. Without such assurance, we believe UK law breaches the principle of proportionality and fundamental rights and, consequently, excise businesses face being taxed and penalized out of existence for genuine errors that involve no material revenue risk. Then who would legitimately collect and pay the £40 odd billion excise duties to the Exchequer per year?”

The findings of HMRC’s review will be published on 31 March 2014.

Tags: Alan Powell, HMRC, UKWA