The company imported significant quantities of product on a monthly basis. The imports covered a diverse range of products, from nearly 20 different countries, many different suppliers, and using a large number of customs agents to submit declarations on their behalf.
Brexit also played a role in leading to a significant increase in both the volume and complexity of their customs declarations.
The company were subscribed to Management Support System (MSS) data reports from HMRC, which detailed its customs declarations and which they received on a monthly basis.
However, the reports ran to approximately 3,000 lines a month, and with 27 fields of data for every line, they had neither the resource or expertise to organise, scrutinise and interpret the data.
We suggested that they send us six months of reports for analysis, and we would then organise a workshop session to share our findings and recommended actions.
The challenge faced
What did we find?
Resulting actions
The use of more than 25 different customs agents uncovered a need to review how the company engaged with customs representatives and its process for providing consistent clearance instructions.
Over 90% of the imports were from related parties, prompting a discussion on the customs valuation method (did the relationship influence the transaction value, and thus the declared customs value?).
A large amount of duty was incurred where available tariff quota on steel products was not “claimed” by their customs agents on a multitude of declarations.
Duty was also found to have been paid on goods imported from the EU which were declared as UK origin, meaning duty was deemed payable, but were in fact made in Germany, meaning duty could have been avoided if appropriate evidence of origin had been available.
We also found a smaller number of declarations where duty relief had been claimed in error for goods shipped from the EU, but which did not qualify for preferential tariff treatment.
recovering overpaid duties from HMRC
developing more robust internal processes
enhancing its compliance profile.
As the error relating to unclaimed tariff quota was identified quickly, and the quota for the given period had not been exhausted, the company was able to recover a five-figure sum from HMRC.
They were also able to reclaim the duties incurred on the products erroneously declared as being of UK origin.
The company pre-empted the findings of any customs audit and corrected the declarations where duty relief had been claimed in error though a voluntary disclosure, avoiding civil penalties and any adverse impact on their compliance record with HMRC.
The company also implemented a robust process for instructing customs agents and conducted a review of its transfer pricing arrangements.
Customs Data Analytics - Case study
The business
A UK wholesaler of sanitary products and parts
With our help the company was able to uncover a mix of opportunities and risks which they otherwise may not have been aware of, with the end result of: