New Customs Regulations Expose Exporters To HMRC Checks And Penalties

By issuing a Certificate of Origin, UK suppliers can enable their customers to benefit from special customs duty rates via a Free Trade Agreement, potentially saving them significant duty on the imported goods and giving them a competitive advantage.

Until now, there was no penalty imposed on UK suppliers for enabling these potential savings by providing an Origin Certificate which was made invalid through incorrect information.

The maximum penalty is capped at just £1000 and only applies to exports to Canada, Turkey, New Zealand, Iceland, Liechtenstein, Norway and CPTPP (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership).

This is the first time that exporters have become subject of HMRC fines for issuing incorrect Certificates of Origin and demonstrates a move by HMRC to tighten up on the finer details of post-Brexit legislation.

Adam Wood, Head of Commercial at Barbourne Brook commented:

“All Free Trade Agreements have a mechanism by which customs authorities in the country of import can refer Certificates of Origin back to HMRC for investigation with the exporter (and the other way round). If the Certificates of Origin prove to have been incorrectly issued, this is communicated back to the country of import and the importer must pay back the duty saved.

However, imposing penalties on UK exporters is totally new territory for HMRC.  It’s a tentative step with fines limited to £1000 and the caveat that only known and material errors will be penalised, which is difficult to prove.  Nonetheless, the message is clear to exporters – errors made in Origin Certificates may now be investigated and it is no longer a no-risk way of cutting costs for customers.

We can assist UK exporters to ensure that they only issue Certificates of Origin for qualifying goods and that they have the necessary audit trail in place to withstand scrutiny from HMRC.”