HMRC have been taking action against UK intermediaries, while acting as ‘indirect representatives’ in relation to valuation issues, under-paid duties and VAT since 2021 and our trade body, the British International Freight Association (BIFA) has advised us, to be cautious before acting as ‘indirect representatives’.
There are very real risks in acting as an indirect representative and our customs team would be very wary of involvement outside our customer portfolio, but Brexit has triggered an increase in forwarders offering indirect representation, many of whom have not conducted proper due diligence.
Indirect representation (IR) offered an additional revenue stream, but the UK-based entity making customs declarations to HMRC on behalf of non UK-established importers is wholly liable for taxes and duties owed.
BIFA has been vociferous in warning against IR and despite numerous articles on the dangers of being an indirect customs representative, with no other entity established in the UK, it is the agent who has acted on an indirect basis that is liable for under-paid duties and VAT, often due to inappropriate use of Postponed VAT accounting.
Freight forwarders have been targeted by HMRC in relation to valuation issues surrounding imports into the UK, often eCommerce traffic, that were cleared on a delivered duty-paid (DDP) basis.
When supplying goods under DDP Incoterms, the shipper is responsible for customs clearance obligations and payments of import duties and taxes in the buyer’s country.
Foreign-based shippers can qualify for UK VAT and EORI registration without being GB domiciled and once registered they can engage a GB Intermediary for the clearance, on direct or indirect representation.
Any import customs entry undertaken on a client’s behalf, as an indirect customs entry, leaves the intermediary jointly and severally liable for the duty and VAT exposure, while the client is solely responsible under direct representation.
Our customs experts offer guidance for imports into the UK and export flows to the EU with R42 process, and other fiscal representation for other clearances where the goods remain in France or for indirect entries in most popular European destinations.
We can ‘health-check’ your import and export processes to ensure you are not in risk of customs penalties and in full compliance with EU and GB legislation.
Our customs team can take of all your customs declarations and are ready to support businesses of all types and sizes.
If you have customs questions, or would like to learn more about our services, please EMAIL Chloe Henshall, who leads our customs portfolio.
