UK Customs and Direct or Indirect representation.

Freight forwarders beware, Do you provide Indirect representation ? Are you sure you know the answer or understand the implications. Are you sure your import and export clerks understand the difference. If you do not you could be leaving yourself open to a very costly mistake.

Direct representation

On the face of it quite a simple explanation. The customs representative acts in the name of and on behalf of another party. The party being represented is the declarant and is obliged to meet all the obligations arising from the declaration. The declarant is has sole responsibility for maintaining records and providing an audit trail to customs.

If the customs instructions from the declarant are followed then no liability should fall on the customer representative. If he doesn’t follow the declarant’s instructions then they do become jointly and severally liable for any debt.

Indirect representation

Again a simple expanation. The customs representative acts on behalf of another person but acts in their own name. In this instance the customer representative must maintain the full audit trail. In this instanct the indirect representative is jointly and severally liable for all customs liabilities arising from an incorrect declaration.

Questions on Direct representation a freight forwarder / Customs broker should follow.

Do you obtain a direct representation form from your customers

This form can be an individual form per shipment or a form per customer but must confirm all the information needed to complete a customs entry. If the Supplier invoice is missing a HS Code or CPC then does your form cover this.

Is your customer a UK or EU company

If your customer is a NON-UK company or even worse a NON-EU company then in all likelyhood you are operating as an indirect representative, however you complete the customs entry.

Are you acting as a sub-agent

If a freight forwarder sub-contracts the clearance to you then you may be acting as an indirect representative. That is because in most instances the direct representative form completed does not make an allowance for this. Be very careful when handling third-party sub-contacted customs clearance work.

After BREXIT will an EU company fall under indirect representation

As of today we do not have an answer on this but the answer is likely to be yes. The issue will be for those who have used direct representation for the proceeding three years will UK customs determine that now they cannot easily enforce the debt against an EU company will they come after the direct representative.

Are you a member of BIFA

If you are a member of BIFA then they regularly provide information and warnings on direct and indirect representation. “A guide to representation with HMRC” in their good practice toolbox is a must read.

Shipments customs cleared under DAP or DDP terms

A real word of warning for freight forwarders who clear under DAP / DPU or DDP terms. Obtaining a UK EORI number for an overseas customer and using this to customs clear goods as the UK delivery point isn’t registered or refuses to act as importer has implications.

By undertaking customs clearance under instruction from overseas a direct representation form is unlikely to cover you. Think about your exhibition goods, if you use exhibition CPC’s could you be liable for any duty and VAT arising from a mis-declaration.

Read up on it here.

As taken from .gov website
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