Press Release - HM Revenue & Customs: The Control
& Facilitation of Imports
7 November 2008
HM Revenue & Customs clears most imported goods quickly, and
processes for submitting customs declarations and payments for
non-EU imports are straightforward, says a report out today from
the National Audit Office. The rate of physical checks at the UK
border is below the EU average, however, and the number of audits
of traders has dropped substantially since 2005-06.
Ninety-nine per cent of declarations are processed
electronically and 90 per cent of goods are cleared immediately.
The Department checks documents for about 6 per cent of imports
each year and aims to clear 95 per cent of these within two hours.
However, a recent quality review by the Department found an 18 per
cent error rate in these checks.
The Department has only recently standardised the reporting of
physical checks, and these reports suggest that between 2 and 3 per
cent of imports get checked. The EU average is 9 per cent, but
practices vary across the EU. Additional checks are undertaken and
irregularities identified but not reported. The Department needs to
improve its reporting, develop a standard for the minimum level of
checking and undertake testing to understand compliance
levels.
Ninety-seven per cent of goods examined are selected using cargo
information and 3 per cent using the Department’s main trade
system. The number of examinations as a percentage of imports
selected from the Department’s trade system has fallen from 0.3 per
cent in 2003-04 to 0.1 per cent in 2007-08.
But these examinations have a significantly higher rate of
identifying irregularities than those selected from cargo
information.
Audits of traders fell by half for large businesses and
two-fifths for small and medium businesses between 2005-06 and
2007-08. The chance of a trader receiving an audit fell from 18 per
cent to under 10 per cent. The additional revenue from this
compliance work is reducing while the level of errors detected is
rising, particularly among new traders. For small and medium sized
businesses, the level of errors detected has increased from 32 to
39 per cent.
The fragmented management of customs activities within the
Department, a lack of clear accountability, and incomplete
management information have hindered effective oversight of its
performance and risk management.
Tim Burr, head of the
National Audit Office, said today:
"HMRC has made it
easier to import goods into the UK. The lack of information on
compliance levels and the declining number of trader audits does
however risk diluting the control the Department has over imports.
It needs to develop ‘minimum’ levels for checks and trader audits,
so that importers pay the right amount of tax and duty, and fully
comply with the laws on prohibited and restricted
goods."
Notes for
Editors
- In 2007-08, the UK imported £186 billion of goods from outside
the EU. Imports increased on average by 5.7 per cent a year between
1999 and 2006 and represented 11.6 per cent of Gross Domestic
Product in 2006. In 2006-07, the Department collected £2.3 billion
in Customs Duty and £19.2 billion in Import VAT, representing
almost five per cent of total tax revenues.
- Declarations are not required for EU traffic.
- The customs process and calculation of duty payable can be
complex because of the multiplicity of rates, reliefs and
preferential trade agreements agreed at EU level, which are often
intended to reduce the costs for traders.
- The Department is responsible for enforcing 34 regimes that
prohibit or restrict types of goods that can be imported into the
UK. These include drugs, firearms and certain products of animal
origin.
- Responsibility for border controls to combat social and
physical threats transferred on 1 April 2008 from HMRC to the new
shadow UK Border Agency, an agency of the Home Office. HMRC retains
policy responsibility for managing international trade.
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Tim Burr, is the head of
the National Audit Office which employs some 850 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 48/08
All enquiries to Barry Lester,
NAO Press Office: Tel: 020 7798 7937
Mobile: 07748 181 692