I was very interested – but more than a bit concerned – to read the article in the June 2005 issue of Logistics Manager entitled “Eliminating Shipping Stress”. Written by Brian Southern who, director of Benair Freight International, it set out a total shipping solution provided by his firm and how that service provided mutual benefit for all concerned. The article explained that, by outsourcing a business’ shipping function, all the headaches and responsibilities of import and export were loaded on to the forwarder. To quote the article: “So what are the disadvantages of outsourcing your shipping? Quite simply, none”.
Whilst I can understand the attraction of outsourcing the shipping function, the legal position regarding the responsibilities of the import and export declarations has to be made ABSOLUTELY clear – the importer or exporter has the legal responsibility to ensure that ALL declarations are correct. There is no escape from this and the newly merged department of HM Revenue & Customs is taking an increasingly hard-line approach in this regard.
As an example, a business approached me earlier this year having experienced a particularly unpleasant audit from a Customs officer. The business is involved in all the usual import and export functions including the importation of specialised machinery parts for repair and re-export to the customer. The audit officer issued three Civil Penalty warning letters which all began “You have failed to comply with your legal requirements as explained below” set out the particular sections under the EU Customs Code legislation where “offences” had been committed. It was all to do with not taking responsibility for the actions of the Freight Forwarders being used. The warning letters said that the infringements rendered the company liable to a penalty of up to £2,500 per error. On this occasion, the Commissioners would take no further action, although woe betide you if it happens again. Now, I am NOT saying that businesses shouldn’t outsource their shipping function but companies must realise that they retain the legal responsibility for all declarations. If you are looking to outsource, you do need to make sure that, in the event of errors being made and fines levied by HMRC, the question as to who pays the fines and gets the warning letters is clearly set out in a written agreement. I like the Benair idea but there is a great deal more to it than initially meets the eye.
MIKE HODGE, Customs consultant, Mike Hodge Associates. T: 01582 760244