MPs say management of customs activities fragmented

21 July 2009

Public Accounts Committee report states HM Revenue & Customs' (HMRC) management of customs activities is fragmented and disjointed and the situation has been made even more complicated by UK Border Agency involvement since April 2008

Edward Leigh MP, Chairman of the Public Accounts Committee said:

"HMRC is responsible for enforcing import controls to ensure that traders bringing goods into the country from outside the EU pay the right amount of duty and tax and that our borders are proof against the smuggling of prohibited and restricted goods, such as drugs and guns.

"So it is far from reassuring to learn that the department’s management of customs activities is fragmented and disjointed, that accountabilities are blurred and that management information is poor. This situation has been made even more complicated by the involvement since April 2008 of the UK Border Agency.

"Direct comparisons are difficult but it does look as if the rate at which physical examinations of consignments are carried out at the UK border - some 2 to 3 per cent of imports are physically checked - compares unfavourably with the EU average of 9 per cent.

"HMRC has tried to speed up the process of clearing imports at ports by shifting the emphasis from physical examinations to documentary checks and audits of traders. In practice this has led to an erosion of control. Against an increasing number of imports, the department is carrying out a lot fewer documentary checks and trader audits – and detected non-compliance is increasing.

"HMRC has argued that an approach based on assessing risk and managing intelligence justified the relatively low levels of physical examination. The trouble is that HMRC and the UK Border Agency have lacked robust processes to identify new and emerging risks. This is a weakness that both bodies must address in a concerted way."

Mr Leigh was speaking as the Committee published its 38th Report of this Session which, on the basis of evidence from HM Revenue & Customs, examined helping traders to comply with customs rules, controlling imports into the UK, the organisation and management of customs activities, and identifying risks and gathering intelligence.

In 2007–08, HM Revenue & Customs (the Department) processed some 22 million import declarations from 16,000 traders, accounting for over £186 billion of goods imported from outside the European Union (EU). It collected £2.5 billion in Customs Duty and £19.3 billion in Import VAT. It is responsible for enforcing controls over imports to collect revenue and protect the United Kingdom from social and physical threats, such as drugs and firearms, whilst making it quick and easy to import legitimate goods.

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