Commenting on the publication of the Commons public accounts committee’s report on HM Revenue & Customs’ control and facilitation of imports, South Norfolk MP Richard Bacon, a member of the committee, said: “HM Revenue & Customs (HMRC) aims to prevent illegal imports, such as drugs and firearms, from being imported into the country.”
HM Revenue & Customs (HMRC) plans to spend £2.7 billion from 2006-07 to 2010-11 on a transformation  programme to improve its services and detection of non-compliance easier.

“HMRC does this by checking traders’ documents and undertaking audits of traders at their premises.”

“HMRC sought to speed up the clearance of imports at the UK frontier by cutting the number of physical examinations and increasing its document checks.  However, despite rising imports, the number of documentary checks fell from 15.9 per cent in 2003-04 to 5.5 per cent in 2007-08.” 

“The UK also erroneously reported a physical examination rate of 0.1 per cent, one of the lowest in the EU.  Although the actual rate is likely to be between 2 and 3 per cent, this is still much lower than the EU average of 9 per cent.” 

“What’s more, when HMRC centralised its document checking into one operations hub in 2007, only one in five of its staff had any experience of customs work and, a year later, it was discovered that 18 per cent of the hub’s document checks had errors.”

“HMRC is supposed to stop guns, drugs and other contraband from being smuggled through the UK frontier but its management of border checks has been downright sloppy.  This could potentially be putting the UK at risk and HM Revenue & Customs needs to do much better in future.”     

Mr Bacon was speaking as the Commons public accounts committee published its report on HM Revenue & Customs’ control and facilitation of imports.  HM Revenue & Customs (HMRC) controls imports by checking traders’ documents, physically examining goods at the frontier, and undertaking audits of traders at their premises. In April 2008, the UK Border Agency assumed responsibility for carrying out the physical examinations of goods at the frontier.  To speed up clearance of imports at ports, HMRC aimed to limit the number of physical checks carried out at the border and shift its controls more towards documentary checks and trader audits.  Although consignments increased by 19 per cent from 3.4 million to 4.1 million between 2003–04 and 2007–08, the proportion of documentary checks fell from 15.9 per cent to 5.5 per cent over the same period.

In 2007, the Department reported to the EU that its rate of physical examination was 0.1 per cent of all goods imported from outside the EU. However, this rate was based on just 200 imports selected for checking by HMRC each month using its main trade system and excluded other examinations selected as a result of detection officers reviewing cargo and manifest information.  The National Audit Office examined the data from April to September 2008 and identified gaps and inconsistencies in recording.  The data suggested that, on average, the total examination rate was between 2 and 3 per cent of imports, still lower than the average EU examination rate of 9 per cent. 

HMRC centralised its documentary checks to its National Clearance Hub in 2007 but, when the Hub was established, only 30 of the 150 staff had previous customs experience and a review in February 2008 revealed that 18 per cent of checks had an error. The Department subsequently concluded that no goods had been imported that should not have been, because the errors were largely in the administrative processes, such as recording the time or date incorrectly.

21 July 2009

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See also::
PAC REPORT: HMRC's control and facilitation of imports

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