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HMRC and Border Force restrict access to customs authorisations to those who can meet the general authorisation criteria, can demonstrate effective customs control of their operations, and effective and compliant use of the authorisation for which they are applying.  

HMRC’s strategies, policies, processes, and systems are designed to support legitimate customers in accessing the customs system, while promoting compliance and making it hard to bend or break the rules.

For those looking to become authorised to operate customs authorisations, compliance begins prior to application.  

By understanding the requirements of operating authorisations correctly, the importance of controlling customs goods correctly, reporting errors and avoiding misuse, traders can reduce the risk of accidental or ongoing errors. 

By operating robust authorisation processes, HMRC will screen out those whose intent is to misuse authorisations, unfairly impacting those around them or potentially committing illegal activity.  

Where non-compliance is discovered, HMRC will take steps to respond, working with the authorisation holder to ensure issues are addressed to avoid repeated non-compliance, or authorisations are removed where appropriate. 

Control and facilitation are not mutually exclusive. Our customs compliance regime is designed to support legitimate customers to navigate the system whilst using data effectively to target risks and tackle illicit trade.

HMRC have set out how the HMRC Charter and Civil Service values will be applied in all compliance activity in the HMRC Professional Standards for Compliance. The compliance approach to assessing customs activity and monitoring customs authorisations will meet these professional standards.

Controlling the granting of authorisations and monitoring the use of customs authorisations ensure that HMRC can deliver an authorisation system that protects the UK from smuggling, revenue risks, fraud, risks to health and safety or non-compliance with customs regulations. These steps to controlling authorisations can be broken down into:

• pre-authorisation
• authorisation process
• monitoring
• inspections and checks
• responding to misuse of authorisations

These steps align with the prevent, promote and respond approach and aim to ensure that applicants for authorisations are aware of requirements prior to being authorised, can demonstrate through the lifespan of the authorisation that they continue to meet these requirements and steps are taken where misuse occurs.

Those wishing to apply for customs authorisations should ensure that prior to application they have researched the requirements for the authorisation that they intend to apply for and have set up the appropriate operational structures to ensure that the requirements can be met.  

Traders should familiarise themselves with the following before applying: 

• HMRC provides guidance to those looking to apply for customs authorisations on what benefits authorisations offer to applicants as well as expectations for how to operate these authorisations correctly.

The authorisation process ensures that applicants can meet the general authorisation criteria which includes compliance, customs competence and financial standing. The authorisation process also looks at the customs controls in place within an applicant’s operations to ensure that applicants can demonstrate that these controls meet HMRC or Border Force expectations.

HMRC or Border Force may undertake a visit to an applicant’s customs site to ensure that the site meets customs control requirements such as separating storage areas for customs related goods, control locations for certain goods or logistics in place to support the inspection of goods by border force or HMRC officials. This visit may occur before or after granting of the authorisation and may be used to assess both location specific operation as well as assessment of overall controls of customs operations within the business.  

For all authorised economic operator (AEO) applications, a site visit is carried out prior to granting the authorisation.

HMRC will monitor the use of authorisations, periodically checking that authorisation conditions are being met and that the trader continues to meet the general authorisation criteria. This monitoring may in some circumstances include site visits or requests for additional information from authorisation holders.  

It is the responsibility of the applicant of an authorisation and authorisation holders to monitor the criteria of the authorisation and conditions of their authorisation; to notify HMRC of any changes to the authorisation. Any amendment should be notified as soon as it is known, ideally before things are changed; and amendment to processes, locations or goods being moved etc should be notified before the changes, so that they can be agreed by HMRC.  

The applicant of an authorisation or authorisation holders may set up internal control systems that will enable them to monitor the conditions of their authorisation on a regular basis.

The following areas of the authorisation may be monitored: 

• processes
• management (including sites and location)
• system
• operations
• agent and intermediaries
• customs administrations
• error management (avoiding suspension or revocation)
• responding to query from HMRC or visit request
• criteria and conditions of the authorisation
• monitoring plan
• authorised persons
• correspondence address
• impact of amendment

HMRC may control the movement of goods via inspecting or checking customs goods and declarations. These inspections ensure that those moving the goods are complying with the conditions set out in their authorisations of correctly declaring goods and not moving goods that are not permitted within their authorisation.

Where misuse of customs authorisations occurs, HMRC will take appropriate action to address this misuse, and work with the authorisation holder to ensure that where possible this is put right. Where this may not be possible HMRC or Border Force will take action to respond to the misuse, using warning letters, customs civil penalties or potentially removing the authorisation.

Applications must be completed fully and accurately. Applications should reflect the current state of the business or where it includes practices that are yet to be established, further detail on how and when this will be established. Where applications are incomplete, they may be refused. Where an application has been completed with inaccurate information and the authorisation has been granted, the authorisation may be subject to annulment.  

Applicants are advised to make themselves aware of the application questions and evidential requirements prior to application to ensure that they have everything in place ready to support the application process.

It is the responsibility of an authorisation holder to ensure that their details are kept up to date and the authorisation is only used as laid out in the authorisation notification. An authorisation holder must not utilise their authorisation to move goods that have not been agreed in the authorisation. 

Authorisation holders should not operate customs activity out of a new location, amend their processes significantly or move different goods than previously approved prior to notifying HMRC for agreement as these changes may result in the authorisation needing amendments. 

Where there is a significant business change such as a merger, takeover or entering administration, authorisation holders are advised to notify HMRC of the intention of these changes as soon as possible so that they can be advised what steps are required.

Where HMRC issue authorisation holders or applicants requests for further information to support the granting of or maintaining of authorisations, these requests for information must be responded to in a timely manner as covered in the request. Failure to respond to these requests may result in HMRC taking action on misuse of the authorisation.

Authorisation holders are required to report to HMRC or Border Force any occurrences where they identify errors within their customs processes. These notifications should be made in a timely manner to the appropriate contact so that they can be addressed.

When misuse of authorisations, or infringements of customs requirements occurs, HMRC can take action to address this misuse. In most cases HMRC or Border Force will look to support the authorisation holder to address concerns and meet their requirements, however in some cases where the misuse is significant or poses a risk to the UK these authorisations may be suspended immediately.

Where misuse occurs, HMRC will in most cases look to work with the authorisation holder to ensure that the infringement has addressed and the authorisation holder is educated to avoid repeating the infringement. Where misuse or an infringement occurs, HMRC will set out what has gone wrong, how to address this and provide education on the correct action to undertake.  

Some of the ways in which HMRC may provide education include:

• providing advice when we attend a trader’s premises to undertake an International trade intervention, HMRC then confirm this advice in a letter of written instruction
• advising, for example, what records should be kept and any management assurance checks to be conducted
• providing the links to the relevant gov.uk websites, and information on public notices and tariff classification services

There are situations where providing education isn’t the best approach to ensure compliance. For example, there may be little scope for providing education where:

• it is apparent that an authorisation holder is fully aware of their obligations
• it would need to be provided to an agent, agents provide a recognised specialist service and should therefore have a good understanding of the customs rules and regulations

A warning letter will include exact details of any infringement including what legislation has been breached by the authorisation holder.  

A warning letter may be issued up to three years after an infringement has taken place and will warn that a further similar contravention within a period of two years may result in a customs civil penalty.  

Warning letters for deficiencies in systems will explain what an authorisation holder needs to do to correct those deficiencies and will set a time limit within which they have to correct those deficiencies. If authorisation holder fail to comply with those instructions they may be liable to a civil penalty.

Customs civil penalties are financial penalties issued to an authorisation holder when misuse has occurred.  

Customs civil penalties (CCP) were introduced by Sections 24 to 41 of the Finance Act 2003. The customs civil penalty statutory provisions are set out in part 3 of the Finance Act 2003 includes: 

• the customs (contravention of the relevant rule) from 1 January 2021
• the export (penalty) schedule of contraventions from 1 January 2021

The statutory instruments include schedules for both imports and exports which provide detail of the various types of contraventions of the customs law that can be penalised using CCP.

Border Force takes CCP action at ports and airports where contraventions of customs law may occur. 

Any errors identified on a customs declaration for import or export are deemed to be a contravention of customs law.

Contraventions of customs provisions include: 

• infringements of customs regulations  
• failures to comply with the terms of customs authorisations  
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• failure to comply with customs procedure  
• failure to produce information
• unauthorised removal of goods from customs control  

Where HMRC identify a contravention of customs law, HMRC has the discretion to take CCP action. Civil penalties are not intended to penalise a trader who is trying to be compliant.

The issue of a penalty for contraventions in no way implies dishonesty on the part of the recipient.  

The CCP action HMRC take depends on the circumstances surrounding the contravention and the trader’s compliance history or attitude towards compliance.  

Where a customs civil penalty is deemed inappropriate, HMRC will send a letter of written instruction to the authorisation holder to advise that whilst on this occasion CCP action was not deemed appropriate, HMRC are advising them of the corrective steps they need to take to ensure compliance in future.

Where HMRC consider that a penalty is appropriate, we decide:  

• the amount of the penalty  
• whether there should be any mitigation (reduction) of the penalty and  if so, how much

In some circumstances, it may be appropriate for use of the authorisation to be withdrawn, suspended or revoked. This section covers the ending of an authorisation because of misuse of the authorisation or inability to continue to comply with the general authorisation criteria or authorisation requirements.

When an authorisation holder no longer requires use of an authorisation, or where an authorisation holder is unable to continue to meet their conditions of authorisation or authorisation requirements, they may choose to withdraw their authorisation. This is deemed as a voluntary revocation and would not result in a barring period. An authorisation holder would be expected to discharge their goods from the authorisation in the appropriate manner.

Suspension of a customs authorisation is intended to support the authorisation holder to rectify any misuse of the authorisation whilst preventing use of the authorisation until this has been addressed. Authorisations may also be suspended whilst investigations are ongoing into potential breaches of customs obligations prior to a potential revocation decision occurring.  

Customs authorisations may be suspended by HMRC or at the request of the authorisation holder. The length of suspension period varies in Northern Ireland and Great Britain. 

In Great Britain where an authorisation is suspended by HMRC this suspension can apply for a period deemed reasonable by an officer of HMRC up to a period of 60 days.  

In Northern Ireland an authorisation can be suspended for a period of up to 30 days. This period may be extended by a further 30 days at the request of the authorisation holder to finish addressing the issues around meeting conditions or eligibility criteria.  

In both Great Britain and Northern Ireland this period may be extended up to 9 months or indefinitely respectively where investigations are taking place as to potential breach of customs obligations.

Where the authorisation holder is unable to meet the criteria or obligations of their authorisation, the authorisation may be revoked by HMRC. Revocation ceases the holder’s use of the authorisation immediately and may result in the authorisation holder being barred from re-application.

Annulment of authorisation decisions take effect from the point that the authorisation decision is granted retrospectively. This means that the authorisation holder may be liable to debts arising from customs movements that may have been included in the authorisation. HMRC may annul an authorisation decision where:  

• the decision was taken on the basis of incorrect or incomplete information
• the holder of the decision knew or ought reasonably to have known that the information was incorrect or incomplete
• if the information had been correct and complete, the decision would have been different

Where an authorisation is revoked for the authorisation holder’s failure to comply with the conditions of the authorisation, the person cannot make an application for approval for the same authorisation for a period of one year, or for a period of three years where the authorisation concerned is authorised economic operator (AEO). Where the previous authorisation is treated as annulled the applicant cannot make an application for approval for the same authorisation for a period of three years. 

During this period any application made for the same authorisation would not be accepted by HMRC and therefore cannot be considered for approval.

Any HMRC or Border Force decision to issue a warning letter, customs civil penalty, to revoke or suspend an authorisation will be subject to the right to be heard process prior to the decision being taken, or appeal process after the decision has been made.

Director

A director who is involved in the management of an authorisation holder can make a request for an amendment to be made to their authorisation. They may choose to withdraw their authorisation.

Authorised person or nominated officer

The applicant or authorisation holder should ensure that the nominated or authorised person is instructed to inform the customs authorities whenever compliance difficulties are discovered and establishes procedures for informing the customs authorities of such difficulties. The applicant should have procedures in place for notifying customs in case of customs compliance difficulties and also an appointed contact person responsible for notifying the customs authorities. All changes should be reported to the nominated person(s) and his or her replacement(s).

Any of the changes below relating to the authorisation holder should be notified to HMRC:  

• business name  
• legal status  
• merger or demerger  
• place of establishment  
• correspondence address (if different from the address of establishment)  
• correspondence address for mutual recognitions arrangements MRA communications (if different from the address of establishment)  
• contact person  
• sale or closure of business
• economic sector of activity or role in the supply chain

Intermediaries and Agents

Authorised agent can operate customs activities on behalf of an importer and make representations. The customs agent is outsourced by the importer to handle customs matters, because of their experience and technical knowledge, which the importer may be lacking. The customs agent shall be empowered by the authorisation holder to operate customs activity. The customs agent must specify whether the representation is direct or indirect. The authorisation holder must disclose the appointment of a person as a customs agent, and the withdrawal of an appointment of a person as a customs agent to HMRC.  

The option to outsource may be more cost effective than in-house operations for reasons of economic scale, expertise, technology, and the stimulation provided by competition in the private sector.

Customs manager

The authorisation holder can choose whether they wish to appoint a customs manager depending on the size of an organisation The import manager is responsible for the monitoring of customs activities and plans on the management should be based on risk analysis performed at the various stages (examinations before granting the authorisation status, management of the authorisation granted. The monitoring system by import manager should be capable of preventing and detecting illegal or irregular transactions. These are depended on a number of factors which can influenced them:

• the type of authorisation held
• the number of locations — the import manager must ensure that location of goods is recorded in stock records, where appropriate different goods for example, goods falling under restrictions or prohibitions, community and non community goods, hazardous goods, high value goods, overseas and domestic goods, air cargo are stored separately
• the size of the business
• the strength of internal controls over the business processes and whether processes are outsourced
• whether minor improvements to processes or procedures have been recommended during assurance audit

The customs manager’s responsibility is to:  

• make each head of department fully aware of internal controls of their own department
• record the dates of audits by HMRC and correct identified weakness through corrective actions
• notify the customs authorities if fraud, unauthorised or illegal activities are discovered
• make the relevant internal control procedures available to the personnel concerned
• create a folder in which each type of goods is linked with its own related customs information for example, tariff code, customs duty rates, origin and customs procedure depending on the concerned volume of goods
• appointment of responsible person(s) for managing and updating the customs regulations applicable (inventory of regulations): i.e. clearance or accounting, software
• inform and educate staff regarding inaccuracies and how one can prevent them from happening. Having procedures for recording and correcting errors and transactions in place. Encouraging the use of e-learning or other training to the staff who engage in customs activities

If an applicant wishes to amend the terms of their authorisation, they must inform HMRC immediately of the required change so that HMRC can take the necessary action. This may include any change in legal entity or any event that results in the business entering into an insolvency arrangement.  

Some changes may have minimum impact on the authorisations like change of directors, however in case the new director has a criminal record, this may have an effect on their authorisation.

Breach of a customs obligation

The applicant of an authorisation or existing authorisation holder has a legal obligation to ensure that they are operating in accordance with conditions set out in the authorisation notification. As soon as it becomes clear that they will no longer fully meet the terms of the authorisation, they must notify HMRC of the upcoming changes. The changes or new additions must be specified in the updated notification of authorisation.

To reflect activities carried out

Authorisation holder has to make sure they maintain a high level of control of their operations, and of the flow of goods, by means of a system of managing commercial and records in accordance with the conditions of their authorisation. Where there is a deviation from these conditions, such as changing the goods imported, the authorisation holder must amend their authorisation to reflect these changes.

Change of circumstances and review of circumstances

An authorisation holder may through monitoring or re-assessment of their position discover serious deficiencies in their business which means they cannot meet the conditions of their authorisation. If this is the case, the authorisation holder must notify HMRC via a voluntary disclosure. Other circumstances that should be notified to HMRC include a change of director, or the business entering into administration or an insolvency arrangements.

The applicant or authorisation holder must notify HMRC of any changes (applying for more authorisation) which may influence the continuation, or content of the authorisation. If the applicant or authorisation holder wishes to amend the terms of their authorisation, they must inform HMRC immediately of the required change so that HMRC can take the necessary action. These actions may include any changes:

• facilitations
• name of legal entity or persons named on the authorisation
• details of authorised person
• address of operation and address of location of records
• adding new locations
• name of intermediary and agent
• existing procedures
• retrospective authorisation
• to the goods and processes, including customs procedure code (CPC) and commodity code
• to the commercial stock system or duty management system

Suspension

HMRC may decide to suspend a customs authorisation instead of annulling, revoking or amending where: 

• there may be sufficient grounds for annulling, revoking or amending the decision, but does not yet have all necessary elements to decide on the annulment, revocation or amendment
• the conditions for the authorisation are not fulfilled or that the holder of the authorisation does not comply with the obligations imposed under that authorisation, and it is appropriate to allow the holder of the authorisation time to take measures to ensure the fulfilment of the conditions or the compliance with the obligations
• the authorisation holder requests such suspension because he or she is temporarily unable to fulfil the conditions laid down for the authorisation or to comply with the obligations imposed under that authorisation
• In cases referred to in the latter points above, the holder of the authorisation shall notify HMRC to take the decision of the measures he or she will take to ensure the fulfilment of the conditions or compliance with the obligations, as well as the period of time he or she needs to take those measures

Revocation

The authorisation holder may have their authorisation revoked where they no longer meet the authorisation criteria or if they fail to meet any condition to which the authorisation is subject. If the authorisation holder ceases to satisfy any eligibility criteria which applied when the authorisation was granted, the authorisation may also be revoked.  

An authorisation holder may make an application in writing to HMRC for their authorisation to be revoked or HMRC may revoke an authorisation, if the authorisation holder has been involved in a breach of a customs obligation.

Withdrawing authorisation

Where an authorisation is no longer required an authorisation holder can withdraw their authorisation, this is voluntary revocation. Voluntary revocation may not impact any other authorisations held, but authorisations should be ended when not needed to minimise the risk of misuse. More detail on specific processes that need to be followed with goods when ending a customs authorisation can be found within the customs handbooks referenced in earlier sections.

Discharging goods

When ending an authorisation the authorisation holder should discharge their goods within the period agreed in the application form. The period will start when the goods are placed under the customs procedure. If a longer period is needed the authorisation holder must contact HMRC before the period for discharge expires to apply for an extension.  

To discharge the liability of customs charges suspended on goods as indicated in the application form, the main processed products indicated in the notification of authorisation or unprocessed goods as indicated in the application form must be put to an eligible disposal. This must be done within the period for discharge agreed for the goods. Disposals may be made by:

• re-export (or export where applicable) outside the UK by a declaration entry
• declared to free circulation
• declared to another customs procedure using the appropriate customs procedure code (CPC). This movement will discharge the authorisation holder’s liability provided they record details of the date and reference particulars of the declaration entering the goods to the subsequent procedure. This information must be retained in their records in order to discharge their liability.
• a certificate of destruction is required from the disposal company used or, in the event of destruction on site, a self-certificate signed by a director of the company in order to discharge the procedure

Keeping records

When an authorisation is no longer required, the applicant or authorisation holder is expected to keep records pertaining to the economic activity of the business and form part of importing or exporting any goods of a class or description subject to a duty of customs (whether or not in fact chargeable with that duty). There may be situation where the authorisation holder is not carrying on a trade or business which consists of or includes the importation or exportation of customs goods but is concerned in some other capacity in such importation or exportation.

The applicant of an authorisation or authorisation holder must contact HMRC as soon as they become aware that there will be changes that will have an impact on the eligibility and conditions of their authorisation. Any delay in notifying HMRC of the changes may result in annulling, suspension or revocation of the authorisation.