SGSAROA8000 - Assessment of risk and offence action - Irregularities discovered during BIS compliance visit
The use of open export licensing has increased dramatically over recent years. Use of these licences is subject to certain conditions such as registration, record keeping and referencing official and commercial export documents. BIS has a team of dedicated compliance officers who make regular visits to ensure that these licences are being used correctly and to audit sample exports. When, during the course of these visits, compliance officers discover irregularities they will send HMRC a copy of their audit report and suggest that the exporter makes contact. Strategic Exports and Sanctions Team act as a point of contact for these reports and, after consulting Customs B, will forward them for action by LBG or local risk teams as appropriate.
If the trader is shortly due for an audit then deal with these irregularities at the same time. Otherwise, consider in the light of the BIS report and your local knowledge of the trader, whether a visit is necessary to investigate the irregularity or whether the matter can be dealt with by telephone or written correspondence. If you intend to visit as a result of BIS report, contact the appropriate compliance officer to avoid overlapping visits. In any case let BIS and Strategic Exports and Sanctions Team know what action you have taken. Where possible, action should also be recorded on DCIS and or Centaur.
In the case of a first offence by an otherwise compliant exporter, or where the offence is relatively minor i.e. failure to quote the correct OGEL or OIEL on the SAD, then a warning letter should be sufficient. An example of a suitable warning is given in SGSAROA14000.
Where it is a second or subsequent offence, consideration should be given to Prosecution. However, before such action is considered, the local officer must refer to Customs A/B who will obtain legal advice from the Crown Prosecution Service (CPS) on whether there is sufficient evidence to secure a prosecution under CEMA s68(1) and whether there is a public interest in doing so.
Should the company decline to accept the offer to compound, we must be in a position to prosecute and we are bound to act in accordance with the Code for Crown Prosecutors, CPIA 1996 and the Attorney General’s Guidelines on Disclosure. In any case, report the matter to Strategic Exports and Sanctions Team and Customs B.
For offences which fall under CEMA s68(1), the maximum penalty awarded by the court can be up to three times the value of the goods involved. However, there is a need to consider the fact that these offences have not been detected by HMRC/UKBA. A policy decision has therefore been taken that, where the intention is to offer a compound settlement, the amount should be established on the same basis as that used to establish restoration terms where goods are seized for breach of export controls (SGSAROA7020). This takes into account not just the value of the goods, but also the circumstances surrounding the export. The basis of this policy is that where we detect the offence before the goods leave the country, we would normally limit our action to seizure, and then if appropriate, restoration. It therefore seems inequitable that a greater financial penalty should be imposed where HMRC/UKBA has not detected the offence and the goods have left the country.
Where there is any doubt as to the appropriate course of action, the local office should contact Strategic Exports and Sanctions Team who will take legal advice if necessary.