Tuesday 17th Oct, 2017

INDUSTRY OPINION: Compliance communication concerns

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I AM becoming increasingly concerned about the deterioration in the relationship between customs brokers and DIBP at the operations level. We should be their greatest asset, especially given the greater average experience and in-depth training of brokers, but instead and increasingly we are excluded from any information that may assist compliance or allow post warrant amendments prior to an audit.

Given that the compliance reports show that about 50% of recovered underpaid duty is through Voluntary Disclosure it would seem to be a no brainer.
A customs broker sees every one of the consignments over $1000 that are imported and can therefore actively assist in compliance and recovery of shortpaid duty.

DIBP officers see what? 4%? And with limited staff and resources how long does finalisation of a matter unnecessarily blow out as a consequence?

A perfect example of this is in what appears to be the current approach to working with brokers on compliance.

Rather than advising industry that a matter has been discovered that may warrant review and adjustments, as happened in the football TCO matter in 2016, the opposite appears now to be occurring.

Let me give you just three examples:

  1. Cider – if you are not aware of this, Sleeping Beauty, you really have been asleep for 100 years. The matter revolves around Additional Chapter Note 5, which requires, inter alia, that cider is made only from apple or pear juice and contains no flavouring substances. Audits have been occurring for at least two years and I understand large posts have been collected. Wouldn’t it have been faster to advise industry of the issue and specify a period within which posts must be lodged?
  2. Temporary imports under s.162 – I have already written about this, but the matter revolves around not all temporary imports being able to claim s.162 because Australia did not accede to all the Annexes to the Convention. Who knew? DIBP patently didn’t when they issued the 1999 ACN on procedures to be followed, and perhaps didn’t when the Regs were amended in 2015, but they’ve found out since. A broker will have only found out if they’ve been caught up in an audit and threatened with a demand for the duty and GST shortpaid when s.162 did not apply. I am aware of brokers being threatened with penalties in these matters.
  3. This last one is my personal favourite. A DIBP team has decided that the method of calculating the Valuation Date should be changed, with no prior reference nor consultation on this changed practice with industry.
    The Valuation Date is important because that is the date used for currency conversion. The legislation provides at CA s.161J that it is the date that the goods departed from their place of export. As this is often difficult to ascertain for sea freight, DIBP long standing policy and practice as outlined in ACN 2001/01 and the valuation “Instructions and Guidelines” has been to use the “on board” date on the bill of lading. The current suggestion is that brokers should find the date the container passed through the gate at the terminal. Neither a fast nor a realistic suggestion of course, especially when the net difference in duty payable as a consequence of varying exchange rates over a day or two would be small. Importantly, it is not in accordance with our Government’s published instructions that unnecessary documentation and procedures be reduced. It is also not in accordance with the Department’s own published trade facilitation agenda, which appears to be understood amongst senior officers but is taking a while to seep down.

The compliance report published by DIBP each quarter is a valuable document, but would be more so if it contained more synopsis of facts for major and/or recurring problems so that we can more effectively aid our clients in compliance.
Given that, however, how much reliance can we place on the figures when we know they are skewed as in point three above?

The last compliance report showed the largest amount of errors as incorrect valuation date. If we cannot rely on accurate reporting of compliance issues it is harder to identify areas that need improvement or review.

Too often as brokers, we pick our fights and make commercial decisions to not pursue disputed matters further.

Perhaps the time has come that we revisit those decisions where the legislation and DIBP past policy and practice clearly support your contentions.

Back yourself and your knowledge because, if you do not, an error that is no error may be recorded against your licence and the corporate brokerage licence.

If you are threatened with penalties in these or other such matters, may I suggest you appeal the decision, obtain Rulings, and, importantly, refer it to your industry association and (where appropriate) obtain legal advice and assistance.

Remember that a penalty cannot be issued without due process.

Compliance is compliance however it is achieved, especially if the objective is only to recover shortpaid duty rather than collect penalties.

* Susan Danks is a licensed customs broker and the owner of Susan Danks Tariff Consulting.

From the print edition October 5, 2017

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