Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



CUSTOMS COMPLIANCE FOCUS FOR 2011 – 2012 AND VOLUNTARY DISCLOSURE

Those involved in the air cargo industry would be aware of the importance of complying with the requirements of Government agencies both in Australia and overseas.

One of the agencies which has an immediate impact on industry is the Australian Customs and Border Protection Service ("Customs").  Compliance is important, not just to ensure the correct revenue is paid but to ensure accurate reporting and authorised movement of goods.  Failure to comply can attract financial penalties and intervention in the supply chain for goods being imported and exported.

Accordingly, there was significant interest in Customs' recent seminars entitled "2011/12 Compliance Focus".  Customs used those seminars to stress in particular, that "deliveries without authority" are a major area of concern and will be a specific focus of increased compliance action.  Customs also stressed the importance of voluntary disclosure of false or misleading statements that have previously been made to Customs.

In the seminars held around the country, Customs highlighted the following areas of concern:

  • deliveries without authority;
  • cargo control issues associated with major resource projects;
  • cargo reporting timeliness and accuracy;
  • goods of consumer safety concern;
  • imported drug precursors;
  • export of strategic goods;
  • undervaluation of imported goods;
  • incorrect luxury car tax payments; and
  • low value threshold issues (SACs).

As mentioned earlier, a key focus of the seminar and a key focus for Customs Compliance action, will be on deliveries without authority.  Moving goods without the authority of Customs, or simply not being able to account for goods that are subject to Customs control, is subject to a variety of responses by Customs including prosecutions for a fault based offence or a strict liability offence.  A strict liability offence is one where a person can be guilty of the offence even if that person believed an authority to deal had been issued and there has been no intention to commit the offence.  Customs also has the option of issuing an Infringement Notice where it believes a strict liability offence has been committed.  The issue of Infringement Notices is governed by Guidelines issued by Customs.

Customs has stated that it will not tolerate movement of goods without authority as it compromises Customs' ability to monitor goods and the integrity of the borders.  Customs is much more likely to issue a financial penalty, such as an Infringement Notice, in respect of deliveries without authority, than for other types of offences.

Customs also emphasised the benefits of voluntary disclosure of false or misleading statements to Customs.  It is an offence to make a false or misleading statement to Customs (regardless of whether the statement results in an underpayment of duty).  However, no offence is committed in respect of the false statement if voluntary disclosure is made (subject to certain conditions governing how the voluntary disclosures are to be made).  An incorrect statement can result in an offence being committed, even if the incorrect statement was unintentional. 

Our experience is that Customs responds very favourably to entities that voluntarily disclose incorrect statements.  Customs also commented that past voluntarily disclosure is a factor taken into account in respect of future breaches where there has not been voluntary disclosure.  A history of being voluntarily compliant will make it easier to convince Customs that any breaches of the law discovered by Customs were inadvertent and do not warrant a severe penalty.

Another comment made by Customs was that it will be making greater use of Infringement Notices.  Customs made clear that Infringement Notices will not be reserved for deliberate misconduct and can be issued even when there was no intention to breach the law.  A number of those in industry may consider that Infringement Notices are a minor matter, given that the level of penalties are relatively low.  However, an Infringement Notice represents evidence that Customs believes there has been commission of an offence which could lead to heavier penalties and prosecution in the future and could also adversely affect those holding licences issued by Customs.  As readers would be aware, one condition of most licences issued by Customs is that the licence holder is "fit and proper" and has not breached relevant legislation.  It should be kept in mind that there are mechanisms to appeal the issue of an Infringement Notice.

Given Customs' stated approach, we strongly recommend that if you are aware of any possible breaches, you contact us to discuss the best way of disclosing those breaches to Customs.  In most cases, voluntary disclosure will have the result that there has been no breach of the Act.  Even if this result is not achieved, voluntary disclosure will almost certainly result in a better outcome than if the breach is discovered by Customs.

Please contact us if you would like further information regarding Customs' compliance focus in 2011/12 or how to manage voluntary disclosure of any potential breaches of the Act.

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