Committee highlights defects in customs and excise regulations

Select Committee on Statutory Instruments

At its meeting this week the Select Committee on Statutory Instruments (SCSI) scrutinised 11 tax and customs-related SIs, reporting four of them for being defective in various ways.

The role of the SCSI (a committee of MPs with expert support) is to assess the technical qualities of each instrument that falls within its remit and to decide whether to draw the special attention of the House of Commons to any instrument on one or more of a range of grounds, including defective drafting, lack of clarity, unjustifiable delay or going beyond the authority granted by the parent legislation.

The four SIs deemed defective by the committee are –

SI 2018/1248: Customs (Import Duty) (EU Exit) Regulations 2018
This instrument is one of a number made under the Taxation (Cross-border) Trade Act 2018 to establish a new stand-alone customs regime for the UK in preparation for its withdrawal from the EU. These Regulations make provision regarding customs declarations and duties, valuation of chargeable goods, guarantees, and related matters.

Reported for requiring elucidation and for defective drafting. HMRC has undertook to make a relevant amendment before exit day and to correct a number of what it acknowledges are drafting errors.

SI 2018/1258: Customs Transit Procedures (EU Exit) Regulations 2018

Like S.I. 2018/1248, this instrument is made under the Taxation (Cross-border) Trade Act 2018 to establish a new stand-alone customs regime for the UK in preparation for its withdrawal from the EU. These Regulations set out the details of the various transit procedures that will form part of that regime.

Reported for requiring elucidation, for defective drafting and for failure to comply with proper legislative practice. One of the examples of defective drafting is the use of the phrase “which they have decided to approve, and have not decided to approve” in paragraph 23(6)(a) which, the committee notes, “appears to be an absurdity”. It notes that the original EU provisions which distinguish clearly between “seals of a special type in use and … seals of a special type that it has decided not to approve”. This part of the report is also notable for an interesting debate over whether a failure to ‘satisfy domestic standards of clarity’ is acceptable if it results from copy-out of EU law. In short the committee decides it was, but isn’t now (after Brexit) except that in this instance it is because it relates to a Convention the UK intends to accede to as soon as possible after exit day in its own right.

S.I. 2019/13: Excise Goods (Holding, Movement and Duty Point) (Amendment etc.) (EU Exit) Regulations 2019 and S.I. 2019/14: Excise Duties (Miscellaneous Amendments) (EU Exit) Regulations 2019

S.I. 2019/13 amends the Excise Goods (Holding, Movement and Duty Point) Regulation 2010, in particular, those parts that relate to movements of goods subject to excise duty between the UK and EU countries. S.I. 2019/14 makes further miscellaneous amendments to secondary legislation to address deficiencies arising from the withdrawal of the UK from the EU without a withdrawal agreement.

Both reported for failure to comply with proper legislative practice. Specifically both instruments refer to provisions of customs legislation made in public notices, certain of which have not yet been made.

The seven SIs given the OK by the committee are:

Instruments requiring affirmative approval

• S.I. 2019/73 Value Added Tax (Tour Operators) (Amendment) (EU Exit) Regulations 2019
• S.I. 2019/113 Customs (Records) (EU Exit) Regulations 2019

Instruments subject to annulment

• S.I. 2019/43 Value Added Tax (Finance) (EU Exit) Order 2019
• S.I. 2019/59 Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019
• S.I. 2019/60 Value Added Tax (Accounting Procedures for Import VAT for VAT Registered Persons and Amendment) (EU Exit) Regulations 2019
• S.I. 2019/83 Income Tax (Pay As You Earn) (Amendment) Regulations 2019
• S.I. 2019/91 Value Added Tax and Excise Personal Reliefs (Special Visitors and Goods Permanently Imported) (Amendment) (EU Exit) Regulations 2019

The full SCSI report can be read here. The committee’s other reports can be read here.

European Statutory Instruments Committee

The European Statutory Instruments Committee (ESIC) is appointed by the House of Commons to examine and report on draft SIs, including whether a negative procedure SI should be instead subject to the affirmative procedure.

The Customs Safety and Security Procedures (EU Exit) Regulations 2019

The EU has a safety and security policy for customs across Europe, governed by the Union Custom Code (UCC) legislation. It protects the EU against potential threats such as terrorism and the trade from illicit goods such as guns and drugs. The policy is designed for information on goods to be shared and risk assessed before they arrive in or leave the EU. This is to facilitate the movement of legitimate trade into or out of the EU. These Regulations remove or replace references, phrases, processes and terms that will be inoperable in a no deal scenario and ensure the Authorised Economic Operator (AEO) programme, which provides the security of international supply chains, is maintained.

The ESIC states that the safety and security requirements of the new UK-only customs regime will operate at UK ports is of national commercial, economic and security significance. The committee therefore recommends that the appropriate procedure for the instrument is for a draft of it to be laid before, and approved by a resolution of, each House of Parliament before it is made (i.e. the affirmative procedure) on the ground that it is of political and legal importance. The government’s response is awaited but it is expected to accede to the committee’s recommendation.

SIs recommended for the negative procedure include:

• Cash Controls (Amendment) (EU Exit) Regulations 2019
• Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019
• Customs (Enforcement of Intellectual Property Rights) (Amendment) (EU Exit) Regulations 2019
• Mutual Assistance on Customs and Agricultural Matters (Revocation) (EU Exit) Regulations 2019

By George Crozier, CIOT Head of External Relations.