Recent reports of warehouse operators being pursued for disproportionate and even unlawful penalties by HMRC officers have raised concerns at UKWA that the sector is being treated unfairly.

The apparent failure of HMRC to recognise the difference between error and criminality is uncomfortably reminiscent of the scandal surrounding the Post Office’s pursuit of small businesses – namely sub post offices – which grabbed the news headlines again just weeks ago as those wrongly accused were exonerated.

Although now resolved with the help of UKWA, one of our members – an excise warehouse keeper – found themselves being pursued by HMRC for multi-million pound assessments in a case of alleged outward diversion fraud, despite having followed all correct procedures and carrying out the necessary due diligence.

Another warehouse keeper who inadvertently breached conditions of the warehouse approval, had goods seized by HMRC, leading to massive disruption to the warehouse keeper’s business. UKWA’s Excise expert, Alan Powell, confirms that in this instance the conditions imposed by HMRC were unlawful. Fortunately for our member, Alan was able to intervene in this case to ensure all the offending conditions were removed. These are just two examples of inappropriate and unfair penalisation of warehouse operators, many of which, according to Alan, are due to a misunderstanding of the law and a failure on the part of HMRC and Border Force to read the relevant sections of HMRC’s own public notices.

The situation is compounded further by the complex process of contesting the legality of such seizures. If the seizure is not contested, it is considered a legal action, even if HMRC and Border Force have acted unlawfully and the movements themselves were entirely lawful. This is treacherous territory and truly terrifying for an SME without either the resources or access to expertise required to negotiate through the labyrinthine process of challenging HMRC.

HMRC can levy potentially crippling penalties under the Finance Act 2008, fining warehouse owners merely for making errors, and at present there is limited scope for defence against what are virtually absolute penalties. The problem here – and the parallels with the Post Office scandal – are clear.

Our role is not to bash HMRC. We understand the importance of their work and support the pursuit of those deliberately defrauding the Government.

However, while we wholly condemn criminal activity, as the voice of the industry we will call out HMRC for overzealous treatment of companies who have made honest administrative errors based on either oversight or misunderstanding. Warehouse keepers are the facilitators of the movement of goods through the supply chain, they are not the owners of the goods and have no equity in the cargo they handle. Therefore, for HMRC to place such onerous responsibilities on their shoulders is unfair and the imposition of punitive fines, simply for error, unacceptable.

Peter Ward


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