Over the past few years, Customs has introduced several initiatives under the Customs Modernization Programme, such as Registration Licensing and Accreditation (RLA), Advance Payment Notifications (APN), VAT number verification, and new commercial invoice requirements, to mention a few.
These have been introduced with advance notifications, and Customs has repeatedly issued notices advising traders to comply with the requirements. In some instances, enforcement dates were extended several times, allowing traders to comply.
Warnings of possible penalties were also published through various channels, as well as warning letters issued to specific Customs clients.
Along with these new developments, Customs also identified other areas of concern such as unfinalized provisional payments, unattended Customs queries, and supporting documents not received.
Customs has, quite correctly, identified this as a concern, mainly due to officers having to follow up on historic cases rather than being utilized for current functions such as expediting releases, conducting inspections, and basically facilitating trade.
Over recent months, there has been a significant increase in actions taken by Customs to ensure compliance. Clients who have not completed the on-boarding process for RLA have been issued warning letters notifying the intention to suspend registration i.e. the Customs Code will be suspended until compliance.
Similarly, notices of intent are currently being issued notifying Clearing Agents that their licence will be suspended pending finalization of outstanding provisional payments.
Declarations are more frequently being rejected, rather than queried if, for example, the VAT Registration number cannot be verified against the Customs Code. Declarations may also be rejected if invoice requirements are not adhered to, or if an APN has not been correctly declared.
Compliance with the Customs Act is a basic requirement for South Africa to conduct international trade and those who deliberately defraud the fiscus, or who are not compliant, should accept the consequences, subject, of course, to Customs following due process in issuing penalties or notices of intent.
There are appeal processes in place to deal with decisions by the Commissioner, but these take time to finalize and there is an area of concern to be monitored.
If a clearing agent’s licence is suspended because of one client being non-compliant, the agent is therefore unable to conduct business with Customs on behalf of all their other clients. Within days, a company may suffer substantial financial losses, with the risk of losing staff.
Whilst not condoning non-compliance, one must ask if it would be reasonable to suspend a licence for an unfinalized provisional payment of R10 000? The next question then is, will Customs use the threat of suspending registrations and licences for less serious non-compliance matters?
The current economic environment, nationally and internationally, simply does not allow for a logistics company not to be able to conduct business with Customs due to a non-compliance with minimal risk to the fiscus.
Letters of intent must be read carefully and the terminology understood, firstly to ensure the appropriate response and, secondly, to ensure that the content of the letter does not exceed the boundaries of the offence. Non-compliance must obviously be dealt with, but dealt with reasonably.
