News / BIFA warns of 'very real risks' of acting as an indirect representative

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BIFA has urged its members to be more cautious while acting as ‘indirect representatives’, following an increase in HMRC actions against forwarders failing to pay correct duties.

This week, the UK forwarding association said its members had been targeted in relation to valuation issues surrounding Chinese imports into the UK, cleared on a delivered duty-paid (DDP) basis.

One industry source told The Loadstar: “Any serious forwarder knows, or ought to be aware of, the very real risks in acting as an indirect representative.

“The Chinese e-commerce situation was flagged as dodgy from the start, and no serious player would have taken up the opportunities that looked great on paper, but now perhaps are coming back to haunt those that took it on.”

Brexit catalysed an uptick in forwarders offering indirect representation (IR), many of which have ignored advice on proper due diligence, particularly when it comes to Chinese e-commerce.

Another source said IR offered an additional revenue stream, but with this a UK-based entity making customs declarations on behalf of non UK-established importers is wholly liable for taxes and duties owed, and BIFA has been vociferous in warning against it.

BIFA said: “The association has published numerous articles on the subject of establishment, representation and the dangers of being an indirect customs representative.

“In this situation, with no other entity established in the UK, it is the import agent who has acted on an indirect basis that, in reality, finds themselves liable for under-paid duties and, more controversially, VAT.”

The industry source said there were “very few cases where any serious forwarders” operated as an IR and, if it did happen, it was usually for existing clients of EU partners prior to Brexit.

HMRC was contacted for comment, but has yet to respond.