Introducing a voluntary standard for customs intermediaries

Question 1

Summary

Accepted Answer

Subject of this consultation

This consultation discusses the government’s proposal to introduce a voluntary standard for customs intermediaries, with the aim of improving the quality of service provided across the sector.

Scope of this consultation

This consultation seeks views on:

the objectives of a voluntary standard, and what format it could take
how a voluntary standard could be designed and implemented
the potential content of a voluntary standard
training and educational offerings for the intermediary sector, which would support the introduction of a voluntary standard

Who should read this

Customs intermediaries, traders (particularly those who use or are considering using a customs intermediary), and any other members of the border industry with an interest in and/or understanding of the customs intermediary sector.

Duration

This consultation will run for 12 weeks and 2 days from 5 June 2023 to 30 August 2023.

Lead official

The lead official is the Customs Intermediaries policy team of HM Revenue and Customs (HMRC).

How to respond or enquire about this consultation

Please send responses or enquiries to customsintermediariesconsultation@hmrc.gov.uk.

Additional ways to be involved

HMRC will be holding several webinars to engage with interested parties on the consultation. Should you wish to attend, please email us at customsintermediariesconsultation@hmrc.gov.uk.

After the consultation

HMRC will publish a summary of responses as soon as possible after the end of the consultation period.

Getting to this stage and previous engagement

In February 2022, HMRC and HM Treasury (HMT) published a Call for Evidence: An Independent Customs Regime, which included a chapter seeking views on the customs intermediary sector. A summary of responses was published in July 2022.

At Spring Budget 2023, the government announced that it would publish a consultation on introducing a voluntary standard for customs intermediaries.

Question 2

Foreword

Accepted Answer

At Spring Budget 2023, the Chancellor set out a package of measures to simplify customs import and export processes, and support the UK’s competitiveness and promote economic growth. This announcement followed on from the 2022 ‘Call for Evidence: An Independent Customs Regime’, and the measures complement wider transformational changes at the border that the government has committed to delivering, as set out in the 2025 Border Strategy.

The government recognises the significant role that customs intermediaries play in the facilitation of smooth international trade for UK businesses. A competitive, effective and high-quality customs intermediary sector is key to supporting the government’s ambitions for the border, and so HMRC and HMT asked for views on this important sector in last year’s call for evidence.

We know that many customs intermediaries provide a high-quality and invaluable service to traders, but feedback from the call for evidence told us that is not always the case. We also heard that it can be difficult for traders, who may be new to customs processes, to identify a good quality intermediary to support them with trade.

I want to ensure that our traders are able to easily identify and access a high-quality customs intermediary, so this consultation seeks views on introducing a voluntary standard for customs intermediaries, with the overall aim of improving standards across the sector.

I hope that a range of intermediaries, traders and any other interested parties will respond to this consultation, just as they did so invaluably to the call for evidence. Above all, I look forward to a collaborative approach to this next stage of the process, and to continuing to work effectively with the customs intermediary sector in supporting the UK’s ambition of being the best place in the world to do business.

Victoria Atkins MP
Financial Secretary to the Treasury

Question 3

1.  Background

Accepted Answer

The 2025 UK Border Strategy sets out the government’s vision for the UK border to be the most effective in the world. A border which simplifies processes for traders, improves the security and biosecurity of the UK and embraces innovation. As part of this, the government committed to work with customs intermediaries to help them deliver high-quality services for traders.

Customs intermediaries help traders to move goods across borders by ensuring they are meeting their obligations and moving goods efficiently through the customs system, and are therefore a key component in the operation of the border and the facilitation of trade. They normally complete customs declarations on behalf of traders, sometimes alongside other services, like paying tariffs or import duties and providing or arranging transportation of goods. They could be customs brokers or customs agents, fast parcel operators (FPOs), freight forwarders, warehouse operators and hauliers.

After the UK’s exit from the EU, more traders have sought the services of customs intermediaries as they adjust to the increased need for customs declarations. 78% of all customs declarations for international trade in 2022 were intermediated by a third party, and 99% of traders relied solely on the use of an intermediary to declare all of their trade (Source: HMRC Trade Statistics and Customs Analysis). It is a government priority to ensure that there is sufficient capacity in the customs intermediary market to support UK traders, some of whom may be completing customs declarations for the first time.

For that reason, the government provided substantial support to the sector to ensure it could grow to meet increased demand. This included around £80m of grant support to help nearly 5,000 intermediaries with new IT systems, recruitment, and training.

Following this period of significant change for customs intermediaries, in February 2022 we launched a Call for Evidence on An Independent Customs Regime (CfE). This included a chapter on the customs intermediary sector, which sought to understand if all traders, including small and medium-sized enterprises (SMEs), are able to access a customs intermediary at an affordable cost and that the service they receive is of high quality.

Responses to the CfE emphasised that intermediaries play a vital role in customs processes for many traders, and affirmed that there is sufficient capacity in the sector to support traders. Stakeholders thought that, in general, the cost of using an intermediary was proportionate to the services they provide, though several referenced a wide variation in costs between different intermediaries.

Feedback was mixed on the quality of the service provided by the sector. Most stakeholders said they had generally received a good or satisfactory service from customs intermediaries, but there were also accounts of poor-quality services being provided. These included experiences of incorrectly completed declarations leading to further complications for traders, issues with intermediary knowledge and experience, and more ‘customer service’ based issues around timeliness, communications and access to paperwork. In addition, some responses reported difficulties in comparing the quality of intermediaries before appointing one. These issues are set out in more detail in Chapter 3.

A number of intermediaries cited difficulties with adapting to new government systems and challenges adjusting to new processes as barriers to intermediaries providing a better-quality service, for example adapting to new requirements in the Customs Declaration Service (CDS), and resource required to transition. In terms of addressing issues, some stakeholders also called for the introduction of a licensing regime for UK customs intermediaries to address quality issues they had observed.

Following the conclusion of the CfE, we have been considering the feedback received on the intermediaries sector to inform policy development as part of the policymaking process. This consultation constitutes the next step in that process.

Question 4

2.  About you

Accepted Answer

We are looking for input from a wide range of intermediaries, traders, and anyone else with views on the sector, so questions in this section are for background information only, to help us contextualise your responses. We want to understand more about you and your experience of intermediation.

Question 1: What type of business are you? (such as clothes retailer, car manufacturer, freight forwarder, fast parcel operator, haulier)

Question 2: What is the size of your business? (Micro: 0 to 9 employees, small: 9 to 49 employees, medium: 50 to 249 employees, large: 250 or more employees)

Question 3: If applicable, how many movements do you make per year? Are they imports, exports, or both?

Question 4: If applicable, how long has your business been importing or exporting goods, or supporting traders to import/export if you are an intermediary?

Question 5

3.  Why we are consulting

Accepted Answer

Many responses to the 2022 CfE reported a good or satisfactory service from customs intermediaries, and also emphasised the important role that intermediaries play in UK trade. However, the responses that did raise concerns with the quality of service amongst intermediaries, drew attention to a number of areas.

Issues with intermediary knowledge and experience were the most frequently raised concern with the quality of intermediary service. When responses went into detail on this area, they focused on intermediaries’ knowledge of customs processes, rules and/or requirements, and ability to apply these or to advise traders on them.

Experiences of incorrectly completed declarations were also frequently raised as a quality issue, with responses detailing how incorrect declarations could cost traders in overpaid VAT or duties, in time spent correcting the errors, or in delays with goods held up. When a cause was attributed, it often related to intermediary knowledge levels, communications issues, or issues with intermediaries’ accuracy and quality assurance processes.

A number of responses also mentioned that it can be very difficult to compare intermediary quality before appointing one, particularly for SMEs, whilst others raised concerns around difficulties in changing intermediaries. Some responses also mentioned issues with the transparency of fees applied by intermediaries.

Finally, some stakeholders reporting quality issues raised concerns over what could be categorised as more generic ‘customer service’ issues, such as timeliness, poor communication, and difficulty accessing paperwork.

As above, in 2022, 99% of traders relied solely on the use of an intermediary to declare all of their trade. Intermediaries play a vital role in the operation of the UK border and are an important part of the process of moving goods for the overwhelming majority of UK traders. The government wants to ensure that traders are well supported by a consistently high-quality intermediary market, and this consultation is therefore considering policy responses to address these reported issues with the quality of service provided.

Specifically, we are considering responses to improve intermediary knowledge, improve the accuracy of customs declarations completed by intermediaries, and address the potential difficulties in comparing intermediary quality, while looking to address more customer service-related issues where possible.

This consultation is intended to capture stakeholder views on approaches that could deliver these objectives.

Question 6

4.  Potential approaches

Accepted Answer

Having identified the need for a policy response, there are several potential options that government could pursue. These can be broadly thought of as a spectrum, with each end attracting contrasting levels of government involvement (see below).

Figure 1: Spectrum of potential approaches

Note: this is illustrative only, not exhaustive.

At one end of the spectrum is the option to rely solely on the market to provide solutions. This would effectively constitute a continuation of the current approach and maintain the position of no government intervention, with the intention of allowing the market to settle and in doing so resolve its issues itself.

At the other end, there is the option for government to legislate to introduce a regulatory regime for customs intermediaries, similar to the licensing models adopted in other countries such as the US, Canada and Australia. This would involve introducing mandatory, regulated requirements for customs intermediaries, for example on competence, experience, or finances. Customs intermediaries would need to demonstrate that they meet, and continue to meet, these requirements in order to practice.

There are also options in the middle of the spectrum, in particular voluntary approaches such as standards or certification. These options would introduce an acknowledged standard for customs intermediaries that providers could choose to sign up to, but adherence would not be mandated by government as a requirement to practice.

Question 7

5.  The case for a voluntary standard

Accepted Answer

Any of these options are applicable to and could work in the customs intermediary sector. Many responses to the CfE included suggestions for potential next steps for the sector, and these fell across this spectrum of interventions.

Some respondents felt that the sector would develop on its own without any government intervention, whilst others suggested introducing a regulatory model, and others still recommended the introduction of voluntary standards.

Having considered the responses, as set out in Chapter 3, the government feels that at this stage intervention is appropriate, rather than maintaining the status quo. This is particularly in order to improve customs knowledge and declaration accuracy across the sector, but also to address the lack of mechanism for comparing the quality of intermediaries’ service and the difficulties this can pose for traders in identifying and engaging a good quality intermediary.

However, it is also the government’s view that the introduction of a mandatory regulatory regime for customs intermediaries, such as licensing, would not be a proportionate approach to pursue at this time. The sector has undergone a significant amount of change in recent years, in particular having scaled up to meet increased demand from traders following the UK’s departure from the EU. Introducing mandatory requirements to practice would represent another significant change to which the sector would need to adapt, which may be counter-productive to its continued development at this time. In particular, it is likely to impose costs and burdens on customs intermediaries, which may increase the price of trading and/or lead to unsustainable rates of market exit.

Being mindful of the need to strike a balance between a high-quality intermediary sector and the burdens placed on intermediaries to achieve this, the government therefore believes that introducing a voluntary standard for customs intermediaries would be an appropriate, proportionate and beneficial step for both intermediaries and their customers at this point in time.

Given the voluntary nature, this option would be less disruptive and burdensome than mandated regulation, whilst encouraging overarching improvements in quality and standards across the sector. It could also provide a mechanism to aid traders with differentiating between intermediaries, and be designed and implemented collaboratively between government and industry to ensure maximum effectiveness.

There are different forms that a voluntary standard could take, and these are explored in the following chapters.

Question 8

6.  Objective of a voluntary standard

Accepted Answer

Most simply, a standard is an agreed way of doing something. It could be for making a product, managing a process, delivering a service or supplying materials – standards cover a wide range of activities undertaken by organisations. It could include guidelines for industry to follow and commit to, while setting out what best practice should look like for consumers. While legislation may in some cases set a requirement to meet a standard, any standard introduced for customs intermediaries following this consultation would be voluntary, as set out in Chapter 5.

Standards can be developed to meet different objectives, for example to educate and inform by providing guidance or examples of best practice, or to encourage quality or consistency of approach in a specific sector. They can also provide varied levels and forms of assurance, which come with different burdens and costs to implement.

Standards with the main objective to educate and inform can also vary in purpose; some are largely intended to provide broad guidance and information on best practice, whilst others aim to set much more prescriptive and/or measurable requirements. Conformity to these types of standards could be self-declared or peer-reviewed, but they typically do not support independent, third-party verification of an organisation’s adherence to them. Therefore, claims from an organisation that they meet this type of standard are typically less costly, but any confidence that they generate in the market is largely limited.

Standards, and claims from an organisation that they meet them, can engender more confidence in the market that a service or product follows industry best practice by incorporating the possibility of independent, third-party verification. This type of standard must be specific and measurable, with clear and unambiguous requirements against which an organisation can be assessed. An organisation can then ask an independent body to verify that they meet the standard, in a process called conformity assessment or certification. Whilst there is no requirement of an organisation to undertake certification, this independent confirmation that the organisation meets the specific, measurable criteria outlined in the standard confers a higher level of assurance that the product or service is high-quality.

Accreditation is the confirmation that the independent organisations conducting certification are competent, impartial and apply the standard with integrity. It therefore offers an additional level of assurance that certification will deliver the right outcomes. Any independent body that requests accreditation must do so from the UK’s national accreditation body, the UK Accreditation Service (UKAS).

Certification and accreditation would therefore provide increasing levels of assurance and confidence that a customs intermediary meets the requirements of a voluntary standard. However, there would also be a cost implication. Intermediaries undertaking certification would likely incur a charge for doing so, although doing so would be on a voluntary basis, leaving intermediaries to determine if certification would be beneficial to their business.

Whilst all options have their merits, on balance the government believes that the most appropriate objective of a voluntary standard for intermediaries is to promote quality and consistency among customs intermediaries by providing an indication of a provider’s quality, rather than merely to inform and educate, and that this indication of quality should be independently assessed to provide a greater degree of confidence in an intermediary’s service. Therefore, we consider that the standard should be suitable for independent, third-party certification of intermediaries, with a requirement for those bodies providing the certification to also be accredited.

Question 5: Do you agree that the primary objective of a voluntary standard for customs intermediaries should be to promote quality and consistency among customs intermediaries with an indication of quality, rather than to predominantly inform and educate? If not, what do you consider should be its primary objective, and why?

Question 6: Do you agree that a voluntary standard for customs intermediaries should be suitable for independent, third-party verification that the standard has been met, in other words, certification? If not, what alternative form do you think the standard should take, and why?

Question 7: Do you think certification bodies that provide that external verification should themselves be checked to ensure they are capable of assessing conformity to the standard, in other words, accreditation? Please provide details to explain your answer.

Question 9

7.  Design and implementation

Accepted Answer

Whilst the section above discusses the objective of a standard, there are different ways in which a standard, including one suitable for independent verification, could be designed and implemented.

The government believes there are some key principles that this design and implementation process should incorporate. At the most fundamental level, it is our view that the process should be robust and should be undertaken in partnership between government, industry and interested parties, to ensure the standard is credible and works effectively for all parties. We also believe that the standard should be freely and readily accessible to anyone wishing to view and use it, and intend that its usage and effectiveness should be monitored.

The government therefore considers that an appropriate design process would bring together expertise from industry and bodies with experience of writing standards, along with government, to develop an objective and measurable standard by consensus. We also expect that this process would actively consider how to ensure the standard is freely available, and how it should be evaluated and monitored once implemented. One way to achieve this could, for example, be through working with the British Standards Institution (BSI), as the national standards body, which has established, robust design processes. However, the government intends to work with stakeholders on establishing the design process following the conclusion of the consultation, and at this stage is predominantly interested in views on the key principles for the process as outlined above.

Question 8: Do you agree with the key principles for the design and implementation of a standard as set out above (in other words a credible, collaborative approach between government and stakeholders, freely and readily accessible, monitored for usage and effectiveness)?

Question 9: In your view, how could usage of the standard be encouraged?

Question 10

8.  Content

Accepted Answer

As above, the government believes that the standard should be designed and implemented in partnership with industry and other stakeholders, and that the specific and detailed content of the standard should be arrived at through this collaborative approach. However, at this early stage, the government is interested in views on the broad areas that should be covered by a standard for customs intermediaries, which could be further refined through that design process.

There are no set requirements for what should be included within a standard for professions or service sectors, although there are some typical themes that are often covered. These include, but are not limited to:

education or competency requirements
levels of experience
commitments to continuing professional development (CPD)
customer service levels
IT or system requirements
appropriate insurance cover
established complaints and appeals procedures

There is no existing, comprehensive UK professional standard of this sort for customs intermediaries, but there are various other sources that can be considered relevant and from which inspiration could be drawn. These include, but are not limited to:

Whilst it may be inspired by typical themes and other sources, fundamentally the content of a voluntary standard for customs intermediaries will need to be appropriate to the sector and any requirements within it achievable.

The government’s view is that the following broad areas are likely to be key components of a voluntary standard for customs intermediaries:

competence and/or education and/or experience, to include ways of demonstrating sufficient understanding of customs processes and rules
staff development, to include commitments to CPD
systems and data, to include quality assurance processes
customer service, to include complaints procedures, dispute resolution mechanisms and timeliness
administration, to include record keeping and insurance
compliance with relevant statutory requirements

As above, the government would welcome views on these areas, including suggestions for the more specific or detailed requirements which could sit beneath these broad themes, but expects that the detail of these areas and how they are transformed into a tangible standard would be further refined and agreed as part of a collaborative design process.

Question 10: What are your views on the above suggested components of the voluntary standard? Please include any suggestions for potential specific requirements within these general areas.

Question 11: Should any of the suggested components not be included?

Question 12: Are there any areas missing that you feel should be included?

Question 13: Do you anticipate any unintended consequences arising from including any of the suggested content?

Question 14: Do you envisage any issues with measuring against these areas for the purposes of certifying intermediaries against this standard?

Question 11

9.  Training and educational offerings for the customs intermediary sector

Accepted Answer

As above, the government expects that a voluntary standard should make reference to a minimum level of competence, knowledge or education for customs intermediaries. It is a routine requirement in professional standards, and customers should be able to be confident that their intermediary understands customs rules and processes, and how to apply them. However, as detailed in Chapter 3, feedback from the CfE indicated that this isn’t always the case and that some intermediaries’ customs knowledge and understanding may be limited. Setting clear expectations of competence in a voluntary standard could encourage improvements in this area.

In order to attain those improvements, the requirements must be appropriate and deliverable. They should mirror or derive from existing educational provisions available to intermediaries, for example existing qualifications or training courses, and should also acknowledge that experience may provide a sufficient level of competence even in the absence of formal training or education. If they do not, and/or if there are insufficient opportunities, for example via training, for intermediaries across the sector to attain the level of competence set out in the standard, improvements are less likely to be achieved.

It is therefore important to understand what the current training and education provision for customs intermediaries looks like, and whether there are sufficient opportunities for intermediaries to improve their customs knowledge. We are aware that there are some providers offering customs training courses, with options ranging from 1-day online courses to masters level qualifications, and that some intermediaries are making use of these. These include the UK Customs Academy, which was set up to prepare the UK’s customs sector for trade in a post-EU Exit landscape. There is also a customs training providers register on GOV.UK, listing organisations who have submitted their details (training providers on this list and the courses they offer are not vetted, approved or recommended by HMRC. The information is provided to HMRC by the training providers and we do not verify or guarantee how current or accurate it is).

We also understand that some customs intermediaries may provide their own internal training, either instead of or in addition to undertaking externally run training, although this provision will differ from intermediary to intermediary. We are keen to understand whether intermediaries are making use of either or both internal and external training, and the reasons for this. We also welcome further views or information on the current training and educational offering, and in particular whether it provides adequate support to upskill intermediaries across the sector.

We also welcome initial views on how competence should be referenced within a voluntary standard, and whether it would be appropriate to refer to particular qualifications, courses or experience in doing so. However, as set out in Chapter 8, we expect that this aspect of the standard would also be refined as part of the collaborative design process with industry.

Question 15: If you are an intermediary, do you or your organisation use external training offerings? Please provide details to explain why/why not.

Question 16: If you are an intermediary, do you or your organisation provide internal training? Please provide details to explain why/why not.

Question 17: If you answered ‘yes’ to Question 15 or Question 16, what aspects of your work do you use external and/or internal training for? If you use both external and internal training, please explain if you use them for different aspects of your work (such as external training on customs processes, but internal training on using CDS).

Question 18: If you answered ‘yes’ to both Question 15 and Question 16, have you found either external or internal training to be more beneficial to your day-to-day work?

Question 19: Do you think there are currently sufficient, adequate training offerings available to intermediaries? Please provide details to explain why/why not.

Question 20: Considering the training and qualifications available to and undertaken by intermediaries, how do you think competence or education should be referenced within a voluntary standard? Please provide details to explain your answer.

Question 12

10.  Assessment of impacts

Accepted Answer

Summary of impacts

Year	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028
Exchequer impact (£m)	nil	nil	nil	nil	nil	nil

Exchequer Impact Assessment

This is not expected to have an Exchequer impact, but this will be revisited once the policy is fully developed.

Impacts	Comment
Economic impact	This consultation is not expected to have any macroeconomic impacts. Any proposals that are taken forward following the consultation will be individually assessed and any significant macroeconomic impacts will be communicated.
Impact on individuals, households and families	There are expected to be no separate impacts for individuals at present. Any future impacts will be fully examined and detailed.
Equalities impacts	It is not anticipated that there will be impacts for those in groups sharing protected characteristics by launching the consultation.
Impact on businesses and Civil Society Organisations	The introduction of standards may have a small cost to businesses which will become clearer depending on the design of the standard. Further impacts will be further considered following the conclusion of the consultation.
Impact on HMRC or other public sector delivery organisations	Any additional delivery funding requirements will be assessed following the outcome of the consultation.
Other impacts	None identified at this stage.

Question 13

11.  Summary of consultation questions

Accepted Answer