The real risk of customs non-compliance to your company

Disruption
and loss
resulting from
inadequate
or failed customs
procedures, systems
or policies, customs
employee errors or
customs systems failures,
can have a huge impact
on your
business.
Companies
often make
the mistake
of thinking
that Customs
formalities
are merely
“admin”, the
result being
that many
functions
are allocated
to the most
junior
personnel,
without
management having
a full understanding
of the importance or
consequences of what is
involved. For instance,
it is crucial to keep
accurate registers for
customs warehouses or
rebate stores, but time
and again these are left to
people without adequate
knowledge and without
the registers periodically
being checked or audited.
An entry clerk, simply
left to frame entries, for
which payment received
is nominal, may not be
aware that he/she may be
dealing with high value/
high risk commodities.
Someone without a
proper understanding
of matters might think
that little harm might
come from allowing a
third party transporter
to use a company’s road
bond (reputable company
providing upfront
payment), until the
goods are
diverted
and Sars
calls for
full value
of the
goods for
forfeiture,
as well as
duty and
VAT.
Licensing
and
registration
is another
potential
area of risk,
as is a lack
of understanding of the
processes allowed or to be
followed for either rebate
stores or the variety
of species of Customs
warehouse.
Frequently, issues
arise out of change of
ownership of goods or
where goods are subjected
to a process or to handling
that is not allowed. This
prejudices their status
as “bonded goods” and
causes Sars to assert that
duty and VAT must now
be brought to account,
together with penalties
and potentially an amount
of money in lieu of
forfeiture.
On many an occasion,
personnel ask Sars if they
can do something, which a
particular official allows,
only for the company to
later be told that such
action is unlawful. It is
imperative that you have
permission in writing,
otherwise such approval
is meaningless. One can
also not raise the fact
that Sars did not pick
up a discrepancy in an
earlier audit as an excuse;
ignorance of the law does
not f ly.
So, what is the real
risk of customs noncompliance
to your
company? There are
many victims out there
that can vouch for the fact
that the cost of unknown
non-compliance can be
devastating. Delays in
the release of imported
goods can run into
thousands of rands in
storage, demurrage, late
delivery penalties or even
cancelled contracts. Sars
can seal premises pending
an audit or remove
computers and phones to
download information,
leaving businesses
crippled pending
finalisation. Product lines
can become unprofitable
because of unforeseen
costs or consequences and
directors/management
can find themselves faced
with demands in their
personnel capacities in
terms of section 103 of the
Customs Act.
It is imperative that
management fully
understands the business
risks, given that the
Customs Act is selfregulatory.
Customs
compliance goes hand in
hand with operational risk
and, as such, companies
need to ensure top-down
knowledge of required
compliance areas and the
correct level of expertise
for proper implementation
and fulfilment of
responsibilities.
INSERT
There are many
victims out there
that can vouch for
the fact that the
cost of unknown noncompliance
can be
devastating.
– Quintus van der Merwe
CAPTION
By Quintus van der
Merwe, head of
international transport,
trade & energy at
Shepstone & Wylie
Attorneys