Drug, gun fear over import checks

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Gun runners, drug smugglers and rogue traders are reaping the benefits of low levels of checks on imports to the UK, an MP has claimed.

Edward Leigh, the chairman of the House of Commons Public Accounts Committee, also warned tax revenue was being lost because of the lax regime.

His warning came as a report showed physical checks are done on just 2-3% of imports from outside the EU.

The National Audit Office report said HM Revenue and Customs was fragmented.

The report from the spending watchdog also raised concern over a decline in the number of audits of traders carried out by HM Revenue and Customs (HMRC).

'Alarm bells'

Audits fell by half for large business and two-fifths for small and medium businesses between 2005/06 and 2007/08.

The chance of a trader receiving an audit fell from 18% to less than 10% over this period, and the levels of errors detected rose from 32% to 39% among smaller businesses.

However, the National Audit Office (NAO) praised HMRC for clearing most imported goods quickly and ensuring that processes for submitting customs declarations and making payments for non-EU imports are straightforward.

But it warned that "fragmented" management of customs activities, a lack of clear accountability and incomplete information were hindering effective oversight of performance and risk management.

The UK imported goods worth £186bn from outside the EU in 2007/08. The £2.3bn paid in customs duty and £19.2bn in VAT on those imports account for almost 5% of total tax revenues.Mr Leigh is worried about counterfeit goods reaching the UK

Mr Leigh said: "Today's NAO report rings alarm bells about HMRC's control of imports.

"The department's management of customs activities is described as fragmented and the report highlights a lack of clear accountability and incomplete management information on compliance levels.

"The department has only just started recording the number of examinations carried out at the UK border and it turns out that only some 2%-3% of imports are being physically checked. This is well below the EU average of 9%.

"Another cause for concern is that there has been a sharp decline in the number of audits of traders by the department. Moreover, the level of errors detected in traders' returns is rising, especially among new traders.

"All of this can only make it easier for rogue traders to bring prohibited and restricted goods - such as counterfeit goods, drugs, guns and ammunition - into the country and for them to dodge paying the right amount of duty and taxation."

'Meaningless comparison'

The head of the NAO, auditor general Tim Burr, said: "HMRC has made it easier to import goods into the UK. The lack of information on compliance levels and the declining number of trader audits does however risk diluting the control the department has over imports.

"It needs to develop minimum levels for checks and trader audits, so that importers pay the right amount of tax and duty, and fully comply with the laws on prohibited and restricted goods."

An HMRC spokesman said: "The customs freight handling system (CHIEF) is able to check all import and export declarations, totalling around 30 million every year. In addition, HMRC has other systems and methods to look for irregularities and anomalies.

"This use of technology, coupled with risk and intelligence, means that we only need to stop and look at those goods genuinely requiring additional checks.

"Other EU customs authorities have different and frequently wider remits, so direct comparisons relating to numbers of physical checks are difficult and often meaningless."