Reforming the Intermediary Sector
Since we left the EU, UK companies have been grappling with challenging new arrangements when trading across the Channel. Businesses now face significant changes to the way they deal with customs controls at the border. As a result, many have turned to intermediaries, who provide specialist services to reduce the bureaucratic burden of these new importing and exporting requirements.
These specialist services include transportation, storage, packaging, warehousing, customs clearance and documentation, meaning firms themselves don’t have to invest in the necessary expertise, although of course they do come at a cost.
With the rise in demand for these services, HMRC is looking into how effectively the industry is performing, and how businesses can get more from the intermediary market. View our full response here.
Our research has found that the majority of IoD members who import and or export use an intermediary for their customs work. Many use customs agents for the end-to-end process of their customs work since they do not have the capacity to do this themselves. Our survey data shows customs changes is consistently the most challenging aspect to EU trade, so it is important firms have the support they need in order to alleviate this hassle. In our March 2022 trade survey, 44% of respondents said they are finding customs changes challenging, 83% of which are SMEs.
A common theme among members who have used an intermediary has been that when the new trading arrangements with the EU were first introduced, their customs agents didn’t necessarily have all of the relevant knowledge needed and mistakes were therefore made, often at the expense of the business. Similarly, despite the situation having subsequently improved on the EU front, members have found that beyond the EU, intermediaries aren’t as confident, for example working under Free Trade Agreements. Members have told us that it would be more helpful for the intermediary sector to have a closer working relationship with HMRC.
In this way, intermediaries would be held more accountable for the work that they do on behalf of businesses, since as a result of Brexit, firms are increasingly reliant on support such as the services intermediaries provide. The US for instance has much stricter licensing regulation for customs brokers under US Customs and Border Protection. Following this example, with a system whereby customs agents are held responsible for their own customs work whether through a certification requirement, a qualification, or through stricter monitoring, businesses would avoid unjustly paying the price for mistakes that are not necessarily their own.
The counter argument is that there would consequently be fewer available customs intermediaries for businesses to engage with. However an accountability based approach would see fewer mistakes being made, and therefore increased efficiency of the sector as a whole.
