UK export control law breaches attracting million pound civil penalties

Stacy Keen of Pinsent Masons was commenting after the details of four compound settlements issued by HM Revenue and Customs (HMRC) to infringers of export controls earlier this year were made public by the UK government.

Export control breaches are criminal offences, but the 1979 Customs and Excise Management Act allows HMRC to "compound" offences and offer civil settlement penalties in lieu of referring the matter to the Crown Prosecution Service (CPS). A compound penalty can be up to three times the value of the goods exported, but a significant discount can be offered if a firm discloses potential breaches to HMRC on a voluntary basis – and subsequently agrees to cooperate with its investigation.

The largest of the four latest settlements made public was reached last month. The government said £920,437.20 was paid relating to the unlicensed exports of ‘dual use’ goods as part of the settlement. Dual use items are particular goods, software or technology which can be used for civil and military purposes.

The value of the other compound settlements reached in the other three cases were £217,012.50 in respect of unlicensed exports of dual use goods, and £4,100 and £2,912.16 respectively in relation to unlicensed exports of military goods.

The government also revealed details of a guilty plea made in criminal proceedings concerning UK export controls in a case where it was suspected that controlled chemicals had been brought to the UK without a licence. The company behind the activity was fined £600 and made liable for a statutory surcharge and court costs.

Keen said: “The recent stats show that compound penalties around the million pound mark for breaching the UK’s export control laws are no longer uncommon.”

“The very low value of the penalty in the criminal case is surprising given that it arose from an ‘investigation into the suspected deliberate evasion of UK export licencing controls’ and this was not a case involving a breach that was voluntarily reported, the shipment having been stopped by Border Force,” she said.

“While the implications of being convicted of a criminal offence can reach beyond the financial penalty – disclosures and details may be requested as part of tenders, insurance premiums will likely be raised, and the ability to utilise UK general licences may be restricted, for example – this does appear to be a missed opportunity to demonstrate a tough stance on export control breaches generally and evasion specifically,” she said.