New Processes for Voluntary Disclosure

The website of the Dept Immigration & Border Protection (DIBP) released guidelines last week as to DIBP’s requirements for the voluntary disclosure of errors in import declarations. This is provided for under s.243T & s.243U of the Customs Act. (I’m surprised anyone found it given the lack of notice of its release.) No indication was provided as to any industry consultation prior to the release and, given no commentaries have been published other than by members of industry, it appears that none occurred. 

Hint: it’s never too late for DIBP to genuinely consult industry and those bodies that represent it NOR is it too late for the industry body to seek discussion and a review of this unrealistic new process.  

Let’s first review what these sections of the Act – rather than this new process – require. These sections both contain qualifiers in respect of what is “voluntary” and they should be carefully read. Just as importantly it should be noted that once a notice that monitoring powers are to be exercised is given under s. 214AD, a voluntary notification of an error/false and misleading statement after the notice is given is not a defence to a prosecution for an offence against section 243T or 243U.

In simple terms the Act requires that a written notice (called an “error notice”) be provided to an officer that an identified error has occurred and then, that any shortpaid duty is paid in full before proceedings such as an infringement notice are initiated.  That’s it.

In operational terms, the process has been that the “error notice” is provided to DIBP once the parties / their consultants become aware that an error has occurred. It would be expected that along with the notification of the error, the notice would also advise that documents and further information was being obtained and posts would subsequently be lodged. If a ruling as to tariff classification or valuation or origin was required that ruling request would be lodged at or about the same time. The principle in this process is to advise the regulator as soon as possible and as required by the Act and thereby protect the client from penalty while the matter is properly reviewed and adjustments prepared. In general part of this process is at least one conversation with an officer to discuss matters such as timing, requirements, etc.

This new process requires that ALL of the work required in completing the adjustments, including documentation, adjustment calculations in spreadsheet format, copies of TA / VA (and how long are THOSE decisions taking?) be lodged with the error notice. It is quite conceivable that this process could delay written notification of the error by weeks or even months, given the time required to put these matters together plus the taken to obtain any ruling. Why is this new process necessary? In this interim period prior to lodgement of the error notice the client and perhaps broker too remain exposed to penalty action. What is the reason behind this delay in acceptance of a right that a party at error has at law , given the legislation allows protection from penalty once the written error notice is submitted to the Department.

On a practical basis too if the error requires post action and that post is lodged and paid, that is also deemed to be written notification to the DIBP. Why then would you bother going through this process if you’ve already done all the work? But aside from that, why initiate this process? If it’s not broken why fix it with something that is both not practical and a significant extension on the interpretation of the meaning of an error notice.

And why require details of any previous voluntary disclosures within the last 5 years? Surely such disclosures are evidence of an intent to comply? What do they have to do with this matter? Given that in the past DIBP have initiated action against brokers relying in part on past paid infringement notices [BR WilliamsCustoms and Freight Forwarding Pty Ltd and Chief Executive Officer of Customs [2013] AATA 100 (27 February 2013)] how can we be sure that a similar view would not be held in these matters and somehow influence outcomes?