Many businesses don’t understand that their goods are classified as ‘dual-use’ so that, despite being intended for an innocuous end-use, they could also have military applications that make them subject to controls.
The breadth of goods that fall in this category is substantial, with many companies unaware that products they’re sell overseas require an export licence.
If you’re a business that deals with military product, you know it’s military product – chances are you’re going to know there are controls in place.
If it’s dual-use, it’s less obvious. It ranges from a certain type of ball bearing to steel pipes of a particular diameter.
In order to make clear that a good is for civil purposes, and therefore not subject to an export licence, it’s critical that traders ask for an end-user statement from their customers, confirming what the goods will be used for.
It’s best practice to check every 3 months whether any restrictions have been imposed on products with particular reference to the specific export country and to keep records of your research.
Once you’ve become aware that your goods will require a licence it’s a case of identifying which one, and then ensuring your documentation is in order to submit your application through SPIRE – the government’s online system – which will soon be replaced by LITE.
The most common licence type is an open general export licence (OGEL) and that’s where you need to get an end user undertaking.
Once you sign up to use the licence, that’s it. After that, there’s a reporting requirement once a year with an OGEL.
Things become more complicated as the goods increase in complexity, or need to be shipped to nations under restrictions.
At that point, you may need to apply for a Standard Individual Export Licence (SIEL), a licence that’s more tailored to you.
The next one along is an Open Individual Export Licence (OIEL), which is a bit more flexible and therefore requires greater scrutiny before being granted.
Once the licensing is complete, it’s also important to pay attention to the routes you, or any intermediaries, use when transporting goods. It can be safer to avoid routes that pass through restricted regions.
Finally, if you realise you’ve shipped something without a licence: declare it.
Owning up to the mistake as soon as it’s discovered shows a level of compliance that the ECJU and HMRC will appreciate when they ask what’s happened and why it’s happened.
While it’s unlikely a business will escape a fine by declaring a mistake, being up-front does increase the likelihood of receiving a reduced fine and ultimately looks much better on the record.
If you’re audited and the ECJU or HMRC find errors without you having declared them, they will go through your books with a fine-tooth comb and they will pick up all of those errors and fine you accordingly.